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A PRESENT VALUE FORMULATION OF THE CLASSICAL EOQ PROBLEM *
Author(s) -
Trippi Robert R.,
Lewin Donald E.
Publication year - 1974
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1974.tb00592.x
Subject(s) - economic order quantity , value (mathematics) , order (exchange) , mathematical optimization , holding cost , mathematical economics , economics , time horizon , computer science , mathematics , operations research , statistics , supply chain , finance , political science , law
The usual analysis of the deterministic economic order quantity problem seeks to minimize the average cost of inventory ordering and holding costs per unit time. An alternative approach described in this paper examines the present value of discounted costs over an infinite horizon. Differences in the solutions and implications of errors using the two methodologies are discussed.