The effect of continuous price change in the EOQ

Date
1992
Authors
Erel, E.
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Source Title
Omega
Print ISSN
0305-0483
Electronic ISSN
1873-5274
Publisher
Pergamon Press
Volume
20
Issue
4
Pages
523 - 527
Language
English
Type
Article
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Abstract

The sensitivity of the basic economic order quantity (EOQ) model to continuous purchase price changes is explored. The phenomenon of continuous price changes exists in several countries and it is not likely to improve. The paper shows that using the conventional EOQ can be quite costly and far from optimal, if the holding cost rate is determined erroneously by ignoring the price change.

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