An EOQ model with backlog-dependent demand

K. Skouri ()
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K. Skouri: University of Ioannina

Operational Research, 2018, vol. 18, issue 2, No 12, 574 pages

Abstract: Abstract The impact of stockout has been underlined in many consumer studies. According to them, stock-out affects consumers’ purchase decisions and this is especially true on online shopping. In this paper, an inventory model is considered, under the classical EOQ framework, by assuming that shortages affect the customers’ demand. To this end, during shortages period, the demand rate decreases proportionally to the existing backlogging. Then, in order for the total cost to be obtained, the backlogged demand rate is approximated by a piecewise constant function. For this approximated model, the reorder interval, that minimizes the total cost, is determined in closed form. Comparisons, through numerical examples, between a specific backlogging rate (already used in the literature) and the proposed approximation, indicate that this approximation gives high quality results.

Keywords: EOQ; Backlogging; Shortages; Approximation (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s12351-016-0279-0

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