Use the economic order quantity model or, for short, the EOQ model. A manufacturer produces processors...

 

Transcribed Image Text:

Use the economic order quantity model or, for short, the EOQ model. A manufacturer produces processors at a rate of on a continuous production line at a rate of 5000 per month which are used for the production of its own computers. Therefore, the processors are placed into inventory until they are needed for assembly into computer laptops on the production line. The company is interested in determining when to produce a batch of processors and how many processors to produce in each batch. Each time a batch is produced, a setup cost of $14,000 is incurred. The production of processors in large batches leads to a large inventory. The estimated holding cost of keeping a speaker in stock is $0.50 per month. This cost includes the cost of capital tied up in inventory Q1a) Determine the order quantity (Q) to replenish inventory by minimizing cost. Minimize the total cost per unit time, by finding its first derivative and also checking is second derivative. Q1b) Determine the corresponding cycle Use the economic order quantity model or, for short, the EOQ model. A manufacturer produces processors at a rate of on a continuous production line at a rate of 5000 per month which are used for the production of its own computers. Therefore, the processors are placed into inventory until they are needed for assembly into computer laptops on the production line. The company is interested in determining when to produce a batch of processors and how many processors to produce in each batch. Each time a batch is produced, a setup cost of $14,000 is incurred. The production of processors in large batches leads to a large inventory. The estimated holding cost of keeping a speaker in stock is $0.50 per month. This cost includes the cost of capital tied up in inventory Q1a) Determine the order quantity (Q) to replenish inventory by minimizing cost. Minimize the total cost per unit time, by finding its first derivative and also checking is second derivative. Q1b) Determine the corresponding cycle

Answer rating: 100% (QA)

A Determining the Order Quantity Q We can use the EOQ model to find the optimal order quantity Q tha... View the full answer