An EOQ Model Under Price Change Anticipation for A System with Insufficient Storage Capacity

Shah Nitin and Shah Y K

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: When a price change is announced in an inventory system, a one time decision has to be made to purchase a large quantity Q’ before the price change becomes effective, to take advantage of current lower price. In this note, we consider a system having a limited storage capacity W<< Q’, so that additional units are required to be stored in rented warehouse. Optimum value of Q’ and corresponding gain are determined. The model is illustrated with an example.

Date: 1990-03-01
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Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:wp00932

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