If the discounts were less steep for example if c3

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: an be eliminated from consideration. T3 (Q ) is minimized (over its feasible range Q ≥ 80, 000) at Q3 =80,000, with T3 (Q3 ) =$85,200. Comparing these three values, we conclude that the quantity Q =80,000 is optimal. ￿ ￿ ￿ If the discounts were less steep, for example, if c3 = $9.5, then it would be optimal to stick with Q ￿ =25,298! IOE 202: Operations Modeling, Fall 2009 Page 14 Space Finding optimal order quantity with discounts: 1. For each value of unit cost cj , use the EOQ formula for the EOQ model to calculate its optimal order quantity, Qj￿ . 2. For each cj where Qj￿ is within the feasible range of order quantities for cj , calcualte the corresponding total cost per unit time, Tj (Qj￿ ). 3. For each cj where Qj￿ is not within this feasible range, determine the order quantity Qj that is feasible for this cost and closest to Qj￿ . Calculate the cost Tj (Qj ). ￿ Note the difference between Qj and Qj￿ . 4. Compare the costs obtained for all cj ’s and choose the minimum, with the orde...
View Full Document

Ask a homework question - tutors are online