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Using the Deterministic EOQ Formula in Stochastic Inventory Control
132
Citations
4
References
1996
Year
EngineeringComputational ComplexityOperations ResearchInventory ManagementInventory ControlSearch CostsSystems EngineeringLogisticsCombinatorial OptimizationQuantitative ManagementCost AllocationSupply Chain ManagementDeterministic Eoq FormulaHeuristic SolutionRelative Cost IncreaseCost IssueStochastic OptimizationOptimization ProblemProcess ControlBusinessField Inventory Management
This note gives an improved bound (√5 − 2)/2 ≈ 0.1180 for the relative cost increase when using the deterministic EOQ formula as a heuristic solution when demands are stochastic. We also discuss under what circumstances this bound is tight.
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