Simply optimal - beyond EOQ for a popular class of inventory problems
CITATION: Van Wijck, W. 1999. Simply optimal - beyond EOQ for a popular class of inventory problems. South African Journal of Industrial Engineering, 10(1): 73-85, doi: http://dx.doi.org/10.7166/10-1-374.
The original publication is available at http://sajie.journals.ac.za
True optimal solution s to real life problems are normally only achievable at the expense of great complexity. Every now and then however, one is almost stunned by the simplicity of a good solution to a practical problem. This paper discusses a relatively simple method for determining the joint optimum order quantity and reorder point for the case where service level is specified as a desired fraction of demand to be satisfied directly from stock. Separate solutions were derived for complete backorders and lost sales, and the method is equally applicable to fixed order quantity and periodic review inventory problems . Demand during the lead time is assumed to be normally distributed. The intent of the paper is to focus on the findings and the application of the method, rather than the mathematical derivation of the formulae itself.
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