Buyer's EOQ Seller's EOQ

Buyer Seller Seller Buyer

Demand/ye 120000 120000 120000 120000
Ordering c 100 250 250 100
Holding Co 20% 20% 20% 20%
Unit Price 3 2 2 3
EOQ 6325 6325 12247 12247
Holding Co 1897 1265 2449 3674
Ordering c 1897 4743 2449 980
Total cost 3795 6008 4899 4654
SD 32
Service lev 97%
Lead time 1 week
z value 1.88

Avg demanSD Ordering cHolding coEOQ Lead time ROP (conventional)

Retailer 45 32 250 1.2 137 1 105
Distributor 45 32 200 0.9 141 1 105
Stockist 45 32 205 0.8 152 1 105
Manufactu 45 32 500 0.7 254 1 105

Avg demanSD Ordering cHolding coEOQ Lead time ROP (Echelon)

Retailer 45 32 250 1.2 137 1 105
Distributor 45 32 200 0.9 141 2 175
As the ROP increases the fre
Stockist 45 32 205 0.8 152 3 239 ordering decreases and the
Manufactu 45 32 500 0.7 254 4 300 decreases overall in the su
As the ROP increases the frequency of
ordering decreases and the inventory
decreases overall in the supply chain
D 12000
unit cost 50
H/year 20%
S 4000
Q 3098.387
Cycle inventory 1549.193
Flow time 47.1213
Reorder interval 94.24259 days
 A B C D
D 12000 D 12000 D 12000 D 12000
unit cost 500 unit cost 500 unit cost 500 unit cost 500
H/year 20% H/year 20% H/year 20% H/year 20%
S 4000 S 4000 S 4000 S 4000
Q 980
Cycle inventory 490
Flow time 15
Reorder interval 30
Holding cost 48990
Ordering cost 48990
Total cost 97980

Sum of all 4 separately ordered

Holding cost 195959 2
Ordering cost 195959
Total cost 391918
 Combined ordering times individual order
D 48000
unit cost 500
H/year 20%
S 4000
Q 1960 2
Cycle inventory 980 2
Flow time (days) 7 0.5
Reorder interval (days) 15 0.5
Holding cost 97980 2
Ordering cost 97980 2
Total cost 195959 0.5
A DL DM DH
Demand per year 12000 1200 120
Ordering cost fixed 4000.00 4000.00 4000.00
Product specific ordering cost 1000.00 1000.00 1000.00
S 5000.00 5000.00 5000.00
H/year 20% 20% 20%
unit cost 500 500 500
EOQ
No. of orders (1) 10.95 3.46 1.10
No. of orders(2) 10.95 7.75 2.45
mi 1.00 1.41 4.47
Final no. of order 9.638 6.81 2.16
calcultion purpose (ignore) 1200000 84853 2683 1287536
calcultion purpose (ignore) 1000 707 224 1931
EOQ 1245 176 56

0.7092198582
A DL DM DH
Demand per year 12000 1200 120
Ordering cost fixed 4000.00 4000.00 4000.00
Product specific ordering cost 1000.00 1000.00 1000.00
S 5000.00 5000.00 5000.00
H/year 20% 20% 20%
unit cost 500 500 500
EOQ 1095 346 110
No. of orders (1) 10.95 3.46 1.10
No. of orders(2) 10.95 7.75 2.45
mi 1.00 1.41 4.47
Final no. of order 9.638 6.81 2.16
calcultion purpose (ignore) 1200000 84853 2683 1287536
calcultion purpose (ignore) 1000 707 224 1931
1.414214
0.921382
sigma L 707 Q 10000 ss 1000
ESC 48.14675
Fill rate 0.995185

Q 400
ROP 300
D/year 5200
SD/week 20
Unit cost 3
H 0.6
Lead Time 2 week
CSL 0.977444

D = 2,500/week; sD = 500
L = 2 weeks; Q = 10,000; CSL = 0.90
0.90