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Essay

Forecasting

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Issue:

Business

 

Written by:

Tova F

 

Date added:

July 5, 2015

 

Level:

University

 

Grade:

A

 

No of pages / words:

3 / 756

 

Was viewed:

8776 times

 

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The standard order size should be calculated using the formula for EOQ, derived using basic EOQ model assumptions. This model is chosen for calculations of EOQ because the data follows all the requirements of the basic EOQ model. Basic EOQ model assumptions are as follows: • Demand Rate is deterministic and is constant over time...
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Rate of replenishment is infinite. • Lead time and other system parameters such as costs are constant, independent of replenishment quantity and are known with certainty • Shortages of stock are not allowed. I.e. C3 = 0. • Acquisition cost is fixed, i.e., no quantity discounts CALCULATIONS: D=15000 units Unit cost, C=$40 Holding cost rate= 0...
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