Economic Order Quantities for Products with Finite Demand Horizons

Abstract Industrial engineers have for many years recommended the implementation of EOQ policies in applications in which the strict assumptions of the EOQ model are not satisfied. There are two reasons for this: 1) the EOQ model is a relatively robust model; that is, it is insensitive to at least some of its assumptions; and 2) the lack of a suitable alternative policy. This paper presents a simple generalization of the EOQ model which allows the model to be directly applicable to products with a finite product life. The model is: 1) computationally simple to use; and 2) yields policies which are appreciably less costly than currently employed alternative policies.