Question: Derive the annual average total cost G ( Q , s ) expression for a EOQ model with finite production rate P , constant demand
Derive the annual average total cost GQs expression for a EOQ model with finite production rate P constant demand rate lambda, shortage costbackorder cost Cs per unit cost h per unit. Also, derive that the minimum order quantity is Q sqrtKLambdahCshCslambdaP and the minimum backorder quantity is sQhlambdaPhCs where k is the fixed set up costHint: You need to take the partial derivative of the average annual cost with respect to Q
and s
and solve them to get the minimum order quantity and the minimum back order quantity
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