An EOQ Model With Non-homogeneous Poisson Demand Process

Authors: B Chandrasekhara Reddy

Country: India

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Abstract: Classical EOQ models with exponentially increasing demand assume deterministic and continuous demand D(t) = a . In reality, for products in growth phase, customer arrivals are discrete, random, and the arrival rate grows with time due to advertising and word-of-mouth effect. Homogeneous Poisson Process with constant rate λ fails to capture this growth. The present study proposes an EOQ model with Non-Homogeneous Poisson Process (NHPP) where arrival intensity is λ (t) = a , a > 0, b > 0. In this paper the demand is assumed to be stochastic in nature. To handle the time dependent demand process, generally there are two approaches namely (a) Treating the demand process on continuous time and continuous state Markov process usually known as Weiner process, and (b) The discrete Poisson process with time dependent parameter can be used. In this paper the latter approach is used in modelling time dependent demand.

Keywords: Inventory model, Stochastic demand, Non-Homogeneous Poisson Process, EOQ model, Inventory system.

Paper Id: 233212

Published On: 2026-09-15

Published In: Volume 14, Issue 5, September-October 2026

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