In this video, we focus on how to calculate the optimal production quantity using the POQ Model. This Optimal price calculator allows a business to accomplish the following: » Determine the quantity it needs to produce or sell in order to realize the maximum of profit; Conclusion. From the past market analysis, the price elasticity was taken approximated to be 1.5. STEP 1. The calculator also offers a visualization of the EOQ model in graphic form. Example of Optimal Price and Output in Monopoly Market. SOLUTION: This is generally referred to as a OPTIMAL PRODUCT MIX problem and Excel solves these kinds of problems really well, especially when the solution conforms to a “linear solution” model. I edited the question so everyone understands what you did there, I hope you don't mind (and I captured the essence of your … Economic Order Quantity uses ordering costs and holding costs to determine the certain level of orders required. Optimal Price Analysis is a mathematical computation that helps a business identify the point where it realize the maximum of profit.. The marginal cost(MC) of the production company is $100. Make sure your Solver add-in module is added to … You can easily calculate the Economic Order Quantity using Formula in the template provided. You will find the EOQ Economic Order Quantity formula above, as well as the EOQ Economic Order Quantity calculator. With this information we can calculate the following market demand function: QD = -100P + 1200. Calculate Inventory Value Write down the production cost per unit for your business (P) -- for example,$5. The EOQ Economic Order Quantity model is used to minimize these inventory related costs. H represents the carrying/holding cost per unit per annum. Solution. How large should the standard order size be for this product? The marginal cost(MC) of the production company is $100. Inventory can be expensive, and money is a precious commodity to any business. Using the equation, $$P[1-\frac{1}{E_p}]=MC$$ $$\Rightarrow P[1-\frac{1}{1.5}]=100 \therefore P=300$$ Question Calculating optimal production batch size Calculating Production Runs Calculate the EOQ/ELS for the following two cases.$\endgroup$– Lioneds Apr 19 '15 at 13:08$\begingroup$@user2437789 OK, that explains it. This simple Economic Order Quantity (EOQ) calculator can be used for computing the economic (optimal) quantity of goods or services a firm needs to order. The square root of 16,000,000 is 4,000 and this is the economic production quantity. P is the price and the x is the quantity. Economic Order Quantity is defined as the optimum level of quantity and frequency of orders for a particular level of demand. 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