Page 45 - F2 Slides 2017-18
P. 45
Economic Batch Quantity
The number of manufactured items to produce in a batch,
to minimise total costs
Where :
D = annual demand
Co = Cost of setting up one batch
Ch = cost of holding one unit per year
R = Annual replenishment (annual production) rate
Annual setup costs = CoD/Q
Annual holding cost = Ch × Q/2 (1-D/R)
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