THE ABC CLASSIFICATION SYSTEM

THE BASIC EOQ MODEL

Example
Week 1 2 3 4 5 6 7 8
105 115 125 120 125 120 135 115

a/
For Q = 600 EOQ 327.0649 Reorder point L*D 192
TV(600) 544.8 TV(EOQ) 457.8908 Currency order 205
=> This Q is not optimal => Saving 86.9 SS 13
TC (EOQ) 62876.09
b/
T EOQ/D(year) 0.052404 year
13.625 days 5 days work and 52 weeks
 9 10 Co 12
110 130 C 10
H 14%
Ch 1.4
D 6240
L 8 days
D perday 24 days
 EOQ Extensions with Quantity Discount Co 12
C 10
Quantity Discount Schedule Total cost H 0.14
1-299 10 327 *** Ch 1.4
300-599 9.75 331 331 61292.1311 D 6240
600-999 9.4 337 600 59175.6 L 8 days
1000-4999 9.5 336 1000 60019.88 D perday 24 days
5000 9 345 5000 59324.976
0<Q<1000 $5.00 pcs Item D (pcs/year) A($) r
1000<Q<2000 $4.90 pcs 1 10000 $25 $0.3
2000<=Q $4.75 pcs 2 1000 $30 $0.3
3 5000 $20 $0.3
4 130000 $28 $0.3

For item 1
QL Price/unit Ch Q* Qi* TC
0<Q<1000 $5.00 $1.50 577 577 $50,866
1000<Q<2000 $4.90 $1.47 583 1000 $49,985
2000<=Q $4.75 $1.43 592 2000 $49,050 => Q = 2000 is optimal

For item 2
QL Price/unit Ch Q* Qi* TC
0<Q<1000 $5.00 $1.50 200 200 $5,300 => Q = 200 is optimal
1000<Q<2000 $4.90 $1.47 202 1000 $5,665
2000<=Q $4.75 $1.425 205 2000 $6,190

For item 3
QL Price/unit Ch Q* Qi* TC
0<Q<1000 $5.00 $1.50 365 365 $25,548
1000<Q<2000 $4.90 $1.47 369 1000 $25,335
2000<=Q $4.75 $1.425 375 2000 $25,225 => Q = 2000 is optimal

For item 4
QL Price/unit Ch Q* Qi* TC
0<Q<1000 $5.00 $1.50 2203 *** ***
1000<Q<2000 $4.90 $1.47 2225 *** ***
2000<=Q $4.75 $1.425 2260 2000 $620,745 => Q = 2000 is optimal
 EOQ Extensions with One-Time Order Before a Prise Rise

Example
Example t Dt At ct ht
1 350 50 65 68.25
z1,1 22800 2 200 50 65 68.25
z1,2 20118.13 3 0 50 65 68.25
z1,3 16483.33 38>33 4 150 50 65 68.25
=> Q1= D1+D2=12 5 500 50 65 68.25
z3,3 50
z3,4 5273.75
z3,5 40262.5 44>38
=> Q3= D3+D4=16

z5,5 32550
=> Q5 = D5 = 16
DP-A Network Representation