Least Total Cost (LTC) method Order size is determined by comparing the carrying cost and the ordering cost of different lot sizes. The lot size where these costs are most nearly equal is selected. Least Unit Cost (LUC) method Order size is determined by comparing the sum of carrying cost and the ordering cost of trial lot sizes. For each trial lot size, this total cost is divided by the number of units in the lot. This results in a unit cost. The lot size with the lowest unit cost is selected. Gross requirement of week 1,2,3 = 30+50+10=90, which can be fulfilled from beginning inventory of 90 units Therefore, net requirement for first 3 weeks = 0. We start the analysis from week 4 onwards. Setup Cost = 10 Inventory Carrying Cost = 0.01 Period 4 5 6 7 8 9 10 20 70 80 20 60 200 50 20 90 170 190 250 450 500 500 500 500 0 70 80 20 60 200 50 0 0 0 0 1 2 10 3 4 5 6 7 8 9 10 10 10 10 10 10 10 10 10 Gross Requirement Cumulative Order Qty Excess inventory Week carried Order cost Carrying cost This period Cumulative cost Diff. of Holding & Ordering cost Total Cost 0 0.7 1.6 0.6 2.4 10 3 0 0 0 0 0.7 2.3 2.9 5.3 15.3 18.3 18.3 18.3 18.3 10.00 9.30 7.70 7.10 4.70 5.30 8.30 8.30 8.30 8.30 10.00 10.70 12.30 12.90 15.30 25.30 28.30 28.30 28.30 28.30 Unit Cost 0.5000 0.1189 0.0724 0.0679 0.0612 0.0562 0.0566 0.0566 0.0566 0.0566 Least Total Cost Least Unit Cost 4.70 (least diff of ordering and holding cost) 0.0562 Quantity Ordered Periods Covered Least Total Cost 250 4 to 8 Least Unit Cost 450 4 to 9