Optimal inventory policies for profit maximizing EOQ models under various cost functions

Abstract

In this paper, we establish and analyze three EOQ based inventory models under profit maximization via geometric programming (GP) techniques. Through GP, we find optimal order quantity and price for each of these models considering production (lot sizing) as well as marketing (pricing) decisions. We also investigate the effects on the changes in the optimal solutions when different parameters are changed. In addition, a comparative analysis between the profit maximization models is conducted. By investigating the error in the optimal price, order quantity, and profit of these models, several interesting economic implications and insights can be observed.