Consider the following production process. The final demand at site 3 is 100 units/day. No...

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Consider the following production process. The final demand at site 3 is 100 units/day. No backorders are allowed. Deliveries at site 1 come from a supplier, which delivers a full batch immediately on request. The ordering cost is 1500. For the two production stages we have: Stage 1: Production rate ( ) = 300 units/day, Stage 2: Production rate ( ) "= 200 units/day The setup costs for each production stage is 750. The holding costs are 1 in stock 1, 2 in stock 2, and 3 in stock 3. Determine the optimal batch quantity. Production at production stage 2 starts as soon as there are units available in stock 2. When a unit has passed production stage 2, it is immediately delivered to stock 3

Rajeswari · Accepted Answer

112916 assignment
Economic Order Quantity, also known as Economic Purchase Quantity, or optimal quantity to order  is the order quantity that minimizes the total holding costs and ordering costs in inventory management. 
If a company holds more stock storage or holding cost would increase but any sudden cusomters’ orders can be entertained.

Consider the following production process. The final demand at site 3 is 100 units/day. No backorders are allowed. Deliveries at site 1 come from a supplier, which delivers a full batch immediately on...

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