An N-period dynamic programming model for constrained multi-item EOQ under stochastic demand

Constrained multi-item EOQ under stochastic demand

Abstract

This study considers an N-period dynamic programming model for constrained multi-item EOQ under stochastic demand. The objective is to obtain a generalized formulation for the finite planning horizon, so that at the long run profits are maximized for each state of demands for the constrained multiple items. At the end of each planning horizon, a decision is made whether additional units will be ordered or not for each item which depends on the demand for the the individual item. The linear programming technique is used to incorporate and handle the constraints. A numerical example is given to illustrate the application of the model.