Item used or sold as they are completed, without waiting for a full lot to be completed
Usual case is where production rate, p , exceeds the demand rate, d , so there is a buildup rate of ( p – d ) units during time when both production and demand occur.
Both p and d expressed in same time interval.
Special Inventory Models Non-Instantaneous Replenishment
Differentiation of this equation with respect to Q , setting the result equal to zero, and solving for Q results in the Economic Production Lot Size, ELS :
Since p > d , the second term is greater than 1,
so the ELS is __________ than the EOQ
Non-Instantaneous Replenishment Economic Lot Size (ELS)
7.
Demand = 30 barrels/day Setup cost = $200 Production rate = 190 barrels/day Annual holding cost = $0.21/barrel Annual demand = 10,500 barrels Plant operates 350 days/year Non-Instantaneous Replenishment Example ELS = p p - d 2 DS H
13.
C for P = $4.00 C for P = $3.50 C for P = $3.00 Total annual cost, $ Purchase quantity, Q 0 100 200 (a) Total cost curves with purchased materials added Purchase Discounts Total Cost Curves First price break Second price break
Beginning with the lowest price, calculate the EOQ for each price level until a feasible EOQ is found.
it is feasible if the quantity lies in the range corresponding to its price.
As subsequent prices are larger than the previous one, the holding cost, H , ( H = i·P ) gets larger.
Since H is in the denominator of the EOQ formula, the EOQ gets smaller .
Purchase Discounts Solution Procedure
15.
Purchase Discounts Example Annual demand = 936 units Ordering cost = $100.00 Holding cost = 25% of unit price Order Quantity Price per Unit 0 - 249 $60.00 250 - 499 $59.00 500 or more $58.00
19.
Purchase Discounts Example Annual demand = 936 units Ordering cost = $100.00 Holding cost = 25% of unit price Order Quantity Price per Unit 0 - 249 $60.00 250 - 499 $59.00 500 or more $58.00
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