Lost Sales Inventory Model in Finite Planning Horizon

Abstract

This study extends a previous Economic Order Quantity (EOQ) model to include lost sales inventory and a
finite planning horizon model. An exact algorithm is developed for finite planning horizon lost sales
inventory condition. A practical approach is proposed to derive the optimal solution. The algorithm with lost
sales inventory and finite planning horizon method improves the total cost of the inventory policy. Our
analysis shows that the minimum total cost of the finite planning horizon method is always greater or equal
to the infinite planning horizon method.