Multi-item EOQ Calculation in Presence of Warehouse Constraints: A Simulative Analysis

The paper proposes an alternative method for the multi-item EOQ calculation in presence of space restrictions. The method, based on the Lagrange multipliers, consists of an iterative procedure which analyses dynamically, through the simulation, the effect of consumption rates and delivery times, determining the real stock overlapping in a fixed time period. This makes possible a more effective exploitation of the warehouse space that brings the lot sizes nearer to their optimal values. The proposed method is targeted to surmount the limits of classical approaches: firstly, the procedure calculates the lot sizes with a dynamic approach based on the simulation of the total stock behaviour in a fixed time horizon, with the aim of maximizing the space saturation; subsequently, the so obtained lot-sizes are corrected to reduce further the total management cost. In particular, this correction is based on the analysis of the slope of the cost function of each item. In order to obtain it, three alternative variations of the dynamic procedure are considered. The three alternatives have been compared among them and with the traditional Lagrange method in different scenarios, showing interesting results in terms of reduction of the total management cost.