Economic Order Quantity: A State-of-the-Art in the Era of Uncertain Supply Chains

Mohammed Alnahhal (), Batin Latif Aylak, Muataz Al Hazza and Ahmad Sakhrieh
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Mohammed Alnahhal: Mechanical Engineering Department, American University of Ras Al Khaimah, Ras Al Khaimah P.O. Box 10021, United Arab Emirates
Batin Latif Aylak: Department of Industrial Engineering, Turkish-German University, Şahinkaya Caddesi 106, Beykoz, Istanbul 34820, Turkey
Muataz Al Hazza: Mechanical Engineering Department, American University of Ras Al Khaimah, Ras Al Khaimah P.O. Box 10021, United Arab Emirates
Ahmad Sakhrieh: Mechanical Engineering Department, American University of Ras Al Khaimah, Ras Al Khaimah P.O. Box 10021, United Arab Emirates

Sustainability, 2024, vol. 16, issue 14, 1-19

Abstract: Inventory management is crucial for companies to minimize unnecessary costs associated with overstocking or understocking items. Utilizing the economic order quantity (EOQ) to minimize total costs is a key decision in inventory management, particularly in achieving a sustainable supply chain. The classical EOQ formula is rarely applicable in practice. For example, suppliers may enforce a minimum order quantity (MOQ) that is much larger than the EOQ. Some conditions such as imperfect quality and growing items represent variants of EOQ. Moreover, some requirements, such as the reduction of CO 2 emissions, can alter the formula. Moreover, disruptions in the supply chain, such as COVID-19, can affect the formula. This study investigates which requirements must be considered during the calculation of the EOQ. Based on a literature review, 18 requirements that could alter the EOQ formula were identified. The level of coverage for these requirements has been tracked in the literature. Research gaps were presented to be investigated in future research. The analysis revealed that, despite their importance, at least 11 requirements have seldom been explored in the literature. Among these, topics such as EOQ in Industry 4.0, practical EOQ, and resilient EOQ have been identified as promising areas for future research.

Keywords: sustainable EOQ; supply chain disruptions; environmental trends; practical considerations; research gaps (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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