EOQ Essay

Introduction Determine the tack together sizing for Company A in the scenario prove in the attached QAT1 task 3 Spreadsheet that would minimize total yearbook be by apply the scotch send sum of money model, showing all of your work.Economic tell step model is an in inventory related equality that helps in determining the optimum order quantity that a company should give suck in its inventory devoted a cost of product, demand dictate and other variables. This is always get ine to help in minimizing the variables inventory costs.  The equation is given byEOQ =WhereA= Setup costsCp = Demand measureP = Production costI = Interest respect (considered an hazard cost, so the risk-free rate can be used)EOQ =   (2 * 400,000 * 42)/ (3% * 500)= 33600000/ 15= elder 2240000=1,497 computersIdentify what Company A should do with the information determined in part AThe economic order quantity (EOQ) is the order quantity that minimizes total holding and purchase o rder costs for the year. Even if all the assumptions dont hold exactly, the EOQ gives us a good indication of whether or not current order quantities are reasonable(Steven, 2009). Therefore, the company uses EOQ in ensuring that the quantity being produced is best and is cost effective hence help the production and marketing departments to be effective in terms of production.      Order sum of moneyHolding existOrder CostMaterial Costshortfall Cost marrow CostQhC(Q/2)(R/Q)SCR(B(Q-n)2)/2QTC99.78$748.33$168,374.58$200,000,000.00$0.00$200,169,122.91199.56$1,496.66$84,187.29$200,000,000.00$0.00$200,085,683.95299.33$2,244.99$56,124.86$200,000,000.00$0.00$200,058,369.86399.11$2,993.33$42,093.65$200,000,000.00$0.00$200,045,086.97498.89$3,741.66$33,674.92$200,000,000.00$0.00$200,037,416.57598.67$4,489.99$28,062.43$200,000,000.00$0.00$200,032,552.42698.44$5,238.32$24,053.51$200,000,000.00$0.00$200,029,291.83798.22$5,986.65$21,046.82$200,000,000.00$0.00$200,027,033. 47898.00$6,734.98$18,708.29$200,000,000.00$0.00$200,025,443.27997.78$7,483.31$16,837.46$200,000,000.00$0.00$200,024,320.771097.55$8,231.65$15,306.78$200,000,000.00$0.00$200,023,538.431197.33$8,979.98$14,031.22$200,000,000.00$0.00$200,023,011.191297.11$9,728.31$12,951.89$200,000,000.00$0.00$200,022,680.201396.89$10,476.64$12,026.76$200,000,000.00$0.00$200,022,503.401496.66$11,224.97$11,224.97$200,000,000.00$0.00$200,022,449.941596.44$11,973.30$10,523.41$200,000,000.00$0.00$200,022,496.721696.22$12,721.64$9,904.39$200,000,000.00$0.00$200,022,626.021796.00$13,469.97$9,354.14$200,000,000.00$0.00$200,022,824.111895.77$14,218.30$8,861.82$200,000,000.00$0.00$200,023,080.121995.55$14,966.63$8,418.73$200,000,000.00$0.00$200,023,385.362095.33$15,714.96$8,017.84$200,000,000.00$0.00$200,023,732.802195.11$16,463.29$7,653.39$200,000,000.00$0.00$200,024,116.682294.88$17,211.62$7,320.63$200,000,000.00$0.00$200,024,532.262394.66$17,959.96$7,015.61$200,000,000.00$0.00$200,024,975.562494.44$18,708.29$ 6,734.98$200,000,000.00$0.00$200,025,443.272594.22$19,456.62$6,475.95$200,000,000.00$0.00$200,025,932.562693.99$20,204.95$6,236.10$200,000,000.00$0.00$200,026,441.052793.77$20,953.28$6,013.38$200,000,000.00$0.00$200,026,966.662893.55$21,701.61$5,806.02$200,000,000.00$0.00$200,027,507.632993.33$22,449.94$5,612.49$200,000,000.00$0.00$200,028,062.43                        QLine    14970    1497200022449.9     Determine the lot sizing for Company B in the scenario found in the attached QAT1 Task 3 Spreadsheet that would minimize total annual cost by using the economic production lot size model, showing all of your work.Economic order quantity model is an in inventory related equation that helps in determining the optimum order quantity that a company should hold in its inventory given a cost of production, demand rate and other variables. Th is is always through with(p) to help in minimizing the variables inventory costs.  