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Hi I was struggling with the ebq formula so is it square root 2× oreder/batch quality ×demand÷ holding cost per unit now do I × or ÷ this by 1-demand÷rate? Thanks a lot. In the f2 lecture on this topic it’s confusing as the lecturer writes he is × it but calls out on his calculator that he is ÷ it. Please help
You must be using Lecture Notes along with the lectures. The formula is given in the notes. Kindly refer to it.
Thanks but it doesn’t state explicly in the notes, it appears to be ×, but the lecturer called out divide when he plugged it in time his calculator, and the answer he got was through dividing. Please tell me if I times or divide the bracketed part of the ebq formula (1-demand÷rate) thanks a lot
The formula cannot be written here. I’ll try to simplify it, so that you may understand.
EBQ = [{2CoD÷Ch(1-D/R)}]^0.5
Since square root cannot be made here, i have used ^0.5 instead. Everything else is same.
Co = Ordering Cost
D = Annual Demand
Ch = Holding cost
R = Replenishment rate
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