Lecture 2 Notes

# If the discounts were less steep for example if c3

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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...
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