A company has estimated net requirements for a particular part as follows:

	Month
	1	2	3	4	5	6	7	8	9	10	11	12
Requirements	100	10	15	20	70	250	250	250	250	40	0	100

Ordering cost associated with this part is $300. Estimated inventory carrying cost is $2 per unit per month calculated on average inventory. Currently no parts are available in inventory. The company wishes to know when and how much to order over the next 12 months.

(a) Apply the economic order quantity and the part period balancing procedures to solve this problem.

(b) What important assumptions are involved in each of the approaches used in part a?