Model I: Purchasing model without shortages Model II: Production model without shortages Model III: Purchasing model with shortages Model IV: Production model with shortages Model I: Purchasing model without shortages Assumptions Demand(D) per year is known and is uniform Ordering cost(S) per order remains constant Carrying cost(C) per unit remains constant Purchase price(P) per unit remains constant No Shortages are allowed. As soon as the level of inventory reaches zero, the inventory is replenished back.Lead time isZero Quantity Time Inventory decreases at the rate of As soon as the level of inventory reaches zero, the ‘D’ inventory is replenished back Model II: Production model without shortages Assumptions Demand(D) per year is known and is uniform Setup cost (S) per production run remains constant Carrying cost(C) per unit remains constant Production cost per unit(P) per unit remains constant No Shortages are allowed. As soon as the level of inventory reaches zero , the inventory is replenished back. Pr-D D Quantity T1 T2 Pr = Production Rate D = Demand Rate T1 is the time taken when manufacturing takes place at the rate of Pr and demand at the rate of D. So the stock is builtup at the rate of (Pr D). During t2 there is no production – only usage of stock. Hence, stock is decreased at the rate of the end of t2, stock ‘D’. At will be nil.
Model I: Purchasing model without shortages Model II: Production model without shortages Model III: Purchasing model with shortages Model IV: Production model with shortages Model I: Purchasing model without shortages Assumptions Demand(D) per year is known and is uniform Ordering cost(S) per order remains constant Carrying cost(C) per unit remains constant Purchase price(P) per unit remains constant No Shortages are allowed. As soon as the level of inventory reaches zero, the inventory is replenished back.Lead time isZero Quantity Time Inventory decreases at the rate of ‘D’ As soon as the level of inventory reaches zero, the inventory is replenished back Model II: Production model without shortages Assumptions Demand(D) per year is known and is uniform Setup cost (S) per production run remains constant Carrying cost(C) per unit remains constant Production cost per unit(P) per unit remains constant No Shortages are allowed. As soon as the level of inventory reaches zero , the inventory is replenished back. Pr-D D Quantity T1 T2 Pr = Production Rate D = Demand Rate T1 is the time taken when manufacturing takes place at the rate of Pr and demand at the rate of D. So the stock is builtup at the rate of (Pr – D). During t2 there is no production only usage of stock. Hence, stock is decreased at the rate of ‘D’. At the end of t2, stock will be nil.
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