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No-shows Probability 0 1 2 3 4 5
1400
1200
Expecte d Cost ($)
1000
800
600
400
200
0
0 1 2 3 4 5 6 7 8 9 10
Num be r Overbooke d
Enter your values for Co and Cu.
- Co is the cost of overestimating cancellations. The
hotel has rooms that are not filled.
- Cu is the cost of underestimating cancellations.
The hotel will have to pay to put the customer up at
a nearby hotel.
- The number of overbookings with the lowest
expected total cost (in red) should be selected.
of Units Overbooked
6 7 8 9 10
`
Example 20.2 - EOQ and Reorder Point Enter your demand, cost, and and lead time information in the blue
column E to generate the graph and reorder policy output.
100.0
Inventory
Buildup
Quantity
50.0
13.7
0.0
0 20 40 60 80 100 120 140 160 180
Tim e Horizon
X ROP
0 13.7
164.3 13.7
T CumProd Q y
63 0 0 1000
63 300.0 164.3
Q0 = 90
Average Inventory = 45.0
Inventory
Buildup
13.7
Q
T otal Holding Cost
600 T otal Setup Cost
T otal Cost
500
400
Cost ($)
300
200
$111.8
100
0
0 50 100 150 200 250 300 350 400 450 500
Orde r Quantity
Increment Q 10
Q CumProd QBEP TC
96 0 0 90 0 112
96 112 112 90 96 112
Q THC TSC TC
0 0.0 0 0.0
10 6.3 500.0 506.3
20 12.5 250.0 262.5
30 18.8 166.7 185.4
40 25.0 125.0 150.0
50 31.3 100.0 131.3
60 37.5 83.3 120.8
70 43.8 71.4 115.2
80 50.0 62.5 112.5
90 56.3 55.6 111.8
100 62.5 50.0 112.5
110 68.8 45.5 114.2
120 75.0 41.7 116.7
130 81.3 38.5 119.7
140 87.5 35.7 123.2
150 93.8 33.3 127.1
160 100.0 31.3 131.3
170 106.3 29.4 135.7
180 112.5 27.8 140.3
190 118.8 26.3 145.1
200 125.0 25.0 150.0
210 131.3 23.8 155.1
220 137.5 22.7 160.2
230 143.8 21.7 165.5
240 150.0 20.8 170.8
250 156.3 20.0 176.3
260 162.5 19.2 181.7
270 168.8 18.5 187.3
280 175.0 17.9 192.9
290 181.3 17.2 198.5
300 187.5 16.7 204.2
310 193.8 16.1 209.9
320 200.0 15.6 215.6
330 206.3 15.2 221.4
340 212.5 14.7 227.2
350 218.8 14.3 233.0
360 225.0 13.9 238.9
370 231.3 13.5 244.8
380 237.5 13.2 250.7
390 243.8 12.8 256.6
400 250.0 12.5 262.5
410 256.3 12.2 268.4
420 262.5 11.9 274.4
430 268.8 11.6 280.4
ter the demand, order cost and holding
in the blue cells to the right to generate the
cost curve.
e optimal order quantiity is calculated.
ve the bar below the graph to see the
act order quantity has on total cost.
Q
T otal Holding Cost
T otal Setup Cost
T otal Cost
INPUT:
OUTPUT:
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problem in
UT table.
be
T table.
Standard Deviation
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Example 20.5 - Quantity to Order using Fixed-Time Period Model with Safety Stock
OUTPUT:
19.900 T+L Standard deviation of demand over the review and lead time
2.054 z z-value for the stated service level
440 Average demand over the vulnerable period
40.87 Safety stock
330 q Order Quantity
rder
Solved Problem 1 Enter your values for Co and Cu.
- Co is the cost of overestimating dem
Co = $ 50.00 Cost per unit of demand overestimated
- Cu is the cost of underestimating dem
- The order quantity with the lowest e
Cu = $ 30.00 Cost per unit of demand underestimated selected.
140
120
Expecte d Cost ($)
100
80
60
40
20
0
35 36 37 38 39 40
Num be r Purchas ed
our values for Co and Cu.
he cost of overestimating demand.
he cost of underestimating demand.
rder quantity with the lowest expected total cost should be
d.
r of Units Purchased
- - - - -
Solved Problem 3 Enter your values in the INPUT table. The
resulting reorder policy will be displayed in the
OUTPUT table.
Fixed-Time Period Model with Safety Stock
INPUT
14 T Number of days between reviews
7 L Lead time in days
120 d-bar Forecast average daily demand (d-bar)
30 d Standard deviation of demand
99% L Service Level
130 I Current inventory level
OUTPUT
137.477 T+L Standard deviation of demand over the review and lead time
2.326 z z-value for the stated service level
2520 Average demand over the vulnerable period
319.82 Safety stock
2709 q Order Quantity
Solved Problem 4 Enter your values in the INPUT table. The
resulting reorder policy will be displayed in
the OUTPUT table.
Fixed-Time Period Model with Safety Stock
INPUT
14 T Number of days between reviews
7 L Lead time in days
20 d-bar Forecast average daily demand (d-bar)
5 d Standard deviation of demand
95% L Service Level
180 I Current inventory level
OUTPUT
22.913 T+L Standard deviation of demand over the review and lead time
1.645 z z-value for the stated service level
420 Average demand over the vulnerable period
37.69 Safety stock
277 q Order Quantity