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MSE260_Session_4_2013_Sol

# C the total cost can be written as c t so the optimal

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Unformatted text preview: ng cost is: . c) The total cost can be written as: C T So the optimal T is: Discussion Session #4 √ K hAA hBB T T 2 √ 1/3 Stanford University Management Science and Engineering Professor Chang & Timucin MS&E 260 – Fall 2013/14 The order quantities for A and B become: d) The new total cost is: C(T)= ( ) ( ) And the original total cost is: 212953. Since we lost the flexibility of planning each product separately, we have a higher total cost in this situation. 2. First Step, we calculate our optimal Economic Order Quantities at different per-unit purchasing costs: EOQ_\$10 =√ EOQ_\$9 =√ EOQ_\$8 =√ EOQ_\$7 =√ = 1306.4 1306 = 1377.1 1377 = 1460.6 1461 = 1561.4 1561 For a \$10 unit cost, EOQ_\$10 = 1306 is infeasible, so we use Q_\$10=800 to calculate our total cost at c=\$10. For a \$9 unit cost, EOQ_\$9=1377 is infeasible, so we use Q_\$9=1200 to calculate o...
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