Deterministic model
Different costs
Ordering/setup cost
Purchasing cost
Holding cost
Shortage cost
EOQ with backorders
= P non-directly served clients that come later
Q* = optimal order quantity
P* = optimal backorder quantity minimizing total cost
EOQ with discounts
1 - Graphically represent the curves TC
2 - Compute for each curve the associated EOQ
3 - Define the total cost curve with jumps
4 - Define the minimum cost for each candidate on each batch size
5 - Compute the total cost TC for each candidate
EOQ - Economic Order Quantity = Wilson's model
Parameters
Variable
Objective function
Properties
ROP - Reordering point
= D*L
Critical level of stock as a warning signal
Ordering costs = O*(D/EOQ)
Holding costs = H*(EOQ/2)
Si Ordering costs = Holding costs => batch size = EOQ
= determine the optimal batch size/order quantity minimizing the total cost TC
Q = order quantity / batch size (unit)
D = demand (unit/time unit)
O = ordering cost (€/order)
H = holding cost (€/unit/time unit)
v = product value (€/unit)
L = lead time (time unit)