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Initially, assume that Phil wants to minimize his inventory requirements. Assume that each order will be only for what is required for a single period.

Initially, assume that Phil wants to minimize his inventory requirements. Assume that each order will be only for what is required for a single period. Using the following forms, calculate the net requirements and planned order releases for the gear boxes and input shafts. Assume that lot sizing is done using lot-for-lot.
Phil would like to consider the costs that his accountants are currently using for inventory carrying and setup for the gear boxes and input shafts. These costs are as follows:
Part
Cost
Gear Box
Setup = $90/order
Inventory carrying cost = $2/unit/week
Input Shaft
Setup = $45/order
Inventory carrying cost = $1/unit/week
Given the cost structure, evaluate the cost of the schedule from (1). Assume inventory is valued at the end of each week.
Find a better schedule by reducing the number of orders and carrying some inventory. What are the cost savings with this new schedule?

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