Economic Order Quanity ( EOQ ) - Need help with basics

[RobBran]

Hi, I recently started an online class and we are covering EOQ. I understand a majority of it, but I am having difficulty with a problem that goes like this:

Baseline Value	Q* = 100.0
Modification(s)	Q*new =
Dnew = 4xDold
cnew = ¼cold
Anew = 3xAold, Dnew = 4xDold, inew = 2xiold, cnew = 6xcold
iold = 26.5%, inew = 22.0% <careful on this one!>
Setup cost is cut in half; Demand is tripled

So it's pretty much asking to find the new optimal order quantity without any variables given except the baseline 100

So I'm thinking for the first one if it's 4xold Demand then Q* is 200

The next two down I'm not sure..

the percentage one I used a formula of old Q*xsqrt(old i / new i) and got 1097.5

Last one I'm not sure..


If anyone can help it would be greatly appreciated. It doesn't even have to be this problem, but at least an idea on how to approach this, thank you.

 

[JeffM]

Hi, I recently started an online class and we are covering EOQ. I understand a majority of it, but I am having difficulty with a problem that goes like this:

Baseline Value	Q* = 100.0
Modification(s)	Q*new =
Dnew = 4xDold
cnew = ¼cold
Anew = 3xAold, Dnew = 4xDold, inew = 2xiold, cnew = 6xcold
iold = 26.5%, inew = 22.0% <careful on this one!>
Setup cost is cut in half; Demand is tripled

So it's pretty much asking to find the new optimal order quantity without any variables given except the baseline 100

So I'm thinking for the first one if it's 4xold Demand then Q* is 200

The next two down I'm not sure..

the percentage one I used a formula of old Q*xsqrt(old i / new i) and got 1097.5

Last one I'm not sure..


If anyone can help it would be greatly appreciated. It doesn't even have to be this problem, but at least an idea on how to approach this, thank you.

WHICH formula are you using for economic order quantity? It is rather difficult to apply a formula that is not provided. There is more than one way to estimate optimum order quantities. For example, does your formula address backorders? If so, how? Does it address the opportunity cost of lost orders? If so, how? Is it probabilistic or deterministic?

What do the symbols mean? Q is frequently used to stand for quantity of items, but you say it is a value, which may imply a monetary amount. What is A? And so on?

It is advisable NOT to use "x" for multiplication in anything remotely algebraic because "x" may be a variable or unknown. Use "*" instead.

Please provide the definition of your symbols and the formula used in your text for economic order quantity, and someone will be happy to help you.