An economic production quantity inventory model with backorders considering the raw material costs

Abstract

Abstract. The classical Economic Production Quantity (EPQ) inventory model does notconsider ordering and holding costs of raw materials. In this direction, this paper considers the ordering and holding costs for both raw materials and nished product. Basically, four EPQ inventory models are developed from an easy perspective that has not been considered before. It was found that the ordering and holding costs of raw materials must be taken into account, because they signi cantly impact on the optimal production lot size of the nished product in both EPQ without shortages and EPQ with shortages inventory models. Furthermore, an EPQ inventory model that determines the optimal lot size for a product that requires more than one raw material, and an EPQ inventory model that obtains the optimal batch size for multiple products, which are manufactured with multiple raw materials, are proposed. Numerical examples are presented in order to illustrate the use of the proposed inventory models.

Extended Economic Production Quantity Models with Preventive Maintenance

“…Nasr et al [7] utilized differential equations for an EPQ model with deteriorating raw materials. In addition, Pacheco-Velazquez and Cardenas-Barron [8] considered an EPQ problem by considering inventory costs of the raw materials and finished items separately. Additionally, Jawad et al [9] analyzed a sustainable EPQ using the laws of thermodynamics.…”

An Imperfect Multi-Item Single Machine production system with Shortage, Rework, and Scrapped Considering Inspection, Dissimilar Deficiency Levels, and Non-Zero Setup Times

“…So one can't ignore this situation (imperfect production), as it has direct side effect on organization's reputation and good-will. Employing mathematical optimizations for inventory management dates back to more than a century ago when Ford Whitman Harris [1] introduced classical economic order quantity (EOQ) inventory model in 1913. This model is the foundations of lot-sizing models; and one can consider Harris as the founder of modern inventory studies [2].…”

A computational approach to economic production quantity model for perishable products with backordering shortage and stock-dependent demand

“…Moreover, Nasr et al [5] discussed an EPQ model with deteriorating raw material and analyzed the model via di erential equations. Pacheco-Velazquez and Cardenas-Barron [6] analyzed an economic production quantity model by considering ordering and holding costs for both raw materials and nished products. Jawad et al [7] developed an EPQ model based on the laws of thermodynamics focusing on the three pillars of sustainability and computed their costs.…”