Simplification of EOQ Model for Planned Shortages by using Equivalent Holding Cost (original) (raw)

This paper presents a simplified Economic Order Quantity (EOQ) model that accounts for planned shortages by utilizing an equivalent holding cost approach. It reviews existing literature on inventory management, particularly focusing on models addressing perishable goods, backordering, and deteriorating items. By employing derived formulae, the study aims to enhance cost efficiency in inventory management, highlighting the balance between ordering costs, holding costs, and shortage costs. The findings suggest that integrating holding cost adjustments can lead to improved inventory planning and profitability.