Abstract
Abstract The classical EoQ formulas for determining the replenishment order sizes are no longer useful when the prices are constantly going up. In this paper, we derive economic purchase order size for the deterministic inventory models under inflationary conditions. Derivation of the model is presented considering two specific situations: (1) one chance to place an optimum reorder before a step increase in purchase cost, and (2) optimum size of the next reorder considering that any other future reorder will be subject to a constant rate of inflation. For each of these two situations, our objective is to minimize the total purchase plus inventory related costs.
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