Multi-item EOQ With Storage Limitation

• Deals with (n>1) items• No Shortage• Items are competing for a limited storage

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Multi-item EOQ With Storage Limitation

Multi-item EOQ With Storage Limitation

Multi-item EOQ With Storage Limitation

• Step1: Compute unconstrained optimal values of the order quantities

• Step2: If storage constraint is satisfied, it is the optimal solution. Otherwise, goto step 3

• Step3: Compute constrained order quantity by modifying denominator in formula

to hi-2λ*ai

[Using Lagrange’s Multiplier’s Method]• λ = 0 gives unconstrained solution • Soln (.xls) Soln(.pdf)

Exercise

• A machine shop produces three products 1,2 and 3 in lots. The shop has a warehouse whose total floor area is 4,000 sq.metres. The relevant data for the three items is given below:

Item 1 2 3

Annual Demand

500 400 600

Cost Per Unit 30 20 70

Set up Cost 800 600 1000

Floor Area Reqd

5 4 10

Exercise

• Ans:• λ= .835• Item 1 = 236 Units• Item 2 = 211 Units• Item 3 = 197 Units• Area Consumed = 3,994