You as a plant operations manager of a milling plant is todetermine the Lot size for a particular milling plant that has asteady demand of 30000 tones/day. The production rate is 190000tones/day, with annual demand of 10500000 tones, set up cost is K200000, annual holding cost is K 210/tone, and a plant operates 350days/year. (a) State the formula and calculate the Production OrderQuantity (POQ) (b) Compare and contrast the Economic Order Quantity(EOQ) and Production Order Quantity (POQ) by explaining the models’salient fetures, assumptions and their theory limitations.
Expert Answer
POQ = √ (2*D*S) / (H (1-d/p))
Where,
D = Annual demand
S =
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