Dynamic Lot. Sizing The dynamic lot-size model in imventory theory, is a gebenalisation of the Eeonomic Order Quintity (EOQ) model that takes into account that demand for a product varies over time. Dynamic lot sixing sometimes refers to as 'Time-Varying Demand' as well. In contrast to EOQ model where demand is constant, in the time-varying deterministic demand model, demands of various periods are unlike. The variatiots depend on different reasons. For example, poduction on a contnict, which requires that certain quantities are delivered on specified dates. Note that we are still considering deterministic demand, i.e, all viriations are known in ndvance. In the basic models, lead-time ts disegarded. When dealing with lot sizing for time-varying demand, it is generally assumed that there are a finite number of discrete time steps, or periods. A period may be, for example, a day or a week. We know the demand in each period, and for simplicity, it is assumed that the period demand takes place at the begiming of the period. There is no initial stock. When delivering a batch, the whole batch is delivered at the same time. The holding cost and the ordering cost are constant over time. No backordens are allowed. We slall use the following notation: Problem Castoo has reodived the following demands for a product this year: Suppoes ordering cost (OC) is $504 and hokding cost (HC) of ope unit of proctuct in a year is 83. There is no sbortage cost. Bedsordering is not allowed in this model. To achieve the minimum total cost (ordering cost + bolding cost), bow many times the company should place orders in a year? In each order, how many products should be ordered? What is the total oost in a year? Watch Whach these two viden: - Video 1: Lot sazzine - Video 2: Lot sixing - lueuristies Questions Q1 (2 marks) Giwn that the total demand of the whole year is 10,000 products, suppoes the company is going to use the EOQ model for the accumulated demand of one year (10,000). In other words, ignore the moathly demand. Computec - Optimal order quantity (Q) - Total cost - Frequency of orders - Time between orders