An Extended EPQ Model to Relax the Constant Demand Assumption into Periodic Demand

An Extended EPQ Model to Relax the Constant Demand Assumption into Periodic Demand

This article presents a new model called the periodic square wave(PSW) to describe the material flow of periodic processes involving an intermediate buffer. The material flows into and out of the intermediate buffer are assumed to be periodic square shaped. By using this model, It is proved that the classical economic lot size model with finite supply rate, the so-called EPQ model, can be applicable to the arbitrary periodic demand case. This new model relaxes the original assumption of the constant demand. It is shown, as a unique application example, that the explicit solution for determining both upstream and downstream economic lot size can be obtained with the aid of the PSW model. The PSW model provides more accurate information on analyzing the inventory and production system than the classical approach, without losing simplicity and increasing the computational burden.