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The effects of inflation and time-value of money on an economic order quantity model with a random product life cycle. (English) Zbl 0971.90005
Summary: For several decades, the Economic Order Quantity (EOQ) model and its variations have received much attention from researchers. Recently, there has been an investigation into an EOQ model incorporating a random product life cycle and the concept of time-value of money. This paper extends the previous research in several areas. First, we investigate the impact of inflation on the choice of replenishment quantities. Second, the unit cost, which has been inadvertently omitted in the previous research, is included in the objective function to properly model the problem. Third, we consider the normal distribution as a product life cycle in addition to the exponential distribution. Fourth, we develop a simulation model which can be used for any probability distribution.

MSC:
90B05Inventory, storage, reservoirs
91B38Production theory, theory of the firm (economics)