TY - JOUR
T1 - EOQ model with batch demand and planned backorders
AU - Huang, Boray
AU - Wu, Andy
N1 - Publisher Copyright:
© 2016.
Copyright:
Copyright 2018 Elsevier B.V., All rights reserved.
PY - 2016/5
Y1 - 2016/5
N2 - The existing literature about the backorder EOQ problem usually focuses on B2C (Business-to-Customer) and neglects the impact of batch demands to the backlogging behavior in B2B (Business-to-Business) environment. This paper contributes by formulating the inventory problem for a wholesaler facing batch demands and using backorder to control her inventory. The wholesaler's non-differentiable average cost function encompasses a curtain-like pattern. Based on its structural properties, we disclose the optimality conditions for the backlogging and ordering quantities. By using these conditions, efficient algorithms can be built to search for the optimal policy. Our discussion about the algorithm design is separated into two parts, i.e., with and w/o an integer requirement to the ordering quantity. In practice, it is more convenient to control the inventory if a wholesaler's ordering quantity is exactly an integer multiple of her customer's demanding size. As the integer requirement exists, a closed-form solution is provided to answer the optimal ordering quantity.
AB - The existing literature about the backorder EOQ problem usually focuses on B2C (Business-to-Customer) and neglects the impact of batch demands to the backlogging behavior in B2B (Business-to-Business) environment. This paper contributes by formulating the inventory problem for a wholesaler facing batch demands and using backorder to control her inventory. The wholesaler's non-differentiable average cost function encompasses a curtain-like pattern. Based on its structural properties, we disclose the optimality conditions for the backlogging and ordering quantities. By using these conditions, efficient algorithms can be built to search for the optimal policy. Our discussion about the algorithm design is separated into two parts, i.e., with and w/o an integer requirement to the ordering quantity. In practice, it is more convenient to control the inventory if a wholesaler's ordering quantity is exactly an integer multiple of her customer's demanding size. As the integer requirement exists, a closed-form solution is provided to answer the optimal ordering quantity.
KW - Backorder
KW - Batch demand
KW - EOQ
KW - Inventory
KW - Nonlinear programming
UR - http://www.scopus.com/inward/record.url?scp=84957054787&partnerID=8YFLogxK
U2 - 10.1016/j.apm.2016.01.004
DO - 10.1016/j.apm.2016.01.004
M3 - Article
AN - SCOPUS:84957054787
VL - 40
SP - 5482
EP - 5496
JO - Applied Mathematical Modelling
JF - Applied Mathematical Modelling
SN - 0307-904X
IS - 9-10
ER -