The effects of varying marketing policies and conditions on the economic ordering quantity

SUMMARY

In this study, models for obtaining economic order quantities (EOQ) are considered which take into account the effects of advertising, price elasticity and economies of scale, and the possibility of some ordered items being defective. An earlier model by Subramanyam and Kumaraswamy (1981) is shown to be restrictive in its treatment of the effects of defective items. To correctly model there effects, three different scenarios for dealing with defective items are considered and the resulting EOQ models presented. Special cases are also considered. It is shown that the earlier model can lead to incorrect economic order quantities in these scenarios.