Cost and Optimization in Government: An Introduction to Cost Accounting, Operations Management, and Quality Control, Second Edition by Aman Khan
Author:Aman Khan [Khan, Aman]
Language: eng
Format: epub
Tags: Political Science, General
ISBN: 9781420067224
Google: 4goqDwAAQBAJ
Goodreads: 35584869
Publisher: Routledge
Published: 2010-04-30T00:00:00+00:00
which is lower than the optimum quantity of 40 we had earlier. This is understandable since the ordering cost was lower and none of the other terms in the Equation were changed.
If, for instance, we lower the ordering cost by $4 from $10.50 to $6.50, the new optimum order quantity will further decrease to 28.504 â 29 units. Let us say that the demand also changes from 250 to 300. This will increase the EOQ by 2, from 29 to 31; that is, It is important to note that even if there is not a significant change in some or all of the value of the terms in our model, the quantity changed will be smaller because it changes by the square root of the ratio of ordering to carrying cost.
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