Sensitivity analysis of eoq model, Managerial Accounting

SENSITIVITY ANALYSIS OF EOQ MODEL

Sensitivity Analysis is regarded with the manner in which those results of solutions change in response to change in model parameters.

1759_Untitled.jpg


It is important to appreciate that in formulating our inventory models, we have really been performing a planning exercise. Thus we have made certain assumptions and estimates (e.g. annual demand D, holding costs H, & ordering costs O) and out solutions have obviously been affected by these. When for example calculating a deterministic EOQ value with maximization of total inventory costs as the objective, expected annual demand (D) is taken into account. If we subsequently find that annual demand has differed from that expected then we will find that the EOQ we selected was not the optimum and, as an outcome, the total inventory cost was not really minimum.

Posted Date: 12/6/2012 6:44:03 AM | Location : United States







Related Discussions:- Sensitivity analysis of eoq model, Assignment Help, Ask Question on Sensitivity analysis of eoq model, Get Answer, Expert's Help, Sensitivity analysis of eoq model Discussions

Write discussion on Sensitivity analysis of eoq model
Your posts are moderated
Related Questions
Explain the categories of The activity cost drivers The activity cost drivers can broadly be classified into following three categories: 1) Transaction drivers: for exampl

Define the Balanced Score Card? 1. Distinguish between standard control and budgetary costing. 2. Define the ‘Balanced Score Card? Explain the steps in implementing ‘Balance

ALGEBRAIC ANALYSIS The supposition of linear cost behavior allows use of straight-line graphs and simple linear algebra in cost-volume study. The net cost is a semi-variable c


Tom Emory and Jim Morris strolled back to their plant from the administrative offices of Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the company''s

Traditional budgeting vs. zero base budgeting 1) Traditional budgeting is accounting oriented. Main stress happens to be on previous level of expenditure. Zero base budgeting m

I am part of a marketing group, and we are working on a project for a local cable company,they currently serve 3,200 customers and sell 50 wireless boxes a month,what I need to do

Sean Corp. issued a $60,000, 10 year bond at the face rate of 8% annually on 1/1/X0. The market rate was 10%. How much cash will the bond investors receive at the end of the first

Types of Non-Controlled Variables a) Parameters: These are input variables that for a given simulation have a constant value. They are factors which help specify the relat

A bill is explained as an unconditional order in writing, addressed through one person to the other, signed through the person providing it, requiring the person to whom it is addr