Accession Number : AD0700156

Title :   MORE ADO ABOUT EOQ.

Descriptive Note : Operations analysis technical memo.,

Corporate Author : AIR FORCE LOGISTICS COMMAND WRIGHT-PATTERSON AFB OHIO OPERATIONS ANALYSIS OFFICE

Personal Author(s) : Presutti,Victor J. , Jr. ; Trepp,Richard C.

Report Date : JAN 1970

Pagination or Media Count : 27

Abstract : The paper is concerned with the determination of explicit expressions for economic order quantities and reorder levels such that the cost of ordering and holding inventory is minimized for specific backorder constraints. Holding costs are applied either to inventory position or on-hand inventory, and the backorder constraint is considered in terms of the total number of backorders per year or the average number of backorders at any point in time. Through the substitution of a new probability density function in place of the normal p.d.f., explicit expressions are determined for the economic order quantities and the reorder points. The resulting economic order quantities are independent of all backorder constraints. It is also concluded that under certain conditions, the minimization of ordering costs and inventory holding costs (applied to inventory position), subject to a backorder constraint, is equivalent in terms of reorder levels to minimization of the safety level dollar investment subject to the same backorder constraint. (Author)

Descriptors :   (*INVENTORY CONTROL, *PROCUREMENT), COST EFFECTIVENESS, INVENTORY CONTROL, MATHEMATICAL MODELS, DECISION MAKING, PROBABILITY DENSITY FUNCTIONS

Subject Categories : Administration and Management

Distribution Statement : APPROVED FOR PUBLIC RELEASE