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  • HW#1

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    Sarah Hassaan
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    1) The document presents an economic order quantity (EOQ) model to determine the optimal order quantity and total annual cost for a product with a demand of 2,600 units per year, ordering cost of $35, holding cost of $0.672 per unit, and unit price of $3.2. 2) Based on the model, the optimal order quantity is 520.4165 units with a total annual cost of $349.7198879103. 3) Sensitivity analyses show that total annual cost increases as demand, holding costs, or order quantities increase from the original values.

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    1) The document presents an economic order quantity (EOQ) model to determine the optimal order quantity and total annual cost for a product with a demand of 2,600 units per year, ordering cost of $35, holding cost of $0.672 per unit, and unit price of $3.2. 2) Based on the model, the optimal order quantity is 520.4165 units with a total annual cost of $349.7198879103. 3) Sensitivity analyses show that total annual cost increases as demand, holding costs, or order quantities increase from the original values.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    5 views4 pages

    HW#1

    Uploaded by

    Sarah Hassaan
    1) The document presents an economic order quantity (EOQ) model to determine the optimal order quantity and total annual cost for a product with a demand of 2,600 units per year, ordering cost of $35, holding cost of $0.672 per unit, and unit price of $3.2. 2) Based on the model, the optimal order quantity is 520.4165 units with a total annual cost of $349.7198879103. 3) Sensitivity analyses show that total annual cost increases as demand, holding costs, or order quantities increase from the original values.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 4

    Annual Cost of a Ordering Holding

    Lead Time Work Days


    Demand drink Cost Cost Work Week (year)
    2600 3.2 35 0.672 5 5 260

    1) EOQ 520.4165

    Reorder
    2) Point 50 At 50 units remaining, the company should place their order

    3) Cycle Time 52.04165

    4) Total Annual Cost 349.7199

    Using the other Equation 349.7199

    Changes in Order Quantity


    Percent Total Annual
    Q Level Value
    Multiplier Cost
    30% Less 0.7 364.2915 372.2018807045
    20% Less 0.8 416.3332 358.4628851081
    10% less 0.9 468.3748 351.6627761765
    Original 1 520.4165 349.7198879103 Sensitivity Analysis F
    10% More 1.1 572.4581 351.3095237644
    410
    f(x) = 17.4859943955155 x
    20% More 1.2 624.4998 355.5485527088 390
    Total Annual Cost

    30% More 1.3 676.5414 361.825576338 370

    350

    330
    Changes On Demand 310

    Demand Percent Total Annual 290


    Value 0.7 0.8 0.9
    Level Multiplier Cost
    Perce
    30% Less 0.7 1820 297.2619047238 292.5967
    20% Less 0.8 2080 314.7478991193 312.799 Order Quantity Change
    10% less 0.9 2340 332.2338935148 331.7734 Holding Cost Change
    Original 1 2600 349.7198879103 349.7199
    10% More 1.1 2860 367.2058823058 366.7893
    20% More 1.2 3120 384.6918767013 383.0989
    30% More 1.3 3380 402.1778710969 398.742

    Changes in Holding Cost

    Holding Percent Total Annual


    Value
    Cost Level Multiplier Cost

    30% Less 0.7 0.4704 297.2619047238 292.5967


    20% Less 0.8 0.5376 314.7478991193 312.799
    10% less 0.9 0.6048 332.2338935148 331.7734
    Original 1 0.672 349.7198879103 349.7199
    10% More 1.1 0.7392 367.2058823058 366.7893
    20% More 1.2 0.8064 384.6918767013 383.0989
    30% More 1.3 0.8736 402.1778710969 398.742
    Discount Model

    1
    2
    3

    Discount Model

    1
    2
    3

    Sensitivity Analysis For Total Annual Cost

    f(x) = 17.4859943955155 x + 279.775910328248 Discount Model


    1
    2
    3

    0.7 0.8 0.9 1 1.1 1.2 1.3


    Percentage Change

    Order Quantity Change Demand Change


    Holding Cost Change Linear (Holding Cost Change)
    Quantity Holding Ordering
    Unit Price Demand EOQ Feasability
    Purchased Cost Cost
    (1 to 699) 3.2 0.672 35 2600 520.4165 YES
    (700 to 999) 3.1 0.651 35 2600 528.7437 NO
    1000 + 2.9 0.609 35 2600 546.6723 NO

    Quantity Adjusted Inventory Total Annual


    Unit Price
    Purchased EOQ Cost Cost
    (1 to 699) 3.2 520.4165 8320 8669.7198879
    (700 to 999) 3.1 700 8060 8425.2
    1000 + 2.9 1000 7540 7967

    Quantity to
    Order
    520.416
    700
    1000

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