Application of Differential Calculus
Application of Differential Calculus
Application of Differential Calculus
Local, Global
Stationary Point
Application of Differential Calculus
2. Test a point just to the left xl, and a point just to the
right xr of each stationary point.
f ʹ (x) = x2 + 2x – 8
Let, f ʹ(x) = 0
⇒ x2 + 2x – 8 = 0
⇒ (x + 4) (x – 2) = 0
⇒ x = - 4, 2
2. Find f ʹʹ(x)
Q D
TC H S
2 Q
Annual Cost
Ordering Costs
Inventory Cost
Application of Differential Calculus
Annual Annual
Total cost = carrying + ordering
cost cost
Q + DS
TC = H
2 Q
EOQ Model
Application of Differential Calculus
-1
dTC H dQ d (Q )
DS
dQ 2 dQ dQ
H DS H DS
0 2 2
2 Q 2 Q
2 DS
HQ 2 DS Q
2 2
H
2DS
Q OP T =
H
2(Annual Demand)(Or der or Setup Cost)
Annual Holding Cost
Application of Differential Calculus
A local distributor for a national tire company expects to
sell approximately 9,600 steel-belted radial tires of a
certain size and tread design next year. Annual carrying
cost is $16 per tire, and ordering cost is $75. The
distributor operates 288 days a year. Determine:
a. what is the EOQ?
b. how many times per year does the store reorder?
c. what is the length of an order cycle?
d. what is the total annual cost if the EOQ quantity is
ordered?
Deriving EOQ
Application of Differential Calculus
Deriving EOQ
Application of Differential Calculus
PD = 10,000 x 1 = 10,000
OC = 10,000/Q x 25
HC = Q/2 x 12.5%
Deriving EOQ