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Minimizing the Discounted Average Cost Under Continuous Compounding in the EOQ Models with a Regular Product and a Perishable Product

2018
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American Journal of Operations Management and Information Systems
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We consider the EOQ model with an opportunity cost of capital, i.e. an amount x invested now will yield (1+i)x at the beginning of the next period. Here i is the interest rate. Given a cost stream i.e. a stream of costs incurred over time, the Net Present Value (NPV) is used to decide the total cost of the cost stream. This total cost takes into account the opportunity cost of capital. The Discounted Average Cost changes the NPV, which is a total, into a cost rate per unit time. The discounted

doi:10.11648/j.ajomis.20180302.13
fatcat:zpqtwsdep5bcjcoityu737qd6e