Solution of an EPQ model with reduced setup cost by combined algebraic and classical approach

  • Richa Nandra et al.

Abstract

Inventory management in EOQ/EPQ model helps a company to overcome under-stocking and overstocking situations.An efficient inventory management covers raw-material, human-resource and
information flow. It improves companys profit and its returns on total assets. EOQ/EPQ model is used to
find the optimal quantity to minimize ordering cost and carrying cost. This paper is an extension of
Cdenas-Barrs [12] model which determines the solution of the model with algebraic optimization. In
this paper, the optimal inventory decisions for EPQ with set-up cost reduction are optimizedalgebraically
and by using classical optimization technique(by differential calculus). Using both techniques
simultaneously an ultimate closed formed solution is obtained. This result will help a small business
owner to determine the optimal inventory level, backorder cost, setup cost and reorder point

Published
2019-12-24
Section
Articles