Unformatted text preview: hen it can
be shown that:
be G (Q) 1 Q * Q =
2 Q Q * 10 Economic Manufacturing
Quantity Model (EMQ)
EOQ model states that the items are obtained from an
outside supplier. (then the assumption is that entire lot is
delivered at the same time)
If we want to use EOQ when the units are produced
internally, then the assumption is that the production
rate is infinite. When the production rate is much larger
than demand, EOQ model holds.
However when the production rate is smaller than
demand, EOQ model leads to incorrect results.
demand, EMQ, Finite Production Rate
Suppose that items are produced internally at a rate P >
λ. Then the optimal production quantity to minimize
average annual holding and set up costs has the same
form as the EOQ, namely: * Q= 2 Kλ
h' Except that h’ iis defined as h’’= h(1- λ/P)
h h(1 11 Inventory Levels for Finite
Production Rate Model
Production Example 4...
View Full Document
This document was uploaded on 03/23/2014.
- Spring '14