In Class Lecture 11/15/2010

Monday, November 15, 2010 8:50 PM

Economic Order Quantity (EOQ) to calculate EOQ = Sqrt of (2DS/H) Also called the Q system
D = Demand S = Set up Cost H = Holding Cost

S (set up costs) the biggest and most expensive factor in the model for EOQ Re-Order point = Mean of Lead Time + Z value (percentage looked up in table) * Standard Deviation of Lead Time ROP = LT + Z * LT

Variance is the Standard Deviation Squared, Standard Variation is the square root of the variance Fixed Order Period (Q system) Schedules inventory checks, instead of constant, then decides, if at an appropriate level, whether to resupply inventory or not Order at the above ROP plus order cycle time Page 573
Econ

In Class Lectures Page 1