An extension of partial backordering EOQ with correlated demand caused by cross-selling considering multiple minor items

Abstract

Zhang et al. (2011) proposed the partial backordering EOQ with correlated demand caused by cross-selling, where a portion of the sales of a minor item is associated with those of a major item. In this paper, we extend their model to make it more applicable to dealing with the inventory replenishment problem for multiple associated items. We formulate the model as a mixed integer nonlinear programming (MINLP) problem and develop a global optimum search procedure with the fill rate given. We further employ a one-dimensional search on the fill rate to obtain the minimum total inventory cost within a predetermined precision, which enjoys polynomial computational complexity.