FIFO and LIFO Policies in Inventory Management

Samuel Eilon

Management Science, 1961, vol. 7, issue 3, 304-315

Abstract: Evaluation of FIFO (-first in first out) versus LIFO (-last in first out) policies in stock depletion problems has hitherto been based on the classification of field life functions as convex and concave, the optimal policy for n > 2 units being determined when the optimal policy for n - 2 units is known. This paper suggests a test for selecting the optimal policy for the n - 2 system, for field life functions with a derivative equal or larger than -1, and by induction the conclusions are extended to n > 2. When the derivative is smaller than -1, LIFO is shown to be an optimal policy.

Date: 1961
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:7:y:1961:i:3:p:304-315

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