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Forecasting
Essay specific features
Written by:
Tova F
Date added:
July 5, 2015
Level:
University
Grade:
A
No of pages / words:
3 / 756
Was viewed:
8770 times
Rating of current essay:
Essay content:
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...
displayed 300 characters
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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...
displayed 300 characters
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