Two recent papers in this journal, Grubbstro¨m
and Erdem (1999) and Ca´ rdenas-Barro´ n (2001)
used an algebraic approach to prove the formulae
for the EOQ and economic production quantity
(EPQ) with a single cost of backordering, only
linear (time dependent). Here we extend the
approach to the more general models of EOQ
and EPQ with two backorder costs, a linear and a
fixed cost per unit. The only treatment of these
models we could find was in Johnson and
Montgomery (1974, pp. 26–33). In their analysis
they used calculus and solved the system of
equations resulting from the first-order conditions.
They did not explicitly identify the two distinct
cases we examine here. Our analysis is based
entirely on an algebraic approach. In addition to
the fact that it is of interest to demonstrate how a
relatively complex model can be fully analyzed
without derivatives, we obtain the explicit identification
of the two cases, a result that does not
appear as easy to do by using calculus.
First we examine the EOQ model and at the end
present the results for the EPQ.