Production order quantity

There must be planned routine maintenance, changeovers planning with the engineers, planners, and marketing, in particular in order to maximize the economic order quantity (EOQ). The EOQ is defined as the point at which the cost of changeover equals the cost of holding the extra inventory by increasing production order quantities. 

TABLE 28.2 Production Order Quantity Equation Terms... 

We mentioned previously that we want to create a flow world with a river of production that flows continuously, not a series of streams and lakes with large dams to retain inventory. A modified EOQ equation offers added insight into the economics of the supply chain. This is the case of the production order quantity, which is a product of the same operations research discipline that produced the EOQ equation. The production order quantity focuses on decisions about how much to make. It differs from the EOQ equation because it takes into account the inventory demand during the production lead-time. The production order quantity is ... 

The terms in the production order quantity equation are the same as those in the EOQ equation with two exceptions (see Table 28.2). 

For very slow rates of r relative to p, there is not much difference between the economic order quantity and the production order quantity. 

This is often the implicit assumption by those applying the EOQ equation, that the EOQ is the same for both ordering and production. However, as r approaches p, the production order quantity increases toward infinity. That is, the production is continuous and never stops. So we now have a river rather than a bunch of dams and lakes. 

The newsvendor problem assumes that unsatisfied demand is lost. The information available to the decision maker includes the demand D, which follows a known distribution with continuous cdf F(-), the unit production (order) cost c, the selling price p, and the salvage value per unit, v. The objective is to minimize the expected cost. It is well known that the optimal production (order) quantity, 5, can be decided easily, which should satisfy the following condition ... 

Inventory policy - how the organization will maintain economic order quantities to meet its production schedules... 

A problem you may find is that the customer changes the order quantity or the delivery date after you have scheduled production and the only way you can meet the prescribed schedule is to pay a premium for shipment. Providing you notify the customer in advance and obtain authorization to alter the mode of transportation there should not be a problem. However, you need a process in place to ensure this happens. 

For each end product or pre-product the density, the product value and the delay costs have to be defined. The density is necessary in order to convert the order quantity (kg) into order volume (1) (order quantity divided by the density of the corresponding product equals the order volume). 

Each of the orders is marked by an order quantity, an earliest start and a deadline. The earliest start states at what time an order can be produced in the earliest case possible (production start of the first quant). The deadline is the desired delivery date (production end of the latest quant) of the end product. 

The purchase orders, sales and distribution order quantities can be higher or lower each day depending on the available number of transportation units e.g. trucks or ships. The production quantity, however, each day is limited by production capacity and cannot be so easily changed day-by-day. These different volume structures need to be matched by integrating order schedules and availabilities of materials. 

Q = economic order quantity c = procurement cost per order D = demand for the product expressed either in dollars or physical units I = inventory carrying costs UC = unit cost of the item... 

The major notations of scalars, vectors, and tensors and their operations presented in the text are summarized in Tables A1 through A5. Table A1 gives the basic definitions of vector and second-order tensor. Table A2 describes the basic algebraic operations with vector and second-order tensor. Tables A3 through A5 present the differential operations with scalar, vector, and tensor in Cartesian, cylindrical, and spherical coordinates, respectively. It is noted that in these tables, the product of quantities with the same subscripts, e.g., a b, represents the Einstein summation and < jj refers to the Kronecker delta. The boldface symbols represent vectors and tensors. 

Refined products establish the order in which each refining unit will be introduced. Only one or two key product(s) specifications are used to explain the purpose of each unit. Nevertheless, the reader is reminded that the choices among several types of units and sizes of these units are complicated economic decisions. The trade-offs among product types, quantity, and quality will be mentioned only to the extent that they influence the choice of one type of processing technology over another. 

The next step up from retail is the wholesaler or distributor (i.e., anyone selling ephedrine products in quantities larger than 24 g). These businesses are registered with the DEA in order to sell these amounts. And different, more restrictive rules apply to them ... 

STAGES OF THE PROCESS The check should preferably be made by someone other than the person who has dispensed the item Check in a designated area Check items in the order they appear on the prescription form Check Product name Quantity Strength Expiry date Label - correct patient details, directions, suitable additional warning labels, and legibility Professional appearance Initial the appropriate checking box on the label... 

Each term on the right-hand side of the equation involves matrix products that contain v a specific number of times, either explicitly or implicitly (for the terms that involve AA). Recognizing that is a zeroth-order quantity, it is straightforward to make the associations... 

Note that if r c and s < c, then the company can make no profit from buying and seUing the product, so that the optimal order quantity is x = 0, irrespective of what the demand D turns out to be. Also, if iS c, then any unsold product at the end of the season can be disposed of at a value at least equal to the cost of the product, so that it is optimal to order as much as possible, irrespective of what the demand D turns out to be. These, of course, are obvious cases. Therefore, we assume in the remainder of this example that s < c < r. Under this assumption, for any given D > 0, the function G(-, D) is a piecewise linear function with positive slope r — c for x < D and negative slope s — c for x > D. Therefore, if the demand D is known at the time the order decision has to be made, then the best decision is to choose order quantity x = D. 

---