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Materials Today: Proceedings 16 (2019) 629–635 www.materialstoday.com/proceedings

ICAMMAS17
Survey on Inventory Model of EOQ & EPQ with Partial
Backorder Problems
Thinakaran.Na, Jayaprakas.Jb*, Elanchezhian.Cc
a
Research Scholar, Dr.MGR Educational and Research Institute University,Chennai,-600095 India
b
Professor, Department of Mechanical Engineering, Malla Reddy Engineering College, Secunderabad,500100, India
C
Professor, Department of Mechanical Engineering, ,Sir Sairam Engineering College, Chennai-600044.

Abstract
This paper contains survey on inventory model of Economic Order Quantity (EOQ) and Economic Production model
Quantity (EPQ) with full and partial backorder condition. Initially most of the papers were focused on full backorder model
or lost sales for inventory model with important parameters like cycle time varying, stock demand & lot size and
substitutable items. The optimal Backorder for EOQ & EPQ model has been discussed and reviewed.

© 2019 Elsevier Ltd. All rights reserved.

Selection and/or Peer-review under responsibility of International Conference on Advances in Materials, Manufacturing and Applied
Sciences.

Keywords: Inventory model ; EOQ ; EPQ ; Backorder ;

1. Introduction

In whole inventory there will be two things every time will strike those or when and how much to order.
More than a hundreds of papers and books have been published under a wide variety of conditions and
assumptions. Ford W. Harris in 1913 developed a classic square root economic order quantity (EOQ) model
developed with simple conditions.
An early extension of the basic EOQ model generally referred to as the Economic Production Quantity
(EPQ) Or Economic Manufacturing Quantity (EMQ) model. Key assumption of both the basic EOQ and EPQ
models is that stockouts are not permitted. Assuming that the lead time and demand are known and constant, t
this means that an order will be placed when the inventory available is exactly sufficient to cover the demand
during that lead time. Zangwill (1966) developed a production multi period production scheduling model with
backlogging, that model is formulated by Montgomery et al. (1973). Rosenberg (1979) presented the analysis
of a lot-size model with partial backlogging. Partial backorders were proposed by Park (1982).

* Corresponding author. Tel.: +91-9443919169 .

E-mail address: profjaya@gmail.com

2214-7853 © 2019 Elsevier Ltd. All rights reserved.

Selection and/or Peer-review under responsibility of International Conference on Advances in Materials, Manufacturing and Applied
Sciences
630 N. Thinakaran et al. / MaterialsToday: Proceedings 16 (2019) 629–635

Nomenclature
D-Demand of the item,
P-Production rate,
Q-Ordered quantity,
T- Order cycle time, S-Stock out level, B-Backorder position and I-Maximum Inventory Level.

Most of the authors have taken inventory lead time as constant for their backorder models. There are two
cases in backorder model, first customer is willing to wait, and the second one is customers not willing to
wait or lost sales.

Inventory Model

EOQ model EPQ model

Full Back Partial Back Full Back Partial Back

order Model order Model order Model order Model

Figure 1 Classification of Inventory Model

The inventory model has divided as EOQ and EPQ model as shown in figure 1. The both models are again
subdivided as full and partial back order. Backorder means a retailer's order for a product which is
temporarily out of stock with the supplier or customer order that cannot be filled when presented, and for
which the customer is prepared to wait for some time. Lost sales means those selling opportunities that seller
have lost because an item was out of stock or because they cannot carry a particular brand or line of
merchandise or any other reason that caused you to lose the opportunity to sell. Stock out or out of stock
(OOS) means there is no item to buy. Stock outs are the opposite of overstocks, where too much inventory is
retained.

Some of the important parameters associated with the inventory back order models are In this “β” will be
the fraction of stock outs that will be backordered according to the privies authors those have done in partial
backorder they prefer if (β=0) customer is willing to wait for the product to arrive (β=1) we lose all the
customers we are in lost sales position.

2. EOQ Models

In early 80’s Kyung S.Park (1982) proposed partial backorder model with the term β included the demand
of backorder and as well as 1-β for the lost sales by time proportional backorder cost and fixed penalty cost.
In this case β=1, means full backorder and β=0, means lost sales. Park taken single echelon, single item,
constant demand case and total demand backorder per inventory cycle is βS and total demand lost (1-β)S. In
his paper optimized the average annual cost by considered the ordering cost, carrying cost and stock out cost.
David W.Pentico has used different approach to modeling the deterministic EOQ with partial backorder
with the use six basic decision variables for constructing a model for EOQ model partial backorder the
variables are [Q,T, I ,S ,B ,and F ]

Leopoldo Eduardo Cardenas-Barron developed equation of EOQ/EPQ inventory model with two
backorder (fixed and linear) using the analytic geometry and algebra method to find the optimization of
backorder level and lot size of EOQ model considered. In this work denoted π as the fixed and ߨ ො as the linear
backorder. The purpose of this work is to finding the way to optimize the total inventory cost of backorder as
 N. Thinakaran et al. / MaterialsToday: Proceedings 16 (2019) 629–635 631

well as lot size. The inventory model used is EOQ with backorder and without backorder is explained through
figure 2.

Figure 2 EOQ with full back order

.
Douglas C. Montgomery et al. proposed fixed backordering in that contain single echelon, single item,
static demand model and “b” is a fraction of stock out in backorder and “1-b” will be the fraction of lost sales
are ahown in figure. However, in many real inventory systems it is more reasonable to assume that only a
fraction, say “b(0 < b < 1)” of the demand during the stock out period can be backordered, and the remaining
fraction”1 –b” is lost. He consider that total number of demands backordered per inventory cycle is “bS”, and
the total number of demands lost is “(1 -b)S”. in this backorder cost is denoted by ߨ
ത.

