An EOQ model with price-dependent supply and demand

Z. Melis Teksan and Joseph Geunes

International Journal of Production Economics, 2016, vol. 178, issue C, 22-33

Abstract: This paper considers a generalization of the Economic Order Quantity (EOQ) model for an end-item that requires an input component for production. The quantity of input components available for production is a nondecreasing function of the price offered by the producer to its suppliers, while the end-item demand is also price-dependent. We analyze the behavior of the optimal replenishment and pricing policy, which depends on the economics of production and procurement costs and the prices associated with input components and end-items. This analysis sheds light on how to deal with price-dependent supply in production planning, as well as on the value of supplier heterogeneity and information on the relationship between component price and supply.

Keywords: Production and inventory systems; Supply chain management; Price-dependent EOQ (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:178:y:2016:i:c:p:22-33

DOI: 10.1016/j.ijpe.2016.04.023

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