High Eccentricity EOQ Total Cost Function Yields JIT Results
Author
Roach, Bill
Publisher
Washburn University. School of BusinessSponsor
Kaw Valley BankDate
July 2009Metadata
Show full item recordAbstract
For perishable inventory, the hold cost H is much larger than anticipated by the classical EOQ formula, orders of magnitude larger. For perishable inventory, the EOQ total cost function is pointed rather than flat. This pointed-ness logically causes the EOQ model to yield JIT-like results. The pointed-ness (eccentricity) of the EOQ total cost curve depends solely on holding cost H and not annual demand D or batch cost S. D and S determine the level of the TC curve but not the shape.