Problem
Timed requirements for an automobile engine are (400, 375, 420, 275, 390, 325). These serve as demand for the production process. Setup cost is $420, and holding cost is $1.50 per unit per-period.
• What are the optimal EOQ and EOT using average demand?
• EOQ has strong assumptions not normally met in practice. Which two assumptions are not met in this problem?
• How does EOQ change if EOT is rounded to the nearest integer?