1. Multi-item EOQ With Storage Limitation
Deals with (n>1) items
No Shortage
Items are competing for a limited storage space

2. Multi-item EOQ With Storage Limitation

3. Multi-item EOQ With Storage Limitation

4. Multi-item EOQ With Storage Limitation
Step1: Compute unconstrained optimal values of the order quantities
Step2: If storage constraint is satisfied, it is the optimal solution. Otherwise, goto step 3
Step3: Compute constrained order quantity by modifying denominator in formula
to hi-2λ*ai
[Using Lagrange’s Multiplier’s Method]
λ = 0 gives unconstrained solution
Soln (.xls) Soln(.pdf)

5. Exercise
A machine shop produces three products 1,2 and 3 in lots. The shop has a warehouse whose total floor area is 4,000 sq.metres. The relevant data for the three items is given below:
Item 1 2 3
Annual Demand
500
400
600
Cost Per Unit 30 20 70
Set up Cost
800
1000
Floor Area Reqd 5 4 10

6. Exercise Ans: λ= .835 Item 1 = 236 Units Item 2 = 211 Units
Area Consumed = 3,994