EIN%206336%20%286%29

# EIN%206336%20%286%29 - EIN6336 MultiProductEOQ(Chapter11)

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2/16/11 Consider a set of  n  products, each of which  follows the EOQ assumptions  except: Items share a major setup/order cost of  A : when any  subset of items is ordered, we incur this cost Item  i  also incurs a minor setup/order cost of  ai We can easily obtain some feasible solutions (although  these may not be of high quality) by: Ordering each item independently according to its’ EOQ Ordering all items at the same frequency Multi-Product EOQ
2/16/11 If we were to order all items independently, then,  for each item: Independent Ordering ( 29 * 2 i i i A a D Q v r + = ( 29 * 2 i i i A a T D v r + = ( 29 ( 29 1 2 n i i i i i i TC D v A a D v r = = + +

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2/16/11 If we were to order all of the items at the same  frequency, then they would all share a value of  T * So, given T*, we would set  Qi * =  DiT * The average annual cost of such a strategy would  be equal to: Simultaneous (Joint) Ordering ( 29 1 1 2 n n i i i i i i i A a v r TC T D v DT T = = + = + +
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## EIN%206336%20%286%29 - EIN6336 MultiProductEOQ(Chapter11)

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