Optimal inventory policies under decreasing cost functions via geometric programming |
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| Affiliation: | 1. CEG-IST, Instituto Superior Técnico, Universidade de Lisboa, Av. Rovisco Pais, 1, 1049-001 Lisboa, Portugal;2. ISEL, IPL, Rua Conselheiro Emídio Navarro, 1959-007 Lisboa, Portugal;3. INP–ENSIACET, Department of Chemical Engineering, 4, allée Emile Monso, 31030 Toulouse, France;1. Département de mathématiques et d’informatique, Université du Québec à Trois-Rivières, Trois-Rivières, Canada;2. Department of Civil and Environmental Engineering, University of Waterloo, Waterloo ON, Canada;1. Center for Translational Neurophysiology for Speech and Communication, Fondazione Istituto Italiano di Tecnologia, via Fossato di Mortara 17/19, Ferrara 44121, Italy;2. European Patent Office, Bayerstr. 34, Munich 80335, Germany;3. Dipartimento di Scienze Biomediche e Chirurgico Specialistiche, Section of Physiology, Università di Ferrara, via Fossato di Mortara 17/19, Ferrara 44121, Italy;4. Dipartimento di Scienze della Vita, Università di Modena e Reggio Emilia, Via Campi 103, Modena, 41125, Italy;5. Instituto de Física Interdisciplinar y Sistemas Complejos IFISC (CSIC-UIB), Campus UIB, Palma de Mallorca 07122, Spain |
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| Abstract: | In this paper, we establish and analyze two economic order quantity (EOQ) based inventory models under total cost minimization and profit maximization via geometric programming (GP) techniques. Through GP, optimal solutions for both models are found and managerial implications on the optimal policy are determined through bounding and sensitivity analysis. We investigate the effects on the changes in the optimal order quantity and the demand per unit time according to varied parameters by studying optimality conditions. In addition, a comparative analysis between the total cost minimization model and the profit maximization model is conducted. By investigating the error in the optimal order quantity of these two models, several interesting economic implications and managerial insights can be observed. |
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