Forecast Horizons in the Discounted Dynamic Lot Size Model

Suresh Chand, Suresh Sethi and Gerhard Sorger
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Suresh Chand: Krannert Graduate School of Management, Purdue University, West Lafayette, Indiana 47907

Management Science, 1992, vol. 38, issue 7, 1034-1048

Abstract: We derive a sharp upper bound on the minimal forecast horizon in the discounted dynamic lot size model with constant initial demand. This bound is given by m(m + 1), where m is the EOQ's worth, i.e., the number of periods for which the total demand equals Economic Order Quantity. Our results do not require the solution of the infinite horizon problem to be unique. Nor do they require the infinite horizon problem to be well defined. We also prove some sensitivity results with respect to the discount factor and the setup cost.

Keywords: discounted dynamic lot size models; existence of forecast horizons (search for similar items in EconPapers)
Date: 1992
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