Sensitivity analysis of eoq model, Managerial Accounting

Assignment Help:

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.


Related Discussions:- Sensitivity analysis of eoq model

Sales of cool-man air conditioners, Sales of Cool-Man air conditioners have...

Sales of Cool-Man air conditioners have increase steadily during the past five years: Year    Sales 1        450 2        495 3        518 4        563 5        584 6          ?

Analysis, Analysis Various business decisions have recurrent themes: wh...

Analysis Various business decisions have recurrent themes: whether to the outsource production or to the support functions, what level of production and pricing to establish, w

Determine the absolute liquid ratio - liquidity ratios, Absolute liquid rat...

Absolute liquid ratio - Liquidity ratios Although receivables debtors and bills receivable are usually more liquid than inventories yet there may be doubts regarding their rea

Analysis and correct journal entry, 1.The acquisition of Company B was fina...

1.The acquisition of Company B was financed by Company A with cash and by issuance of 2M common shares for $100M. Company A forgot to record the stock issuance

Explain product cost, Explain product cost Product costs are those cost...

Explain product cost Product costs are those costs which are associated with and directly identifiable with the product. In other words, which are assigned to the product are p

Explain briefly about variances, Normal 0 false false false...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Cash planning, Firms need cash to invest in inventory, receivables and fixe...

Firms need cash to invest in inventory, receivables and fixed assets and to create payments for operating expenses, so as to increase earnings and sales and make sure the smooth ru

Multi-collinearity, Multi-collinearity Multiple regression analysis is ...

Multi-collinearity Multiple regression analysis is based on the assumption that the independent variables are not correlated with each other, whenever the independent variables

Account analysis-high low method-cost estimation method, Account analysis (...

Account analysis (Inspection of accounts) method: This method requires that departmental managers and the accountant inspect each item of expenditure within the accounts for s

Explain the various stages of product life cycle, Various stages of product...

Various stages of product life cycle Typically the life cycle of a manufactured product will consist of the following stages: 1) market research : before any investment in

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd