EOQ_with_Planned_Shortages

EOQ_with_Planned_Shortages - + = + = Opt Opt s Opt Opt Opt...

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ECONOMIC ORDER QUANTITY (EOQ) with Shortages Allowed Inventory Level Maximum Inventory Level = Q - S Average Inventory Level = ( t 1 / t )(Q- S )/2 Average Inventory Q t 2 0 Time t 1 S Inventory Cycle, t Q - S
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Annual Carrying and Ordering and Shortage Cost Economic Order and Shortage Quantities: D S t = 2 D S Q t - = 1 Q S C Q S Q C Q D C t t S C t t S Q C Q D C b h o b h o 2 2 ) ( 2 2 2 2 2 1 + - + = + - + = + = + = b h h Opt Opt b h b h o Opt C C C Q S C C C C D C Q 2 D Q t t t = + = 2 1
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Example: Example: Annual Demand, D = 10,000 yd Inventory Carrying Cost, C c = $0.75/yd/yr Ordering Cost, C o = $150 Shortage Cost, C s = $2/yd/yr yd 2 . 345 , 2 2 75 . 0 2 75 . 0 ) 000 , 10 )( 150 ( 2 2 = + = + = s c s c o Opt C C C C D C Q $1,279.20 2 2 ) ( yd 6 . 639 75 . 0 2 75 . 0 2 . 2345 2 2 min = + - + = =
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Unformatted text preview: + = + = Opt Opt s Opt Opt Opt c Opt o s c c Opt Opt Q S C Q S Q C Q D C TC C C C Q S Example (Continued): Example (Continued): shortages) (with days 9 . 19 days 311 / 10000 6 . 639 inventory) (with days 2 . 53 days 311 / 10000 6 . 639 2 . 2345 days . 73 days 311 / 10000 2 . 2345 Time, Cycle Inventory 26 . 4 2 . 2345 10000 year, per orders of Number yd 6 . 705 , 1 6 . 639 2 . 2345 Level Inventory Maximum 2 1 = = = =-=-= = = = = = = =-=-= D S t D S Q t D Q t Q D N S Q Opt Opt Opt Opt Opt Opt Opt Opt...
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This note was uploaded on 10/18/2010 for the course MACAU macau taught by Professor Macau during the Spring '10 term at University of Macau.

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EOQ_with_Planned_Shortages - + = + = Opt Opt s Opt Opt Opt...

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