Premium
A UNIFIED APPROACH TO THE PRICE‐BREAK ECONOMIC ORDER QUANTITY (EOQ) PROBLEM *
Author(s) -
Das Chandrasekhar
Publication year - 1984
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.1540-5915.1984.tb01223.x
Subject(s) - economic order quantity , purchasing , order (exchange) , schedule , economics , inventory management , sensitivity (control systems) , process (computing) , point (geometry) , microeconomics , operations research , computer science , operations management , business , mathematics , marketing , supply chain , finance , geometry , management , electronic engineering , engineering , operating system
In many developing countries where supply is limited, a premium rather than a discounted price is paid for buying in larger amounts. In order for management science/operations research solutions to be relevant to developing economies, such realities need to be explicitly recognized and any decisions evaluated from that perspective. To illustrate this point, a typical inventory‐purchasing problem is solved. In the process, formulae are developed that introduce simultaneous price and quantity sensitivity into the inventory equation. A systematic procedure is suggested to locate the optimal order quantity for a given schedule of discounts or premiums.