Technical Note—A Note on the Near Optimality of “5-EOQ's Worth” Forecast Horizons

This note contributes analytical insight into Lundin and Morton's empirical observation concerning the near optimality of “5-EOQ's worth” forecast horizons. They observed that, using protective procedures, forecast horizons corresponding to 5-EOQ's supply guarantee a first-period decision no more than one percent above optimum in an infinite horizon, periodic review, deterministic production planning problem. This note presents similar analytical results for the corresponding infinite horizon, continuous review, deterministic model.