A Comparison of Order Quantities Computed Using the Average Annual Cost and the Discounted Cost

G. Hadley
Additional contact information
G. Hadley: University of Chicago and Universidad de los Andes, Bogota

Management Science, 1964, vol. 10, issue 3, 472-476

Abstract: This note compares the optimal order quantities determined by minimizing the average annual cost and by minimizing the discounted cost over all future time for the simplest imaginable type of inventory model in which the demand rate is assumed to be deterministic and no stockouts are allowed. By specific numerical results it is shown that for all values of the parameters that might reasonably be encountered in an inventory problem there is only a negligible if any difference in the order quantities. It is shown, however, that in extreme cases significant differences may be obtained.

Date: 1964
References: Add references at CitEc
Citations: View citations in EconPapers (27)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.10.3.472 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:10:y:1964:i:3:p:472-476

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().