Summary

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In this chapter the classical economic order quantity model has been presented. The basic form of the EOQ model we discussed included simplifying assumptions regarding order receipt, no shortages, and constant demand known with certainty . By relaxing some of these assumptions, we were able to create increasingly complex but realistic models. These EOQ variations included the reorder point model, the noninstantaneous receipt model, the model with shortages, and models with safety stocks. The techniques for inventory analysis presented in this chapter are not widely used to analyze other types of problems. Conversely, however, many of the techniques presented in this text are used for inventory analysis (in addition to the methods presented in these chapters). The wide use of management science techniques for inventory analysis attests to the importance of inventory to all types of organizations.

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