A Deterministic Inventory/Production Model with General Inventory Cost Rate Function and Concave Production Costs
18 Pages Posted: 28 Oct 2004
Date Written: July 2004
We present a thorough analysis of the economic order quantity model with shortages under a general inventory cost rate function and concave production costs. By using some standard results from convex analysis, we show that the model exhibits a composite concave-convex structure. Consequently, an effective solution procedure, particularly useful for an approximation scheme, is proposed. A computational study is appended to illustrate the performance of the proposed solution procedure.
Keywords: inventory, general inventory cost function, concave production cost, concave-convex programming
JEL Classification: M, M11, R4, C6
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