EFFECTS OF LOST SALES ON COMPOSITE LOT SIZING

The composite EOQ model is extended to incorporate lost sales i.e., when a fraction of shortage quantity is not backordered. Optimal order quantity and maximum allowable shortage are evaluated by using numerical method after developing a quartic equation in terms of lot size. Variations of these values under the influence of lost sales indicate the need for the revision of inventory ordering policies. © 1997 Elsevier Science Ltd