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If there are more than one negative zj -c j then close the most negative of them.
Let the minimum of these ratio be then the vector y R will level the basis
yB. The column element y kr , which is in the kth row and the rth column is
known as the leading element of the table.
Convert the leading element to unity by dividing its row by the leading
element itself and all other elements in its column to zeros by making use
of the relations
Key Points
Quantitative method
Qualitative method
Quantitative Method
Smoothing Method
where
Exponential Smoothing
o In this method, the weightage of the data diminishes
exponentially as the data become older.
Ft is also given by
where,
Key Points
o Large value α of is selected for fluctuating demand while a
lower value of α is selected for smooth demand.
o In exponential smoothing method of forecasting, the forecast
for higher values of the smoothing constant will be more
sensitive to changing patterns in demand.
o In exponential smoothing method of demand forecasting,
demand for the more recent data is given more weightage.
y e = a+bx
Qualitative Method
Delphi Method
Scenario Writing
Forecast Error
Bias
Tracking Signal
Indirect Inventories
Inventory Control
Inventory Costs
Holding Cost (C1 or Ch)
In order to determine the economic order quantity, we must first determine the
total cost of carrying inventories and ordering inventories.
When the order quantity (Q) is received, the maximum inventory level is
equal to Q.
When it is depleted, the inventory level is 0 (zero).
(D/Q)C o
TC = (Q/2)H + (D/Q)C o
where
D = annual demand
ROP = dLT
ROP = dLT + zσ