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Economic production quantity

The optimum production quantity formula for non-instantaneous production is evaluated.


Bmax maximum inventory
TP optimum oder cycle = Qopt/demand rate
h holding cost
s fixed ordering cost
D demand rate
Qopt optimum order quantity


  • continuous stationary demand
  • finite production rate
  • no quantity discounts
  • no backorders
  • any order quantity > 0 is allowed

The problem is equivalent to the classical order quantity with the additional consideration of a finite production rate.

This model can be extended to the economic lot sizing and scheduling problem (ELSP) with common production cycle.


- Nahmias (1997)

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