The Economic Order Quantity (EOQ) model is a classical model used for controlling inventory and satisfying demand. Costs included in the model are holding cost per unit, ordering cost and the cost of goods ordered. The assumptions for that model are that only a single item is considered, that the entire quantity ordered arrives at one time, that the demand for the item is constant over time, and that no shortages are allowed. Suppose we relax the first assumption and allow for multiple items that are independent except for a restriction on the amount of space available to store the products. The following model describes this situation: Let Dj = annual demand for item j Cj = unit cost of item j Sj = cost per order placed for item j i = inventory carrying charge as a percentage of the cost per unit W = the maximum amount of space available for all goods wj = space required for item j The decision variables are Qj, the amount of item j to order. The model is: In the objective function, the first term is the annual cost of goods, the second is the annual ordering cost (Dj/Qj is the number of orders), and the last term is the annual inventory holding cost (Qj/2 is the average amount of inventory). Set up a spreadsheet model for the following data: Item 1 Item 2 Item 3 Annual Demand 2,000 2,000 1,000 Item Cost ($) 100 50 80 Order Cost ($) 150 135 125 Space Required (sq. feet) 50 25 40 W = 5,000 i = 0.2 Solve the problem using Excel Solver. Hint: You will need to start with decision variable values that are greater than 0 for Solver to find a solution. If required, round your answers to two decimal places. Optimal Solution: Q1 = Q2 = Q3 = If required, round your answer to the nearest dollar. Do not round intermediate calculations. Total cost = $
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
The Economic Order Quantity (EOQ) model is a classical model used for controlling inventory and satisfying demand. Costs included in the model are holding cost per unit, ordering cost and the cost of goods ordered. The assumptions for that model are that only a single item is considered, that the entire quantity ordered arrives at one time, that the demand for the item is constant over time, and that no shortages are allowed.
Suppose we relax the first assumption and allow for multiple items that are independent except for a restriction on the amount of space available to store the products. The following model describes this situation:
| Let Dj = | annual demand for item j |
| Cj = | unit cost of item j |
| Sj = | cost per order placed for item j |
| i = | inventory carrying charge as a percentage of the cost per unit |
| W = | the maximum amount of space available for all goods |
| wj = | space required for item j |
The decision variables are Qj, the amount of item j to order. The model is:
In the objective function, the first term is the annual cost of goods, the second is the annual ordering cost (Dj/Qj is the number of orders), and the last term is the annual inventory holding cost (Qj/2 is the average amount of inventory).
Set up a spreadsheet model for the following data:
| Item 1 | Item 2 | Item 3 | |
| Annual Demand | 2,000 | 2,000 | 1,000 |
| Item Cost ($) | 100 | 50 | 80 |
| Order Cost ($) | 150 | 135 | 125 |
| Space Required (sq. feet) | 50 | 25 | 40 |
W = 5,000
i = 0.2
Solve the problem using Excel Solver. Hint: You will need to start with decision variable values that are greater than 0 for Solver to find a solution.
If required, round your answers to two decimal places.
Optimal Solution:
Q1 =
Q2 =
Q3 =
If required, round your answer to the nearest dollar. Do not round intermediate calculations.
Total cost = $
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
