PRODUCTION AND OPERATION MANAGEMENT

ASSIGNMENT EOQ MODEL

GROUP NO H

EOQ MODEL WITH PLANNED SHORTAGES

FROM JK SHARMA CHAPTER NO. 14 PG NO 592 UNSOLVED Q NO.4

SOLUTION D=1000 units per year C0=160 per order Ch=Rs. 20 per unit per year

Cs=Rs. 10 per unit per year

Q= /2DC/Ch*{Ch+Cs/Cs}
Ans= 219 units

EOQ MODEL UNDER INFLATION

A=1000
C=10000
S=10000
F=30%
I=15%

EOQ=√2AC(1+1/2)/S*(F-I)

EOQ=√2*1000*10000(1+.15/2)/10000*(.30-.15)

EOQ=119.72 OR 120 TONNES

per unit per year
A small shop produces three machine parts 1,2,3 in lots. The shop has

Item I II
Demand(units per year) 2000 5000
Set up cost(Rs) 100 200
Cost per unit(Rs) 10 20
Floor space required(ft2/unit) 0.5 0.6

The shop uses an inventory carrying charge of 20% of average inventory valuation per annum.If n

SOLUTION

as he carrying cost of inventory is 20% of cost per unit per annum i.e CC1
CC2
CC3

Therefore
EOQ1
EOQ2
EOQ3

Now the total floor area required is 1015.29 Ft2

As it can be seen that this is case of constrained EOQ because the floo

EOQ1
EOQ2
EOQ3

Now the total floor area required is 741.24 Ft2

Again as it can be seen that this is case of constrained EOQ because th

EOQ1
EOQ2
EOQ3
Now the total floor area required is 695.08 Ft2
ots. The shop has only 700 m2 of storage space. The appropriate data for the t

III
10,000
75
5
0.3

y valuation per annum.If no stock outs are allowed determine the optimum lot size??

2.0
4.00
1.00

Units
447.21
707.11
1224.74

ned EOQ because the floor area available is 700 Ft2 we will apply the formula for constrained EOQ

Units
316.23
559.02
825.72

onstrained EOQ because the floor area available is 700 Ft2 we will apply the formula for constrained EOQ

Units
294.88
530
765.47
e data for the three item are presented in the table.(J.K Kapoor ,page No. 600

strained EOQ
,page No. 600 ,Q No.3)
J.K. Sharma , Chapter no. -13 ,Ques no.- 19

Annual Demand (R)= 30000 lt

Set –up cost (Co) = Rs. 80/ batch
Carrying Cost(Cc) = Re. 1/lt
Rate of production is 3 times the sales
So, production = 90000 lt
Usage per day(r) = 30000/365 = 82 lt
Production per day(p) = 90000/365 = 246 lt

EBQ=

= 2696.79 ≈ 2697 lt