Question

strengths and weakness of Fixed Quantity system (FQS)

Answer 1

A settled request amount framework is a standout amongst the most essential in stock administration. Consequently we have to take a gander at how to figure the two factors that characterize it: the request amount Q and the reorder point ROP. Before we do that, nonetheless, we have to take a gander at the suspicions this framework makes. Above all, the framework accept that every one of the factors happen at a steady rate and their esteems are known with sureness. For instance, the framework expect that the request, D, happens at a steady rate and that there is no inconstancy popular. Likewise, the lead time, L, is consistent, the holding cost, H, is known and settled, as are stockout cost, S, and unit value, C. In spite of the fact that these suppositions are not sensible the model is very powerful and gives fantastic outcomes notwithstanding these suspicions.

The amount to Order?

The primary choice in the settled request amount demonstrate is to choose the request amount Q. Review that there are various stock costs, most eminently stock holding expense and requesting cost. We need to choose the "best" request amount that limits these expenses—the EOQ specified beforehand. This is processed by taking a gander at the aggregate yearly stock cost and finding the request amount that limits it. Consider that the aggregate yearly cost is contained yearly buy cost, yearly requesting expense, and yearly holding expense, and looks as takes after:

Add up to cost = Purchase cost + Ordering cost + Holding cost

TC = DC + (D/Q) S + (Q/2) H

where

TC = Total cost

D = Annual request

C = Unit cost

Q = Order amount

S = Ordering cost

H = Holding cost

The main term in the condition, DC, is the yearly buy cost for things. It is contained yearly request (D) times the unit cost of every thing (C). The second term (D/Q) S is the yearly requesting cost. It is figured as the quantity of requests set every year (D/Q), times the cost of each request, S. At long last, the third term is yearly holding cost where (Q/2) is the normal stock held. Keep in mind that our most extreme stock is Q units when the request is gotten. At the point when stock is exhausted we have zero. Thusly all things considered we have Q/2 units in stock. H is the yearly holding cost per unit of stock.