Module4DeterministicInventoryModels

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WhatarethecostsoptimizedinthebasicEconomicOrderQuantity(EOQ)model?
Whatarethecomponentsoforderingcost?
Whatarethecomponentsofholdingorcarryingcost?
Whatarethecomponentsofshortagecost?
HowaretheorderingcostandcarryingcostrelatedattheEOQ?
Whydowenotconsiderthetotalannualcostoftheitemwhenweoptimizeforthe
EconomicOrderQuantity?
7. Forthesamedata,doesthemodelconsideringshortagegiveahigherorderquantity
andtotalcost?
8. Howaretheorderingcost,carryingcostandshortagecostrelatedattheoptimumwhen
shortagecostisincluded?
9. Howaretheorderquantitiesandbackorderquantitiesrelatedinthemodelinvolving
backordering?
10. Inwhichmodelweexplicitlyconsiderthecostofpurchaseoftheitems?Why?
11. Whatarethetwotypesofdiscountmodels?Whatisthedifference?
12. Wherewouldtheorderquantitylieinthetwodiscountmodelswithrespecttotheprice
breakquantities?
13. WhathappenswhenthereisapricebreakataquantitylessthantheEOQ?
14. Whathappenstotheorderquantityifthereisarestrictiononthenumberofordersand
ontotalbudgetinamultipleitemmodelandtheEOQviolatesboth?
15. Whathappenstotheorderquantityifthereisarestrictiononthetotalspaceandon
totalbudgetinamultipleitemmodelandtheEOQviolatesboth?
16. Whatisthemethodologyusedtosolvemultipleitemconstrainedinventoryproblems?
Explain?
17. Consideratwoiteminventoryproblem.Ifthereisnosavingduetojointordering,would
itstillbeadvantageoustoconsiderjointordering?Whyorwhynot?
18. Howarethebatchquantitiesandbackorderquantitiesrelatedintheproduction
consumptionmodelinvolvingbackordering?
19. Whereisthesavingwhenweconsiderjointorderingofitems?
20. Inmultipleiteminventorymodelstheordersforindividualitemsareintegralmultiples
ofotherandsomeordersaresynchronized.Thismodelcangivelesscostwhen
comparedtothemodelwithequalnumberofordersandjointordering.Why?

Problems
1. FindtheEOQgivenD=14000,C0=400,C=40andi=20%.FindTC,NandT?
2. GivenD=14000,C=40andi=20%.FindthevalueofC0ifQ=1500?

3. FindtheEOQgivenD=14000,C0=400,C=40andi=20%andCs=Rs20/unit/year.
FindTC,NandT?IsTClesswhenCsisnotconsidered?
4. FindtheEOQgivenD=16000,C0=600,C=80andi=20%andCs=Rs30/unit/year.
FindTC,NandT?
5. GivenD=14000,C=40andi=20%.Thesupplieriswillingtogiveanallquantity
discountof2%ifQ2000and4%whenQ5000?Whichisprofitable?
6. GivenD=14000,C=40andi=20%.Thesupplieriswillingtogiveanallquantity
discountof1%ifQ1500and3%whenQ5000?Whichisprofitable?Howdoyou
computetheorderquantitywhenthediscountisforaquantitylessthanEOQ?
7. GivenD=14000,C=40andi=20%.Thesupplieriswillingtogiveanallquantity
discountof2%ifQ2000and4%whenQ5000?Thereisalsoamarginalquantity
discountof5%and10%atquantities2000and5000respectively.Findthebestordering
policyundertheconditions?
8. GivenD=14000,C=40andi=20%.Thesupplieriswillingtogiveanallquantity
discountof1%ifQ1500and3%whenQ5000?Thereisalsoamarginalquantity
discountof2%and10%atquantities1500and5000respectively.Findthebestordering
policyundertheconditions?
9. ConsidertwoitemswiththefollowingdataD1=12000,D2=16000,C0=1000,C1=80
andC2=50,i=20%.Thereisalimitof15onthetotalnumberoforders.Findtheorder
quantities?Deriveexpressionsused?
10. ConsidertwoitemswiththefollowingdataD1=12000,D2=16000,C0=1000,C1=80
andC2=50,i=20%.ThereisalimitofRs80000onthemoneyvalueofaverage
inventory.Findtheorderquantities?Deriveexpressionsused?
11. ConsidertwoitemswiththefollowingdataD1=12000,D2=16000,C0=1000,C1=80
andC2=50,i=20%.Thereisalimitof10onthetotalnumberofordersbutjointorders
areacceptable.Deriveexpressionsused?
12. ConsidertwoitemswiththefollowingdataD1=12000,D2=16000,C0=1000,C1=80
andC2=50,i=20%.ThereisalimitofRs80000onthemoneyvalueofaverage
inventory.Thereisalsoaspacerestrictionof80000onthespaceforaverageinventory.
Thetwoitemsrequirespaceof100and60.Findtheorderquantities?Derive
expressionsused?
13. ConsidertwoitemswiththefollowingdataD1=18000,D2=20000,C0=1000,C1=80
andC2=50,i=20%.Thecompanyhasapolicyoforderingtheitemstogethereven
thoughthereisnogain.Whatistheir%losswhencomparedtotheEOQsolutions?
14. ConsidertwoitemswiththefollowingdataD1=18000,D2=20000,C0=1000,C1=80
andC2=50,i=20%.Theordercosthastwocomponentsanadministrativecostof400
andtruckcostof600.Thecompanycansaveonetruckcostiftheitemsareordered
together.Findthe%gaincomparedtoEOQ?

15. ConsidertwoitemswiththefollowingdataD1=18000,D2=20000,C0=1000,C1=80
andC2=50,i=20%.Theordercosthastwocomponentsanadministrativecostof400
andtruckcostof600.Thecompanycansaveonetruckcostiftheitemsareordered
together.Consideralsothecaseofordersbeingamultipleofotherandpartlyjoint
ordered.Doesthecostreducefurther?
16. ConsidertwoitemswiththefollowingdataD1=18000,D2=20000,C0=1000,C1=80
andC2=50,i=20%.Theordercosthastwocomponentsanadministrativecostof400
andtruckcostof600.Thecompanycansaveonetruckcostiftheitemsareordered
together.Thecompanyhasanadditionalrestrictionthatthemaximumamountof
moneyinvestedininventoryatanypointshouldnotexceedRs1.5lakhs.Findtheorder
quantities?
17. GivenD=14000,C0=400,C=40P=20000/yearandi=20%.Findtheproduction
quantityQ,TC,NandT?
18. ConsidertwoitemswiththefollowingdataD1=18000,D2=20000,C0=1000,C1=80
andC2=50,i=20%.UseP=25000forboththeitems.Findtheindividualproduction
quantitiesQandverifyiftheproductioncyclesclashornot?
19. GivenD=14000,C0=400,C=40P=20000/year,Cs=20/unit/yearandi=20%.Findthe
productionquantityQ,TC,s,Imax,NandT?
20. ConsidertwoitemswiththefollowingdataD1=18000,D2=20000,C0=1000,C1=80,
C2=50,Cs=50/unit/yearandi=20%.UseP=25000forboththeitems.Findthe
individualproductionquantitiesQandverifyiftheproductioncyclesclashornot?