Ch. 19 - Inventory TheoryContents: Basic EOQ Model (Solver) Basic EOQ Model (Analytical) EOQ Model with Planned Shortages (Solver) EOQ Model with Planned Shortages (Analytical) EOQ Model with Quantity Discounts (Analytical) Template for the Stochastic Continuous-Review Model Template for the Stochastic Single-Period Model for Perishable Products, No Setup Cost Template for the Stochastic Single-Period Model for Perishable Products, with Setup Cost Template for the Stochastic Two-Period Model, No Setup Cost Template for the Stochastic Infinite-Period Model, No Setup Cost Click on the tab below to select the worksheet of your choice.

Basic EOQ Model (Solver)a K h L WD = = = = = Data 6000 $115 $4.20 9 250 Decision 573.21 (demand/year) (setup cost) (unit holding cost) (lead time in days) (working days/year) Results Reorder Point = Annual Setup Cost = Annual Holding Cost = Total Variable Cost = 216 $1,203.74 $1,203.74 $2,407.49

Q=

(order quantity)

Basic EOQ Model (Analytical)a K h L WD = = = = = Data 6000 $115 $4.20 9 250 Decision 573.21 (demand/year) (setup cost) (unit holding cost) (lead time in days) (working days/year) Results Reorder Point = 216

Annual Setup Cost = $1,203.74 Annual Holding Cost = $1,203.74 Total Variable Cost = $2,407.49

Q=

(order quantity)

EOQ Model with Planned Shortages (Solver)a K h p = = = = Data 6000 $115 $4.20 $7.50 Decision 715.94 257.00 (demand/year) (setup cost) (unit holding cost) (unit shortage cost) Results Max Inventory Level = Annual Setup Annual Holding Annual Shortage Total Variable Cost Cost Cost Cost 458.94

= $963.77 = $617.80 = $345.97 = $1,927.53

Q= Q-S=

(order quantity) (maximum shortage)

EOQ Model with Planned Shortages (Analytical)a K h p = = = = Data 6000 $115 $4.20 $7.50 Decision 715.94 257.00 (demand/year) (setup cost) (unit holding cost) (unit shortage cost) Results Max Inventory Level = Annual Setup Annual Holding Annual Shortage Total Variable Cost Cost Cost Cost = = = = 458.94 $963.77 $617.80 $345.97 $1,927.53

Q= Q-S =

(order quantity) (maximum shortage)

EOQ Model with Quantity Discounts (Analytical)a K I N = = = = Data 6000 $115 0.21 3 (demand/year) (setup cost) (inventory holding cost rate) (number of discount categories) Range of order quantities Lower Limit Upper Limit 0 749 750 1999 2000 10000000 Annual Purchase Cost $120,000.00 $118,800.00 $117,600.00 Annual Setup Cost $1,203.74 $920.00 $345.00 Annual Holding Cost $1,203.74 $1,559.25 $4,116.00 Total Variable Cost $122,407.49 $121,279.25 $122,061.00

Category 1 2 3

Price $20.00 $19.80 $19.60

EOQ 573.21 576.10 579.03

Q* 573.21 750.00 2000.00

Results Optimal Q = Total Variable Cost =

750 $121,279.25

Template for the Stochastic Continuous-Review Modela K h p L = = = = = Data 8000 12000 0.3 10 0.75 (average demand/unit time) (setup cost) (unit holding cost) (unit shortage cost) (service level) Q= R= Results 25674.89 10791.84

Demand During Lead Time Distribution = Normal mean = 0 stand. dev. = 16000

Template for the Stochastic Single-Period Model for Perishable ProducUnit ordering cost Unit holding cost Unit shortage cost Exponential distribution mean = y0 = 10000 1892.42 c= h= p= 20 100 45 Uniform distribution a= b= y0 = 0 20000 3448.28

r Perishable Products, No Setup Cost

Template for the Stochastic Single-Period Model for Perishable ProducUnit ordering cost Unit holding cost Unit shortage cost Setup cost Exponential distribution mean = S= s= 10000 11856.24 11795.98 c= h= p= K= 20 -9 45 2 Uniform distribution a= b= S= s= 0 20000 13888.89 13841.75

Perishable Products, with Setup Cost

Template for the Stochastic Two-Period Model, No Setup CostUnit ordering cost Unit holding cost Unit shortage cost Exponential distribution mean = y10 = y20 = 5 3.71 1.12 c= h= p= 10 10 15 Uniform distribution t= y10 = y20 = 10 5.42 2

etup Cost

Template for the Stochastic Infinite-Period Model, No Setup CostUnit ordering cost Unit holding cost Unit shortage cost Discount factor Exponential distribution mean = y0 = 400 1044.53 c= h= p= a= 35 1 15 1 Uniform distribution t= y0 = 800 741.25

o Setup Cost