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Unformatted text preview: T C ( Q , S m a x ) = A D Q + C D + i C [ Q ( 1- D P )- S m a x ] 2 2 Q (1- D P ) + W 1 S m a x 2 2 Q ( 1- D P ) + W S m a x D Q IE 383 Assignment 10 Due April 13, Monday BEFORE class Please note: 1. Please use 3 decimal points for all interstage calculation steps and 2 decimal points for final answers when necessary. 2. Please show your equations using the symbols we used in class, otherwise 10 points will be deducted. For example, A: ordering cost C: item cost i: interest rate D: demand rate P: production rate W1: variable shortage cost W: fixed shortage cost 3. It is highly recommended to use Excel to solve this assignment. Problem 1 VV26 Inc. is the distributor of a unique industrial plastic container. The estimated annual demand is 12,000 units, annual holding cost is $5 per container and it costs $1,000 to initiate a delivery. The company allows maximum shortage up to 100 units with penalty cost of $5 per unit container and $1 per unit year container. Assuming that delivery is non-instantaneous, where delivery rate is 2000 units per month, determine the optimal...
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- Spring '08