Economic Order and Surplus Quantities Model

A standard mathematical model for inventory management is known as the Economic Order Quantity (EOQ) model. In this communication the EOQ model is extended to include the possibility of determining how much, if any, excess stock should be sold at the beginning of a decision period. The new model is of practical importance for situations in which a formal inventory management system is to be instituted while substantial inventories exist or when changes in demand, ordering costs, or carrying and interest charges require recomputation of the economic order quantity.