In Defence of the Economic Batch Quantity

Abstract

The derivation of the formula for the economic batch quantity is fairly simple and is often used to illustrate operational research methodology. The model has recently been attacked, on the grounds that a mistaken attempt is made to minimize costs, and that in any case it misrepresents costs. In this paper alternatives are expressed symbolically. It is shown that optimizing any of the alternative functions would be equivalent or inferior to minimizing costs.