In the economic manufacturing quantity (EMQ) model, what is the maximum inventory level if the replenishment rate is 1080 units/yr?

To determine the maximum inventory level in the Economic Manufacturing Quantity (EMQ) model, it's essential to understand how inventory builds up based on the replenishment rate and the consumption rate.

The EMQ model considers a scenario where items are produced and consumed simultaneously. The maximum inventory level occurs when production is at its peak and the consumption has yet to catch up completely. At this point, the inventory will rise until it reaches a maximum level, after which consumption begins to deplete it.

The formula for maximum inventory in the EMQ model can be described as follows:

[ \text{Maximum Inventory} = \frac{R^2}{2D} ]

Where:

• R is the replenishment rate (units/year)

• D is the demand rate (units/year)

In this case, the replenishment rate is given as 1080 units/year. To calculate the maximum inventory, you typically would need the demand rate or the consumption rate to finalize the assessment.

If we assume a scenario where the demand rate can proportionally lead to this maximum inventory level being derived correctly according to the EMQ model, you might arrive at an understanding that the maximum level is derived from operational capacities and rates specified within the model's assumptions.

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