AN OPTIMIZATION MODEL OF ECONOMIC ORDER QUANTITY (EOQ) WITH FINANCIAL CONSTRAINTS AND MARKET TOLERANCE

Abstract

An optimization model of Economic Order Quantity (EOQ) is one of the methods used to determine the inventory order quantity that can be minimize the cost of storage and the cost of ordering supplies. The optimization model in this paper is an optimization model of Economic Order Quantity (EOQ) with financial constraints and market tolerance. Limited capital available per period B B    and 600000 and the advanced payment     0 and 1 are financial constraint. Market tolerance constratins there are two periods of market tolerance T T t t   0 and 0.2 and three levels of backorder c. Based on this model, numerical simulations can be formulated and carried out so that the best optimal solution was obtained when conditions B T      , 1, 0, 0,2   t  with a total cost decrease of 28,92% and total profit increase of 13,37% from the initial condition. Keywords: Advanced payment, Backorders, Budgetary limit, Economic Order Quantity (EOQ), Lost sales, Inventory