SOLUTION: Economic lot size model. d=daily demand rates, p=daily production rate, t=number of days for a production run. The book saids that max. inventory is (p-d)t . t=q/p days. Thus maxim

Question 334677: Economic lot size model. d=daily demand rates, p=daily production rate, t=number of days for a production run. The book saids that max. inventory is (p-d)t . t=q/p days. Thus maximum inventory = (p-d)t =(p-d( (q/p)= (1-d/p)q. Please help me make some sense out of these equations. Thank you.
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
Economic lot size model.
d=daily demand rates,
p=daily production rate,
t=number of days for a production run.
------------------------------------------------
The book saids that max. inventory is (p-d)t
If you produce p items and only sell d you
have p-d items left over each day.
If you have that for t days you have (p-d)t
items in your inventory.
=====================================================
t=q/p days.
This defines a variable "q" as p*t, or the amount of
production in t days.
=====================================================
Thus maximum inventory
= (p-d)t =(p-d)(q/p)
You have substituted q/p for t
-----------------------------------
= (1-d/p)q.
You have distributed the product to
get this final statement of # of items
in you inventory.
============================
Cheers,
Stan H.
===================
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