Question
Determine the EOQ and the optimal number of orders placed in a year.
ii) Determine the optimum production lot size and the average duration of the production run.
Answer :
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Given: We are to solve for EOQ, number of orders per year, optimum production lot size, and average production run. Let’s assume standard EOQ and production lot size formulas. i) EOQ and Optimal Number of Orders EOQ formula: [ EOQ = \sqrt{\frac{2DS}{H}} ] Where: * (D) = Annual demand (units) * (S) = Ordering cost per order * (H) = Holding cost per unit per year Optimal number of orders per year: [ N = \frac{D}{EOQ} ] Example Calculation: (Assume values (D=12000) units, (S=100)
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