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Optimal policy for profit maximising in an EOQ model under non-linear holding cost and stock-dependent demand rate

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  • V. Pando
  • J. García-Laguna
  • L.A. San-José

Abstract

In this article, we integrate a non-linear holding cost with a stock-dependent demand rate in a maximising profit per unit time model, extending several inventory models studied by other authors. After giving the mathematical formulation of the inventory system, we prove the existence and uniqueness of the optimal policy. Relying on this result, we can obtain the optimal solution using different numerical algorithms. Moreover, we provide a necessary and sufficient condition to determine whether a system is profitable, and we establish a rule to check when a given order quantity is the optimal lot size of the inventory model. The results are illustrated through numerical examples and the sensitivity of the optimal solution with respect to changes in some values of the parameters is assessed.

Suggested Citation

  • V. Pando & J. García-Laguna & L.A. San-José, 2012. "Optimal policy for profit maximising in an EOQ model under non-linear holding cost and stock-dependent demand rate," International Journal of Systems Science, Taylor & Francis Journals, vol. 43(11), pages 2160-2171.
    • Handle: RePEc:taf:tsysxx:v:43:y:2012:i:11:p:2160-2171
    DOI: 10.1080/00207721.2011.565134
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    Cited by:

    1. Khan, Md. Al-Amin & Cárdenas-Barrón, Leopoldo Eduardo & Treviño-Garza, Gerardo & Céspedes-Mota, Armando & Loera-Hernández, Imelda de Jesús & Smith, Neale R., 2024. "Effects of variable prepayment installments on pricing and inventory decisions with power demand pattern and non-linear holding cost under carbon cap-and-price regulation," Operations Research Perspectives, Elsevier, vol. 12(C).
    2. Valentín Pando & Luis A. San-José & Joaquín Sicilia, 2021. "An Inventory Model with Stock-Dependent Demand Rate and Maximization of the Return on Investment," Mathematics, MDPI, vol. 9(8), pages 1-18, April.

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