33:136:386 Lecture Notes - Lecture 6: Carrying Cost, Marginal Cost, Standard Score
15 Mar 2016
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Numerous variaions on the basic eoq: quanity discounts, storage restricions, backlogging (or backorder) take an order and ship later, etc. Economic producion lot size (epls: the units produced in a single producion run is called a lot , this model helps determine the number of units to produce in a single run that will minimize the inventory costs. Total annual cost for the epls model: tc = . 5(1-d/p)qch + (d/q)co. Formula for the epls: q* = sqrt( 2dco / (1-d/p)ch ) Single period inventory model: to calculate the number of items to be ordered for a single period model, we need to know. The cost we will incur if we overesimate demand (co) The marginal cost we will incur if we underesimate demand (cu) Cu / cu+co ; use this as p, then using p to ind the z score for the reorder point formula.
