Mohawk Industries builds transmissions for a large automobile manufacturer. One of its transmission assemblies requires parts #HD234, purchased from a supplier within the same industrial park. Because of the close proximity of its supplier, the lead time for part #HD234 is negligible. The demand for part #HD234 varies according to the orders received from the automobile manufacturer. The requirements schedule for the next 10 periods is shown below:

This requirements schedule is considered fairly typical. Furthermore, the cost of placing an order with the nearby supplier is $100.00, the purchase cost is $50.00, and the holding cost fraction is 0.01 per period.

Mohawk is in the process of assessing different lot sizing policies. It is interested in several that have been suggested. Before it can decide among them, Mohawk wishes to test each on part #HD234. Those to be tested include:

a. lot-for-lot (LFL) ordering, b. the periodic order quantity (POQ), c. the incremental part-period algorithm (IPPA) d. the part-period algorithm (PPA) with and without the look-ahead and look-backward refinement (LALB)

To assist Mohawk in its examination of the policies, address the following:

1. Compare the ordering policies and total costs of each by subjecting the requirements schedule given for part #HD234 to each model.

2. Explain the cost components for each rule. Account for any differences in the costs calculated for the various lot sizing rules.

3. If any rule performed poorly, explain why.

2 8 Period Demand 1 15 3 50 4 40 5 150 6 225 7 175 35 70 9 20 10 0 2 8 Period Demand 1 15 3 50 4 40 5 150 6 225 7 175 35 70 9 20 10 0