net requirements for one or more weeks The basic trade-off involves the elimination of one or more setups at the expense of carrying inventory longer Lot sizing problem is basically one of converting requirements into a series of replenishment orders Lot sizing problem generally considered in a local level; that is‚ only in terms of the one part and not its components Characteristics of Net Requirements Demand • • • • • Net requirement does not satisfy the independent demand assumption
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basic problem for businesses and manufacturers is‚ when ordering supplies‚ to determine what quantity of a given item to order. A great deal of literature has dealt with this problem (unfortunately many of the best books on the subject are out of print). Many formulas and algorithms have been created. Of these the simplest formula is the most used: The EOQ (economic order quantity) or Lot Size formula. The EOQ formula has been independently discovered many times in the last eighty years. We
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balance between them Flexibility is important in balancing the cost and service Chapter 2 Physical Distribution Component of Physical Distribution 1. 2. 3. 4. 5. Order Processing Transportation Warehousing Material Handling Inventory Management and Control Chapter 2 Physical Distribution Order Processing a. b. c. d. e. f. Verifying customers’ credibility Checking for any outstanding payment Monitoring stock level Preparing invoice Arranging transporter Sending
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(4)Interval between orders: T=QD=160002000=8days (5) Reorder point: DL=2000×5=10000units d. Assuming that we get replenishment of 8000 pounds of flour on Monday and Tuesday respectively‚ the bakery will consume the first 8000 pounds from Monday till Thursday‚ and next 8000 pounds from Friday. However‚ the flour would be expired after 7 days‚ in this case on next Tuesday; while we only consume 4000 pounds before next Tuesday. Therefore‚ the maximum economic lot size under this
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the cost of capital and estimate the cost of placing an order. Assume that the annual inventory cost of a unit is given by‚ CH = iCI‚ where i is the cost of capital and CI‚ the unit cost of the item. 2. Consider the connector data and the all unit price structure described in Table 1. For each price level ($5.00‚ $4.75‚ etc.) determine the EOQ‚ and the corresponding total annual cost. Sketch the total annual cost as a function of the order quantity. Based on these results‚ identify the optimal ordering
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estimated to be 8% per annum. The cost of capital is 10% per annum. The ordering cost is $40 per order. It is also estimated that the weekly demand will have a normal distribution with a mean of 700 and standard deviation of 100. The lead-time to procure the toys from Hyderabad‚ India is guaranteed to be exactly 9 weeks if the shipment is by sea with a unit transportation cost of 5 cents. a) Find the economic order quantity (EOQ) and compute the total cost per year including the purchase cost @$18/furby
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retailer and a single wholesaler in a two-period newsboy problem. Two models are discussed‚ a single-buying-opportunity model and a two-buying-opportunity model. We discuss how the revenue sharing ratio and the wholesale prices are to be determined in order to achieve channel coordination and a win-win outcome. We find that the wholesale prices are set to be lower than the retail prices and the optimal revenue sharing ratio is linearly increasing in the wholesale prices. The proposed revenue sharing contract
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Economic Order Quantity vs. Just-in-time Inventory Models Bettina Bradshaw Susan Day Tameka S. Levy Accounting April 20‚ 2011 There are several models that have been developed to deal with the trade-off between ordering and carrying costs of inventory. The two that will be discussed is the Economic Order Quantity (EOQ) model and the Just-in-time (JIT) model. First‚ the history and definition of the theories will be discussed. Secondly‚ there will be a comparison of these two models presented
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2. Lead time‚ the time between placement and receipt of the order‚ is known and consistent. 3. Receipt of inventory is instantaneous and complete‚ the inventory order arrives in one batch at one time. 4. Quantity discounts are nor possible. 5. The only variable costs are the set-up and holding costs. 6. Stockouts can be completely avoided if orders are placed at the right times. 6. What is the relationship of the economic order quantity to demand? To the holding cost? To the set-up costs
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Mirage Electronics Pty Ltd estimates in the first year‚ the company would have a sale of $694‚925 and a net profit of $8‚115. As the business is newly established with no reputation in the market‚ not every clothing chain will be willing to spend a large amount of money on Reflections. Therefore‚ in the worst-case scenario‚ the business projected that only 5 clothing chains will purchase our product as a trial in Queensland stores. The price set previously in the marketing plan (3.2.3) states that
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