EOQ MODELS WITH GENERAL DEMAND AND HOLDING COST-FUNCTIONS

We consider the continuous, deterministic, infinite horizon, single item inventory system, within the setting of a retail sector, in which the demand rate for an item is dependent on the existing inventory level. The traditional parameter of the replenishment cost is kept constant but the carrying cost per unit is allowed to vary. Two possibilities of variation are considered: (a) a non-linear function of the length of time the item is held in inventory and (b) a non-linear function of the amount of on-hand inventory. We find the optimal policies and decision rules and show that the classical EOQ model is obtained as a limiting case.