Figure 3 EOQ with parcial back order

Renqian zhang proposed another new approach using two item deterministic EOQ model with partial
backorder with substitution or complete the lost scale is shown in figure 3. In his point of view if the item is
out of stock and the customers is not willing to wait then at that time we will lost sales or if we can supply
substitute product with same features. In this work, backorder rate is denoted as “β” and substitution item rate
‫כ‬
is denoted as “α” in this β൑ ߚ the optimal policy is to meet the demand or not. He lost sale of the major
item can be partially satisfied through substitutable item.
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Georghios P. Sphicas proposed an EOQ and EPQ with linear and fixed backorder cost by using algebra
method with fixed and linear backorder . Leopoldo Eduardo Cardenas-Barron proposed one more with easy
method to derive EOQ/EPQ withbackorder. He used arithmetic-geometric mean inequality to find the optimal
total inventory cost and also by using Cauchy-bunyakovsky-Schwarz inequality. M.Omar et al. proposed a
completing the square method for EOQ/EPQ inventory problems. They applied single and multi-variable
problems with derivative methods.
K.Teerapabolarn simplified the Leopoldo Eduardo Cárdenas-Barrón work by analytic geometry and
algebra method W. Ritha, S. Rexlin Jeyakumari proposed a simple procedure for fuzzy EOQ inventory model
with linear and fixed back order cost. They worked Yager’s ranking method with fuzzy numbers to find the
inventory policy of the fuzzy total cost for both EOQ and EPQ model. Ata Allah Taleizadeh developed EOQ
models with price increase and partial backordering under two different scenarios of an announced price
increase and partial backordering.
Dharmendra Yadav et al. developed EOQ model explicitly specify the effects of learning phenomenon on
number of imperfect items present in each lot and partial backlogging in inflationary environment. There result
shows that number of imperfect units and the ordering quantity decreases whereas net profit increases as
learning increases following a form of the logistic curve.
Ata Allah Taleizadeh et al. proposed EOQ models with incremental discounts based on either full or partial
backorder. Gede Agus Widyadana et al. developed inventory problems with and without backordering model
by considering deteriorating items and cost-difference in the study.

3. EPQ Models

The first EPQ with partial backlogged was proposed by K.L. Mak presented simple expressions to assist
management in formulating production inventory control policies. Model is depend on the inventory in which
demand during the stock out period is partial backlogged α (demand during the stock out period that can be
backlogged quantity of backlogged is αSand quantity lost (1- α)S units. David w.Pentico also developed an
EPQ with partial backorder

Figure 4 Full back order for EPQ model

Leopoldo Eduardo Cárdenas-Barrón developed EOQ/EPQ with two backorder (fixed and linear) by analytic
geometry and algebra method to find the optimization of backorder level and lot size of EPQ model is shown
in figure 4. Hui-Ming Wee et al. proposed EPQ model with partial backorders considering linear and fixed
backordering costs there approach is to analyze different optimal inventory policies and decide shortage period
scheduling “β” backorder rate. They used time intervals instead of order and backorder size to generate their
model. Renault Qian Zhang considered a critical value of backorder rate was developed with the extension
work of David W.Pentico new approach.
David W. Pentico and Matthew J. Drake proposed EPQ with partial backorder with policy on filling
backorder. The use the same pure stock out case on backorder and lost sales.in this β is the demand pleasing
the backorder maximum backorder level B = βS. They used time between orders and fill rate to decide the
variables and also they developed partial backorder and LIFO policy.
 N. Thinakaran et al. / MaterialsToday: Proceedings 16 (2019) 629–635 633

Figure 5 Parcial back order for EPQ model

Leopoldo Eduardo Cárdenas-Barrón proposed lot size and shipment policy for an EPQ inventory model
using delivery and rework is shown in figure 5. They derived the optimal replenishment lot size and shipment
policy for an EPQ inventory model with multiple deliveries and rework. Yu-Cheng Tu proposed arithmetic-
geometric mean inequality; Cauchy-Bunyakovsky-Schwarz inequality on to derive EOQ and EPQ models with
shortage and imperfect quality for allowable backorder level and total relevant cost per unit time. Neeraj
Agarwal proposed inventory model for time dependent and cost reduction delivery policy. Prof. B.R. Kharde
introduced the concept of Equivalent Holding Cost (EHC) or Equivalent Carrying Cost (ECC) with that
concept EPQ model with back-ordering or Economic lot size model with planned shortages (ELSB) model is
no different from EOQ model in terms of formulae and difficulty level. To find maximum inventory level and
total annual inventory cost.

Table 1: Number of papers published in indexed Journals

List of Journals No of papers published

European Journal of Industrial Engineering 6
European Journal of Operational Research 6
Journal of the Operational Research Society 6
Computers and Industrial Engineering 5
International Journal of System Science 4
Navel Research Logistics 4
Annals of Operations Research 3
Applied Mathematical Modeling 3
International Journal of Mathematics in 3
Operational Research
International Journal Production Economics 3
Omega 3
International Journal of Operational Research 2
International Journal of Pure and Applied 2
Mathematics
International Transactions in Operational 2
Research
Mathematical and Computer Modeling 2
OPSEARCH 2
The International Journal of Advanced 2
Manufacturing Technology
TOP 2
Yugoslav Journal of Operations Research 2
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4. Conclusions

We conducted detail review in all the levels of journals in inventory backordered related models. Nearly 60
no of core papers have been taken from the survey. We regrouped the research papers into EOQ and EPQ
models with their full and partial backordered cases. Some of them have combined backorder with lot size
case, policies, defective items and discount. From the review, we noticed that there are wide research avenues
in modern scenario. Finally, ordered the list of journals consistently giving more support to publish the
inventory model based papers.

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