Chapter 6 Part 2

Chapter 6 Part 2 - Inventory Decision Making Chapter 6...

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1 1 Inventory Decision Making Chapter 6 (Part 2) 2 This model is a slight variation of the economic order quantity (EOQ) model. underlying assumptions are the same as for the EOQ model except that replenishment occurs over time , rather than in a single shipment non-instantaneous replenishment or gradual delivery model Applies (a) when delivery occurs over a period of time (b) with production orders Economic Delivery Quantity (EDQ) Model
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3 Assumptions Demand rate is continuous, known, and constant Lead time is known and constant Item cost is known and constant No shortages permitted Replenishment occurs gradually over time at a known and constant rate Relevant costs include only inventory carrying cost and ordering cost (i.e., no in-transit inventory cost) Ordering decisions for an item are independent of orders for other items No constraints on order quantity (Q) EDQ Model 4 EDQ Model: Additional Notation d ~ delivery (or production) rate (units per time)
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This note was uploaded on 04/11/2011 for the course WCOB 2023 taught by Professor Billthompson during the Spring '07 term at Arkansas.

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Chapter 6 Part 2 - Inventory Decision Making Chapter 6...

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