EOQ Based on Decreasing Demand

Abstract

The Economic Order Quantity (EOQ) is normally based on the quantity that minimizes the average annual combined cost of holding inventory and ordering in the steady state case....However, the decreasing demand scenario means there is no steady state situation. The solution to getting a common criterion function for all different length cycles (procurement cycle periods) is to use the expenditures over unit time as the criterion function. The expenditures in the next cycle due to a buy are calculated and divided by the cycle time. The holding cost for average inventory is applied to the average inventory in the cycle period. Instead of the holding rate per year in the steady state case, the rate per cycle length is used.

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Document Details

Document Type
Technical Report
Publication Date
May 10, 1991
Accession Number
ADA264955

Entities

People

  • Robert C. Bilikam Jr

Tags

Communities of Interest

  • Counter IED
  • Human Systems

DTIC Thesaurus Topics

  • Acquisition
  • Databases
  • Equations
  • Inventory
  • Lead Time
  • Logistics
  • Military Research
  • Procurement
  • Standards
  • Steady State

Readers

  • Life Cycle Cost Analysis
  • Logistics and Supply Chain Management.
  • Mathematics or Statistics