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An Economic Order Quantity model with partial backordering and all-units discount

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  • Taleizadeh, Ata Allah
  • Pentico, David W.

Abstract

The classic Economic Order Quantity model assumes that the unit purchasing cost is not based on the order quantity. In practice, a supplier may offer purchasers an all-units discount. We develop a model and solution procedure for the EOQ with all-unit discounts and partial backordering at a constant rate. We show, and illustrate with a numerical example, how that model can be used to find the solution for the EOQ with discount and full backordering. A multi-factor experiment is used to gain insights into the improvement in performance of the proposed procedure relative to using the basic EOQ or the EOQ with full backordering and to identify the model parameters that have the greatest impact on the model׳s performance.

Suggested Citation

  • Taleizadeh, Ata Allah & Pentico, David W., 2014. "An Economic Order Quantity model with partial backordering and all-units discount," International Journal of Production Economics, Elsevier, vol. 155(C), pages 172-184.
    • Handle: RePEc:eee:proeco:v:155:y:2014:i:c:p:172-184
    DOI: 10.1016/j.ijpe.2014.01.012
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    References listed on IDEAS

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