EOQ model

Notation Description Value Unit

𝐸𝑂�= √(2𝐴𝐷/ℎ)
D Demand 2,200 unit/unit time
A Fixed order cost 200 $
h holding cost 3 $/unit �=√(2𝐴/ℎ𝐷)
v Unit variable cost 12 $/unit
r Carrying rate 0.25 $/$/unit time
EOQ Optimal quantity 541.60 unit
��=(�/2 ℎ+𝐷×𝑣+𝐴 𝐷/�)
T Reorder interval 0.25 unit time
N Number of order 4.06 time
TC Total cost 28,024.81 $

Discount

Level Quality Unit cost Holding cost EOQ Modified

0 0 800 12 3.00 541.60 541.60
1 800 1500 11.5 2.88 553.25 800.00
2 1500 2500 11 2.75 565.69 1500.00
3 2500 100000 10.5 2.63 579.00 2500.00
 3

Total cost Reorder InvervalOptimal quantity

28,024.81 0.246
27,000.00 0.251
26,555.83 0.257 1500
26,557.25 0.263
A 120
h 0.4

Period 1 2 3 4 5 6
Demand 250 250 300 250 250 350

1. Wagner-Whitin algorithm

Period 1 2 3 4 5 6
Demand 250 250 300 250 250 350
1 120 220 460 760 1160 1860
2 240 360 560 860 1420
3 340 440 640 1060
4 460 560 840
Order at
5 560 700
6 680
7
8
Minimum Value
120 220 340 440 560 680

2. Silver-Meal algorithm

Period 1 2 3 4 5 6
Orders Demand 250 250 300 250 250 350
No. of Period 1 2 3 4 5 6
1 TC 120 220 460 760 1160 1860
AVG 120 110 153.3333 190 232 310
Make Order x
No. of Period 1 2 3 4
2
TC 120 220 420 840
AVG #VALUE! 120 110 140 210
Make Order x
No. of Period 1 2
3
TC 120 260
AVG #VALUE! #VALUE! #VALUE! 120 130
Make Order x
No. of Period 1
4
TC 120
AVG #VALUE! #VALUE! #VALUE! #VALUE! 120
Make Order
No. of Period
5
TC
AVG #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
3. Least Unit Cost Algorithm

Period 1 2 3 4 5 6
Orders Demand 250 250 300 250 250 350
No. of Period 1 2 3 4 5 6
Cummulative demand 250 500 800 1050 1300 1650
1
TC 120 220 460 760 1160 1860
AVG 0.48 0.44 0.575 0.72381 0.892308 1.127273
Make Order x
No. of Period 1 2 3 4
2 Cummulative demand 0 300 550 800 1150
TC 120 220 420 840
AVG #VALUE! 0.4 0.4 0.525 0.730435
Make Order x
No. of Period 1 2
3 Cummulative demand 0 0 0 250 600
TC 120 260
AVG #VALUE! #VALUE! #VALUE! 0.48 0.433333
Make Order
No. of Period
4 Cummulative demand 0 0 0 0 0
TC
AVG #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!

4. PPB Algorithm

Period 1 2 3 4 5 6
Orders Demand 250 250 300 250 250 350
No. of Period 1 2 3 4 5 6
1 TC 0 100 340 640 1040 1740
Make Order 1 1 1 1
No. of Period 1 2 3 4
2 TC 0 100 300 720
Make Order 1 1
No. of Period 1 2
3 TC 0 140
Make Order
No. of Period
4 TC
Make Order
No. of Period
5 TC
Make Order
5. POQ Algorithm

Average Demand D-bar 262.5

Replenishment Cycle T 2

Period 1 2 3 4 5 6
Demand 250 250 300 250 250 350
Cummulative count 1 2 1 2 1 2
Order at 1 1 1
 7 8
200 250

7 8
200 250
2340 3040
1820 2420
1380 1880
1080 1480
860 1160
760 960
800 900
880

760 880

7 8
200 250
7 8
2340 3040
334.2857 380

5 6
1160 1660
232 276.6667

3 4
420 720
140 180

2 3
200 400
100 133.3333
x
1
120
#VALUE! 120
 7 8
200 250
7 8
1850 2100
2340 3040
1.264865 1.447619

5 6
1350 1600
1160 1660
0.859259 1.0375

3 4
800 1050
420 720
0.525 0.685714
x
1 2
200 450
120 220
0.6 0.488889

7 8
200 250
7 8
2220 2920
1 1
5 6
1040 1540
1 1
3 4
300 600
1 1
1 2
0 100
1.511858
 7 8
200 250
1 2
1
Period 1 2 3 4 5 6
d1 250 250 200 350 150 150
d2 180 200 150 250 250 250
Item 1 Item 2
A 130 140 Total
Transportation 400 670
h 0.4 0.3

Wagner Whitin
Period 1 2 3 4 5 6
d1 250 250 200 350 150 150
d2 180 200 150 250 250 250
1 670 830 1080 1725
2 1340 1465 1895
3 1500 1715 1985
4 1750 1885 2155
5 2385 2520
6 2555
Minimum 670 830 1080 1715 1885 2155

Silver Meal
Period 1 2 3 4 5 6
d1 250 250 200 350 150 150
d2 180 200 150 250 250 250
TC 670 830 1080 1725 2265 2940
Avg 670 415 360 431.25
x
1 2 3
TC 670 805 1075
Avg 670 402.5 358.3333
1. Non-aggregate Policy
A B C D
Demand 2200 1900 1900 2500
S 3000 3000 3000 3000
F 900 800 850 900
A 3900 3800 3850 3900
v 45 60 70 55 Carrying rate
h 6.75 9 10.5 8.25 0.15
EOQ 1594.435 1266.667 1180.395 1537.412
Aver. Cost 10762.43 11400.00 12394.15 12683.65 47240.24

2. Aggregate Policy
Order cost 6450
N 2.371095
TC 30587.13