Management Science and Financial Engineering

The Korean Operations Research and Management Science Society (한국경영과학회)
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On the Optimality of the Multi-Product EOQ Model with Pricing Consideration

  • Shin, Ho-Jung (Department of LSOM, Korea University Business School) ;
  • Park, Soo-Hoon (Department of LSOM, Korea University Business School)
  • Received : 2011.10.25
  • Accepted : 2011.12.24
  • Published : 2012.05.31
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Abstract

Two previous studies that attempted to generalize the deterministic joint pricing-inventory decision model are reevaluated. We prove analytically that even in a single-product environment, the EOQ model with constant priceelastic demand cannot find optimal solutions unless two optimality conditions associated with price elasticity and demand magnitude are satisfied. Due to the inexistence of the general optimality for the problem, demand function and price elasticity must be evaluated and bounded properly to use the methods proposed in the previous studies.

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References

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