DSCI 304 Lecture Notes - Lecture 9: Berlin Outer Ring, Carrying Cost, Process Design
23 Nov 2016
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Want to find eoq, also called buy model. Eoq: how much to buy at one time. D and h have to be at the same time. Goal is to get the right quantity right as we are about to run out. As inventory gets used up we eventually have nothing and then we have to refill, thats where eoq comes in. Eoq assumes lead time to get more is constant. Quantity is also used up at a constant rate. A cycle can be defined as the time from when you ordered items to when you have to order more items or when you received you latest shipment to when you recieved your last shipment. Pg 557 at the bottom assumptions super critical! Remeber both these answers have to be equal to be sure you are getting the right answer. Q/d= 1/32 yr *288 so that means every 9 days they complete an inventory cycle.
