Economic Production Quantity Model $($EPQ$)$:

The parameter of the problem:

Demand Rate $=D=2400$ unit$/$year

Production Rate $=P=7200$ unit$/$year

Production Cost $=C=$$$\frac{45}{?}$ unit

Ordering Cost $=Co=$ not known $($assume $$450$ as the minimum to break even with EOQ by reverse$)$

Holding Cost $=Ch=$$$\frac{9}{?}$ unit $\frac{?}{?}$ year $($$$45x\%20)$

Optimal Order Quantity

$Q^{**}\frac{?}{S}=QRT(\frac{2^{**}\text{C}\text{o}\text{D}}{C}{H}^{**}(1-\frac{D}{P}))=600$ Units Optimal Cycle Length

$T^{**}=\frac{Q^{**}}{D}=0\mathrm{.}25(3$ Months$)$

Production Period

$T{p}^{**}=\frac{Q^{**}}{P}=0\mathrm{.}0833(1$ Month$)$

Maximum Inventory Accumulated

Qmax$=Q^{**}(1-\frac{D}{P})=400$ unit

Average inventory is

Qmax $/2=200$ unit

Minimum Total Inventory Cost per Unit Time

TCU$(Q^{**})=C^{**}D+Co\frac{D}{Q^{**}}+$ChQmax$*\frac{*}{2}=$$$111,600$

POM$-$QM

$4\mathrm{.}2$ QM for Windows $-[$Data$]$ Results

$($untitled$)$ Solution

Parameter Value

Demand rate$($D$)$

Setup$/$ordering cost$($S$)$ Holding$/$carrying cost $(H)$

Daily production rate$($p$)$

Days per year $($D$/$d$)$

Daily demand rate

Unit cost

Unit cost

Paramete

Optimal production quantity $(Q^{**})$ Value

$5$ Maximum Inventory Level $($Imax$)$ Production runs per period $($year$)$ Annual Total

ing $+$ Setup$)$ Cost

Total Cost $($including units$)$

Economic Production Quantity Model $($EPQ$)$:

Managerial Interpretation:

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