A comparative analysis of inventory costs of JIT and EOQ purchasing
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 1 November 1997
Abstract
Presents a mathematical model to assist companies in their decision to switch from the economic order quantity (EOQ) to the just‐in‐time (JIT) purchasing policy. Determines an upper limit for the JIT purchase price of an item below which the manufacturer will be better off using JIT purchasing. Also determines the annual demand level at which the costs of EOQ and JIT purchasing will be equal (the indifference point). For demand levels above this indifference point EOQ is the less costly method while JIT is preferable for demand levels below this point. The model also predicts that JIT will be preferred for inventory items with higher purchase price, holding costs, or ordering cost.
Keywords
Citation
Fazel, F. (1997), "A comparative analysis of inventory costs of JIT and EOQ purchasing", International Journal of Physical Distribution & Logistics Management, Vol. 27 No. 8, pp. 496-504. https://doi.org/10.1108/09600039710182680
Publisher
:MCB UP Ltd
Copyright © 1997, MCB UP Limited