IDEAS home Printed from https://ideas.repec.org/a/blg/journl/v11y2016i1p5-14.html
   My bibliography  Save this article

A Revision On Cost Elements Of The Eoq Model

Author

Listed:
  • ASADABADI Mehdi Rajabi

    (Business School, University of New South Wales, Canberra, Australia)

Abstract

The overall objective of this paper is to investigate the fundamental cost elements of the traditional EOQ model and develop the model by expiring some of its unrealistic assumptions. Over the last few decades, there have been numerous studies developing the EOQ model, but the basic cost elements of the EOQ model have not been investigated efficiently. On the other hand, the capital cost of buying inventories seems to be important to be investigated separately as well as holding cost and ordering cost in the model. In this paper, the capital cost of the inventory and possible stepwise increases in holding and setup cost are taken into account to make a revised formula to compute the economic order quantity. The proposed model involves explicitly the capital cost of buying the inventories in the EOQ model to ensure the decision makers that their financial concerns are considered in the revised model and the new order quantity results the minimum total cost.

Suggested Citation

  • ASADABADI Mehdi Rajabi, 2016. "A Revision On Cost Elements Of The Eoq Model," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 11(1), pages 5-14, April.
  • Handle: RePEc:blg:journl:v:11:y:2016:i:1:p:5-14
    as

    Download full text from publisher

    File URL: http://eccsf.ulbsibiu.ro/RePEc/blg/journl/11101asadabadi.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Muhlemann, A. P. & Valtis-Spanopoulos, N. P., 1980. "A variable holding cost rate EOQ model," European Journal of Operational Research, Elsevier, vol. 4(2), pages 132-135, February.
    2. Goh, M., 1994. "EOQ models with general demand and holding cost functions," European Journal of Operational Research, Elsevier, vol. 73(1), pages 50-54, February.
    3. Fredrik Olsson, 2014. "Analysis of inventory policies for perishable items with fixed leadtimes and lifetimes," Annals of Operations Research, Springer, vol. 217(1), pages 399-423, June.
    4. Weiss, Howard J., 1982. "Economic order quantity models with nonlinear holding costs," European Journal of Operational Research, Elsevier, vol. 9(1), pages 56-60, January.
    5. Berling, Peter, 2008. "The capital cost of holding inventory with stochastically mean-reverting purchase price," European Journal of Operational Research, Elsevier, vol. 186(2), pages 620-636, April.
    6. Jaekwon Chung & Dong Li, 2014. "A simulation of the impacts of dynamic price management for perishable foods on retailer performance in the presence of need-driven purchasing consumers," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 65(8), pages 1177-1188, August.
    7. Teunter, Ruud H. & van der Laan, Erwin & Inderfurth, Karl, 2000. "How to set the holding cost rates in average cost inventory models with reverse logistics?," Omega, Elsevier, vol. 28(4), pages 409-415, August.
    8. Pando, Valentín & San-José, Luis A. & García-Laguna, Juan & Sicilia, Joaquín, 2013. "An economic lot-size model with non-linear holding cost hinging on time and quantity," International Journal of Production Economics, Elsevier, vol. 145(1), pages 294-303.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    EOQ; holding cost; setup cost; capital cost;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:blg:journl:v:11:y:2016:i:1:p:5-14. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mihaela Herciu). General contact details of provider: http://edirc.repec.org/data/feulbro.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.