423IE-3: Inventory control and material handling

Assignment #2: Deterministic Inventory Models

1. Given that; D = 14000, Co = 400, C = 40 and i = 20%?

Given: D ≔ 14000 C0 ≔ 400 C ≔ 40 i ≔ 0.20

Required: (a) What is the value of order quantity that will minimize total cost?
(b) What is the maximum inventory?
(c) What is the cycle time?
(d) What is total cost?
Solution: (a) ‾‾‾‾‾‾‾
2 ⋅ D ⋅ C0
Q ≔ ―――= 1183.22
i⋅C
(b) Imax ≔ Q = 1183.22
Q
(c) T ≔ ―= 0.085
D
D Q
(d) TC ((Q)) ≔ ―⋅ C0 + ―⋅ i ⋅ C
Q 2
Q = 1183.22 TC ((Q)) = 9465.73
D
(e) OC ((Q)) ≔ ―⋅ C0 Q ≔ Q = 1183.22 OC ((Q)) = 4732.86
Q
Q
(f) CC ((Q)) ≔ ―⋅ i ⋅ C Q = 1183.22 CC ((Q)) = 4732.86
2
(g) Draw the Q,OC(Q),CC(Q), and TC(Q) diagram Q ≔ 0 ‥ 3000

1.2⋅10⁴

1.1⋅10⁴

1⋅10⁴

9⋅10³

8⋅10³

7⋅10³
TC ((Q))
6⋅10³

5⋅10³ OC ((Q))
4⋅10³

3⋅10³ CC ((Q))
2⋅10³

1⋅10³

0
0 500 1⋅10³ 1.5⋅10³ 2⋅10³ 2.5⋅10³ 3⋅10³