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# K setup cost k setup q order quantity demand rate

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Unformatted text preview: tup cost K: setup Q: order quantity λ: demand rate (units per time) λ: demand c: cost per item h: holding cost (per unit held per time) 6 Properties of the EOQ * Q= 2 Kλ h Q iis increasing with both K and λ and decreasing with h. s and h. Q changes as the square root of these quantities Q is independent of the proportional order cost, c. (except as it relates to the value of h = Ic) Ic The The Average Annual Cost Function G(Q) Cost 7 Example 4.1 Pencils selling at a steady rate of 60/week, costs 2 cents and sells for 15 cents each. It costs \$12 to setup an order and the holding cost is based on 25% annual interest rate. Determine the optimal order quantity, time between orders, yearly holding and setup costs? betwe...
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