The equation is given byEOQ =WhereA= Setup costsCp = Demand rateP = Production costI = Interest rate (considered an opportunity cost, so the risk-free rate can be used)EOQ =   (2 * 5200,000 * 500)/ (4% * 250)= 5,200,000,000/ 10= Sr. 520,000,000= 22804 computersIdentify what Company B should do with the information determined in part BThe economic order quantity (EOQ) is the order quantity that minimizes total holding and ordering costs for the year. Even if all the assumptions dont hold exactly, the EOQ gives us a good indication of whether or not current order quantities are reasonable (Steven, 2009). Therefore, the company uses EOQ in ensuring that the quantity being produced is optimal and is cost effective hence help the production and marketing departments to be effective in terms of production.Order QuantityHolding CostOrder CostMaterial CostShortage CostTotal CostQhC(Q/2)(R/Q)SCR(B (Q-n)2)/2QTC1520.23$7,601.17$1,710,263.14$1,300,000,000.00$0.00$1,301,717,864.313040.47$15,202.34$855,131.57$1,300,000,000.00$0.00$1,300,870,333.914560.70$22,803.51$570,087.71$1,300,000,000.00$0.00$1,300,592,891.226080.94$30,404.68$427,565.78$1,300,000,000.00$0.00$1,300,457,970.467601.17$38,005.85$342,052.63$1,300,000,000.00$0.00$1,300,380,058.489121.40$45,607.02$285,043.86$1,300,000,000.00$0.00$1,300,330,650.8710641.64$53,208.19$244,323.31$1,300,000,000.00$0.00$1,300,297,531.4912161.87$60,809.36$213,782.89$1,300,000,000.00$0.00$1,300,274,592.2513682.11$68,410.53$190,029.24$1,300,000,000.00$0.00$1,300,258,439.7615202.34$76,011.70$171,026.31$1,300,000,000.00$0.00$1,300,247,038.0116722.57$83,612.86$155,478.47$1,300,000,000.00$0.00$1,300,239,091.3318242.81$91,214.03$142,521.93$1,300,000,000.00$0.00$1,300,233,735.9619763.04$98,815.20$131,558.70$1,300,000,000.00$0.00$1,300,230,373.9121283.27$106,416.37$122,161.65$1,300,000,000.00$0.00$1,300,228,578.0322803.51$114,017.54$114,017.54$1,300, 000,000.00$0.00$1,300,228,035.0924323.74$121,618.71$106,891.45$1,300,000,000.00$0.00$1,300,228,510.1625843.98$129,219.88$100,603.71$1,300,000,000.00$0.00$1,300,229,823.6027364.21$136,821.05$95,014.62$1,300,000,000.00$0.00$1,300,231,835.6728884.44$144,422.22$90,013.85$1,300,000,000.00$0.00$1,300,234,436.0730404.68$152,023.39$85,513.16$1,300,000,000.00$0.00$1,300,237,536.5531924.91$159,624.56$81,441.10$1,300,000,000.00$0.00$1,300,241,065.6633445.15$167,225.73$77,739.23$1,300,000,000.00$0.00$1,300,244,964.9634965.38$174,826.90$74,359.27$1,300,000,000.00$0.00$1,300,249,186.1736485.61$182,428.07$71,260.96$1,300,000,000.00$0.00$1,300,253,689.0338005.85$190,029.24$68,410.53$1,300,000,000.00$0.00$1,300,258,439.7639526.08$197,630.41$65,779.35$1,300,000,000.00$0.00$1,300,263,409.7641046.32$205,231.58$63,343.08$1,300,000,000.00$0.00$1,300,268,574.6642566.55$212,832.75$61,080.83$1,300,000,000.00$0.00$1,300,273,913.5744086.78$220,433.92$58,974.59$1,300,000,000.00$0.00$1,300,279,408.5145607.02$22 8,035.09$57,008.77$1,300,000,000.00$0.00$1,300,285,043.86                        QLine    228040    228041300228035           ReferenceSteven A. (2009) management Science Applications in Project Management Project       Management LP Models in Scheduling, Integer Programming           www.eng.umd.edu/sgabriel. uk