The Economic Order Quantity (EOQ) model is a classical model used for controllin

Question

The Economic Order Quantity (EOQ) model is a classical model used for controlling inventory and satisfying demand. Costs included in the model are holding cost per unit, ordering cost and the cost of goods ordered. The assumptions for that model are: only a single item is considered; the entire quantity ordered arrives at one time; the demand for the item is constant over time; no shortages are allowed.

Suppose we relax the first assumption and allow for multiple items which are independent except for a budget restriction. The following model describes this situation:

The decision variables are Qj, the amount of item j to order. The model is:

In the objective function, the first term is the annual cost of goods, the second is the annual ordering cost (Dj/Qj is the number of orders) and the last term is the annual inventory holding cost (Qj/2 is the average amount of inventory).

Set up a spreadsheet model for the following data:

B = $22,000

i = 0.25

Solve the problem using Excel Solver. Hint: You will need to start with decision variable values that are greater than 0 for Solver to find a solution.

If required, round your answers to two decimal places.

Optimal Solution:

Q1 =  

Q2 =  

Q3 =  

If required, round your answer to the nearest dollar.

Total cost = $

Let Dj = annual demand for item j Cj = unit cost of item j Sj = cost per order placed for item j i = inventory carrying charge as a percentage of the cost per unit B = the maximum amount of investment in goods N = number of items

Explanation / Answer

1. I agree with ethical imperialism. There is a right and wrong, whether we agree about what is right and wrong. Some things are always right and some things are always wrong irrespective of time, places and people.

·This helps us to evaluate decisions on objective basis without bias

·There are universal values which are common for all. Morality isn’t about individual or group preferences

·Prevents abuse of ethical standards by crooked men and by men without sufficient intelligence of amoral reasoning (Kohlberg’s theory of moral reasoning- some men fail to achieve the desired level of moral reasoning due to their inherent incapability)

2. I did not choose Ethical relativism- ethical relativism states that what is right is whatever one's society holds it right. Every society has different beliefs, assumptions, and values and it is objectively right or wrong.

Benefits:

·Respect and tolerance for diversity offer a harmonious society.

·Prevents one society forcing their superiority over others which happens in reality when we try to force universal ethical standards

·Inspire of arguments, morals are about assumptions, beliefs, and values, but they can never achieve the status of facts. Hence they are always prone to change. Relativism helps to promote variety of cultures

3.

Ethical imperialism and relativism can be combined with effective decision making

We can have a basic template for following ethical behavior using imperialism which says that those ethics remain same for all. This helps us to offer a fair distributive justice to all standing behind core human values. It also helps to prevent someone from performing a morally incorrect act.

At the same time, we will reflect upon using Ethical relativism to adjust our decision making base on place and culture.   

4. Both imperialism and relativism can be combined together for management and decision making by understanding and incorporating the following protocols:

·Respect for core human values

·Time and place may not matter but context matters when making whether something is ethical or not

·Respect for local values, culture, and practices

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