Establishing The Order Quantity When The Amount Received Is Uncertain

In this paper the economic order quantity formulation is extended to include the case where the quantity received from the supplier does not necessarily match the quantity requisitioned. The best order quantity turns out to depend upon only the mean and standard deviation of the amount received. Analytic results, including cost penalties for using the simple EOQ, are developed for two separate cases corresponding to different assumptions about how the standard deviation of the amount received depends upon the quantity requisitioned.