Consider the following one of many fictitious examples. (Hint: This fictitious example concerns a variation on...
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Consider the following one of many fictitious examples. (Hint: This fictitious example concerns a variation on EOQ.) Production occurs at a rate of 2,000,000 every three months, or every quarter. Consumption - or demand - occurs at a rate of 250,000 every three months, or every qua There is a start-up cost of $2000, a selling cost (or value) of $10 and a quarterly (or three monthly) holding cost of 3%. Plan 1 has 1 production cycle per year, with the cycle re-starting after 1 year. Plan 2 has the production phase of the cycle going non-stop for 1 year before production stops. Plan 3 has a production amount of 100,000 - so, in each cycle, production stops after 100 items are produced, and then production resumes after the inventory drops to 0. 1(a) Which would be cheaper out of plan 1, plan 2 and plan 3? Show all working. 1(b) Suppose we change the amount of production to the optimal amount. How much would this reduce cost by when compared with your answer from Qu la)? Show all working. Consider the following one of many fictitious examples. (Hint: This fictitious example concerns a variation on EOQ.) Production occurs at a rate of 2,000,000 every three months, or every quarter. Consumption - or demand - occurs at a rate of 250,000 every three months, or every qua There is a start-up cost of $2000, a selling cost (or value) of $10 and a quarterly (or three monthly) holding cost of 3%. Plan 1 has 1 production cycle per year, with the cycle re-starting after 1 year. Plan 2 has the production phase of the cycle going non-stop for 1 year before production stops. Plan 3 has a production amount of 100,000 - so, in each cycle, production stops after 100 items are produced, and then production resumes after the inventory drops to 0. 1(a) Which would be cheaper out of plan 1, plan 2 and plan 3? Show all working. 1(b) Suppose we change the amount of production to the optimal amount. How much would this reduce cost by when compared with your answer from Qu la)? Show all working.
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