ABSTRACT
In Chapter 4, we developed the economic order quantity (EOQ) (and various modifications of it) by essentially assuming a level, deterministic demand rate. In this chapter, we relax this assumption and allow the average demand rate to vary with time. In a manner similar to Chapter 4, here, we focus on settings where replenishment quantities are not constrained by capacity. We analyze the implications of finite capacity extensively in Chapters 13 through 15. As compared to the EOQ setting, the time-varying demand situations addressed in this chapter encompass a broader range of practical situations, including:
1. Multiechelon assembly operations where a firm schedule of finished products, exploded back through the various assembly stages, leads to production requirements at these earlier levels. These requirements are relatively deterministic but almost always vary appreciably with time. (This is a topic to which we return in Chapter 15 under the heading of Material Requirements Planning, or Material Resources Planning [MRP].)
2. Production to contract, where the contract requires that certain quantities have to be delivered to the customer on specified dates.
