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EOQ Manufacturing Model with Shortage Formula

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EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant. Check FAQs

EOQ ms = \sqrt{2 \cdot D \cdot C 0 \cdot \frac{C s + C c}{C c \cdot C s \cdot (1 - \frac{D}{K})}}

EOQ_ms - EOQ Manufacturing Model with Shortage?D - Demand per Year?C₀ - Order Cost?C_s - Shortage Cost?C_c - Carrying Cost?K - Production Rate?

EOQ Manufacturing Model with Shortage Example

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Here is how the EOQ Manufacturing Model with Shortage equation looks like with Values.

Here is how the EOQ Manufacturing Model with Shortage equation looks like with Units.

Here is how the EOQ Manufacturing Model with Shortage equation looks like.

1523.1546 = \sqrt{2 \cdot 10000 \cdot 200 \cdot \frac{25 + 4}{4 \cdot 25 \cdot (1 - \frac{10000}{20000})}}

1523.1546 = \sqrt{2 \cdot 10000 \cdot 200 \cdot \frac{25 + 4}{4 \cdot 25 \cdot (1 - \frac{10000}{20000})}}

1523.1546 = \sqrt{2 \cdot 10000 \cdot 200 \cdot \frac{25 + 4}{4 \cdot 25 \cdot (1 - \frac{10000}{20000})}}

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EOQ Manufacturing Model with Shortage Solution

Follow our step by step solution on how to calculate EOQ Manufacturing Model with Shortage?

FIRST Step Consider the formula

EOQ ms = \sqrt{2 \cdot D \cdot C 0 \cdot \frac{C s + C c}{C c \cdot C s \cdot (1 - \frac{D}{K})}}

Next Step Substitute values of Variables

∴

EOQ ms = \sqrt{2 \cdot 10000 \cdot 200 \cdot \frac{25 + 4}{4 \cdot 25 \cdot (1 - \frac{10000}{20000})}}

Next Step Prepare to Evaluate

∴

EOQ ms = \sqrt{2 \cdot 10000 \cdot 200 \cdot \frac{25 + 4}{4 \cdot 25 \cdot (1 - \frac{10000}{20000})}}

Next Step Evaluate

∴

EOQ ms = 1523.15462117278

LAST Step Rounding Answer

∴

EOQ ms = 1523.1546

EOQ Manufacturing Model with Shortage Formula Elements

Variables

Functions

EOQ Manufacturing Model with Shortage

EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant.

Symbol: EOQ_ms

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find EOQ Manufacturing Model with Shortage

Demand per Year

Demand per Year is the number of goods that consumers are willing and able to purchase at various prices during a given year.

Symbol: D

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Demand per Year

Order Cost

Order Cost is the expenses incurred to create and process an order to a supplier.

Symbol: C₀

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Order Cost

Shortage Cost

The Shortage Cost is called the associate cost and is equal to the product's contribution margin.

Symbol: C_s

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Shortage Cost

Carrying Cost

Carrying Cost is the total of all expenses related to storing unsold goods, and refers to the total cost of holding inventory.

Symbol: C_c

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Carrying Cost

Production Rate

Production Rate refers to the number of goods that can be produced during a given period of time.

Symbol: K

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Production Rate

sqrt

A square root function is a function that takes a non-negative number as an input and returns the square root of the given input number.

Syntax: sqrt(Number)

Other formulas in Manufacturing and Purchase Model category

Go EOQ Manufacturing Model with No Shortage

EOQ m = \sqrt{\frac{2 \cdot C 0 \cdot D}{C c \cdot (1 - \frac{D}{K})}}

Go EOQ Purchase Model with No Shortage

EOQ p = \sqrt{2 \cdot D \cdot \frac{C 0}{C c}}

Go Maximum Stock Out Manufacturing Model

Q 1 = \sqrt{2 \cdot D \cdot C 0 \cdot C s \cdot \frac{1 - \frac{D}{K}}{C c \cdot (C c + C s)}}

Go Maximum Inventory Purchase Model

Q purch = \sqrt{2 \cdot D \cdot \frac{C 0}{C c} \cdot (\frac{C s}{C s + C c})}

How to Evaluate EOQ Manufacturing Model with Shortage?

EOQ Manufacturing Model with Shortage evaluator uses EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate))) to evaluate the EOQ Manufacturing Model with Shortage, EOQ Manufacturing Model with Shortage is the order quantity a company should purchase to minimize inventory cost assuming demand is constant. EOQ Manufacturing Model with Shortage is denoted by EOQ_ms symbol.

How to evaluate EOQ Manufacturing Model with Shortage using this online evaluator? To use this online evaluator for EOQ Manufacturing Model with Shortage, enter Demand per Year (D), Order Cost (C₀), Shortage Cost (C_s), Carrying Cost (C_c) & Production Rate (K) and hit the calculate button.

FAQs on EOQ Manufacturing Model with Shortage

What is the formula to find EOQ Manufacturing Model with Shortage?

The formula of EOQ Manufacturing Model with Shortage is expressed as EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate))). Here is an example- 1523.155 = sqrt(2*10000*200*(25+4)/(4*25*(1-10000/20000))).

How to calculate EOQ Manufacturing Model with Shortage?

With Demand per Year (D), Order Cost (C₀), Shortage Cost (C_s), Carrying Cost (C_c) & Production Rate (K) we can find EOQ Manufacturing Model with Shortage using the formula - EOQ Manufacturing Model with Shortage = sqrt(2*Demand per Year*Order Cost*(Shortage Cost+Carrying Cost)/(Carrying Cost*Shortage Cost*(1-Demand per Year/Production Rate))). This formula also uses Square Root (sqrt) function(s).

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EOQ Manufacturing Model with Shortage Formula

EOQ Manufacturing Model with Shortage Example

EOQ Manufacturing Model with Shortage Solution

EOQ Manufacturing Model with Shortage Formula Elements

Other formulas in Manufacturing and Purchase Model category

How to Evaluate EOQ Manufacturing Model with Shortage?

FAQs on EOQ Manufacturing Model with Shortage

Variable Name