Question: Derive the annual average total cost expression for a EOQ model with finite production rate , constant demand rate , shortage cost/backorder cost per unit
Derive the annual average total cost expression for a EOQ model with finite production rate , constant demand rate , shortage cost/backorder cost per unit and holding cost per unit. Also, derive that the minimum order quantity is and the minimum backorder quantity is where is the fixed set up cost. (Hint: You need to take the partial derivative of the average annual cost with respect to and and solve them to get the minimum order quantity and the minimum back order quantity)
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