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Deterministic model - Coggle Diagram
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
D
= demand
(unit/time unit)
O
= ordering cost
(€/order)
H
= holding cost
(€/unit/time unit)
v
= product value
(€/unit)
L
= lead time
(time unit)
Variable
Q
= order quantity / batch size
(unit)
Objective function
= determine the optimal
batch size/order quantity
minimizing
the total cost
TC
Properties
Ordering costs = O*(D/EOQ)
Holding costs = H*(EOQ/2)
Si Ordering costs = Holding costs => batch size = EOQ
ROP - Reordering point
= D*L
Critical level of stock as a warning signal