Economic order quantity model with demand influenced by dynamic innovation effect

Abstract

Inventory control policies for new-product items are highly perceptive to different marketing policies especially for innovation effects at the earlier stage of the product life cycle but unfortunately classical economic order quantity (EOQ) model do not recognises the innovation driven demand model. In this paper, a time dependent innovation driven demand model has been introduced in the basic EOQ model to calculate the different optimal policies. The proposed model acknowledged relationship between the innovation coefficient and the optimal policies. Four hypotheses were framed in this paper based on the numerical exercise that could explain the impact of dynamic pattern of the innovation coefficient on different optimal policies.