EOQ and in#ation uncertainty
نویسنده
چکیده
In#ation uncertainty is introduced into a basic EOQ model and its potential to make mischief is explored. Among other things, it is shown that even when the expected rate of in#ation is less than the marginal cost of capital, the appropriate discount rate to use in computing a discounted expected total inventory cost will not necessarily be negative. Therefore, the classic EOQ square-root formula may drastically underestimate the optimal lot size. The results may be generalized to the more complex inventory models. ( 2000 Elsevier Science B.V. All rights reserved.
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