The classical EOQ (Economic Order Quantity) model has a long list of assumptions. We begin by assuming that the horizon of the process is infinite and that all parameters stay the same over time. Then the solution to the classical EOQ problem is where the parameters A, D, v, and r are the fixed cost of replenishment in $/ order, (constant) annual demand in units/year, unit cost in $/unit, and carrying charge in $/unit/year, respectively. A typical picture of inventory level over time is displayed in Figure 1.
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© 2001 Kluwer Academic Publishers
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Lev, B. (2001). Economic order quantity model extensions . In: Gass, S.I., Harris, C.M. (eds) Encyclopedia of Operations Research and Management Science. Springer, New York, NY. https://doi.org/10.1007/1-4020-0611-X_269
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