6.5 EOQ Without the Instantaneous Receipt Assumption
When a firm receives its inventory over a period of time, a new model is needed that does not require the instantaneous inventory receipt assumption. This new model is applicable when inventory continuously flows or builds up over a period of time after an order has been placed or when units are produced and sold simultaneously. Under these circumstances, the daily demand rate must be taken into account. Figure 6.5 shows inventory levels as a function of time. Because this model is especially suited to the production environment, it is commonly called the production run model.
In this model, instead of having an ordering ...
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