SM1_Group1.pdf

SM1_Group1.pdf - Supply Management(Group A lecture number...

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Supply Management (Group A) lecture number semester 5220 - SS 17 Assignment 1 Date: 13.03.2017 Handed in by: Laura Dorner, 1201799 Maciej Filipek, 0302525 Erik Mayer, 0952265 Handed in for: Univ. Prof. Dr. Werner Jammernegg Dr. Stefan Treitl

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Assignment 1 Group 1 Seite 2 von 5 Economic Order Quantity (EOQ) Sensitivity a) Material A B C D E Sum Order quantity 500 30 72 10000 600 Annual demand 1000 360 432 5000 1800 Cost per unit 30 5 50 0,42 3 Number of orders n 2 12 6 0,5 3 23.5 Total cost average 31507 1857 21981 2521,75 5590,5 63427,25 Total cost worst case 31145 1931,25 21930 2420 5565 62991,25 EOQ Q* (average) 34,16 50,20 17,39 645,50 144,91 EOQ n* (average) 29,28 7,17 24,84 7,75 12,42 81,46 EOQ TC* (average) 30204,94 1850,20 21773,90 2154,22 5486,95 61470,21 EOQ Q* (worst case) 66,67 97,98 33,94 1259,88 282,84 EOQ n* (worst case) 15,00 3,67 12,73 3,97 6,36 41,73 EOQ TC* (worst case) 30300,00 1873,48 21854,56 2179,37 5527,28 61734,69 The table above shows the economic order quantity sensitivity analysis. Two scenarios are being compared with respect to lot-sizing and EOQ for the product range (Product A-E). The first part analysis compares the single product costs. The total costs in the average scenario for product A, D and E are higher than the TC of the worst case. Regarding the annual costs of product B and C, the average scenario has lower TC than the worst-case scenario. The difference in the accumulative total costs of both scenarios shows that the worst case has lower total with TC=634274,25 costs than the average scenario with TC=62991,25. Focusing on the EOQ of products A-E the optimal ordering frequency of the average scenario is way higher denoted by an n = 81,46 compared the worst-case scenario the n is described by an order frequency of n = 41,73. The total cost with respect to EOQ of both scenarios are nearly the same. The average scenario has a TC of 61470,21 currency units and the worst case is not far away denoted by 61734,69 currency units. However, it depends on the product class which order frequency to use. Is the product only storable for a short period of time or is the good perishable or not, makes it even harder to determine the right order quantity with respect to the order frequency.
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