Notes, ideas & techniques
A Study of the infinite horizon ‘solution’ of inventory lot size models with a linear demand function

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Abstract

The article studies the infinite time horizon inventory lot size model with a linear demand function. The pertinent costs are the carrying and order costs, shortages are prohibited, and replenishments are instantaneous. The problem is to minimize the total cost by exhibiting a schedule of optimal replenishment times.

The computerized asymptotic solution suggested here is a generalization of the classical square root law and the more recent cubic root law. Due to its broader usefulness, it should preponderate previously known results.

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