Research Article Open Access

Constrained Probabilistic Economic Order Quantity Model under Varying Order Cost and Zero Lead Time Via Geometric Programming

Kotb Abd-El-Hamid Mahmoud Kotb and Huda Mohamed Hamid Al-Shanbari

Abstract

Problem statement: In this study, we provide a simple method to determine the inventory policy of probabilistic single-item Economic Order Quantity (EOQ) model, that has varying order cost and zero lead time. The model is restricted to the expected holding cost and the expected available limited storage space. Approach: The annual expected total cost is composed of three components (expected purchase cost, expected ordering cost and expected holding cost. The problem is then solved using a modified Geometric Programming method (GP). Results: Using the annual expected total cost to determine the optimal solutions, number of periods, maximum inventory level and minimum expected total cost per period. A classical model is derived and numerical example is solved to confirm the model. Conclusion/Recommendations: The results indicated the total cost decreased with changes in optimal solutions. Possible future extension of this model was include continuous decreasing ordering function of the number of periods and introducing expected annual demand rate as a decision variable.

Journal of Mathematics and Statistics
Volume 7 No. 4, 2011, 343-347

DOI: https://doi.org/10.3844/jmssp.2011.343.347

Submitted On: 12 March 2011 Published On: 3 November 2011

How to Cite: Kotb, K. A. M. & Al-Shanbari, H. M. H. (2011). Constrained Probabilistic Economic Order Quantity Model under Varying Order Cost and Zero Lead Time Via Geometric Programming. Journal of Mathematics and Statistics, 7(4), 343-347. https://doi.org/10.3844/jmssp.2011.343.347

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Keywords

  • Inventory model
  • holding costs
  • storage area
  • lead time
  • geometric programming
  • Economic Order Quantity (EOQ)
  • limited storage space
  • probabilistic single-item
  • varying order