A note on "Khouja and Park, optimal lot sizing under continuous price decrease, Omega 31 (2003)"

Ruud Teunter

Omega, 2005, vol. 33, issue 6, 467-471

Abstract: Khouja and Park [1] analyze the problem of optimizing the lot size under continuous price decrease. They show that the classic EOQ formula can lead to far from optimal solutions and develop an alternative lot size formula using the software package Mathematica. This formula is more exact, but also more complicated. In this note, we study the net present value formulation of the model, and thereby gain an insight that leads to the proposal of a modified EOQ formula. The modified EOQ formula, albeit not as accurate, is a good alternative to the formula developed by Khouja and Park, especially if mathematical complexity may hamper implementation.

Keywords: Lot; sizing; Economic; order; quantity; Price; decrease (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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