An Economic Order Quantity Model With n-Levels of Storage

This paper deals with a mathematical model to determine the Economic Order Quantity (EOQ) of a single item inventory system, when the Own Warehouse (OW) of the management has insufficient space. If the received stock Q exceeds the capacity of the OW, the management considers storing the stock in n Rented Warehouses each with finite capacity. Each Rented Warehouse (RW) is assumed to carry a higher holding cost than that of the OW. Considering all the n warehouses as n-storage points for the single item inventory, a two-phase mathematical model is developed to determine the EOQ. The principle of Shortest Processing Time (SPT) sequencing has been used in the first phase to find the optimal depletion sequence for the warehouses. The second phase deals with the building of cost function for the inventory cycle. The EOQ is determined and the functioning of the model is numerically illustrated.