Journal of the Korean Operations Research and Management Science Society (한국경영과학회지)

The Korean Operations Research and Management Science Society (한국경영과학회)
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Robust EOQ Models with Decreasing Cost Functions

감소하는 비용함수를 가진 Robust EOQ 모형

  • Published : 2007.06.30
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Abstract

We consider (worst-case) robust optimization versions of the Economic Order Quantity (EOQ) model with decreasing cost functions. Two variants of the EOQ model are discussed, in which the purchasing costs are decreasing power functions in either the order quantity or demand rate. We develop the corresponding worst-case robust optimization models of the two variants, where the parameters in the purchasing cost function of each model are uncertain but known to lie in an ellipsoid. For the robust EOQ model with the purchasing cost being a decreasing function of the demand rate, we derive the analytical optimal solution. For the robust EOQ model with the purchasing cost being a decreasing function of the order quantity, we prove that it is a convex optimization problem, and thus lends itself to efficient numerical algorithms.

Keywords

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