Problem 2: (6.10/224 Silver et.al. (1998) Book)

Consider a company facing a demand pattern and costs as follows:

Month	Sequential number	Requirements (units)
January	1	20
February	2	40
March	3	110
April	4	120
May	5	60
June	6	30
July	7	20
August	8	30
September	9	80
October	10	120
November	11	130
December	12	40
	Total	800

Given: Fixed ordering cost A = $25.00, carrying rate r (per month) = $0.05 (Carrying costs are very high in this industry) and unit variable cost v = $4.00.

Using a three-month decision rule, the replenishment schedule and associated costs are as follows:

Month	1	2	3	4	5	6	7	8	9	10	11	12	Total
Starting inventory	0	150	110	0	90	30	0	110	80	0	170	40
Replenishment	170	0	0	210	0	0	130	0	0	290	0	0	800
Requirements	20	40	110	120	60	30	20	30	80	120	130	40	800
Ending inventory	150	110	0	90	30	0	110	80	0	170	40	0	780

Total replenishment costs: $110.00

Total carrying costs: $156.00

Total replenishment + carrying: $256.00

a/ Construct a replenishment schedule and calculate the associated costs using the Fixed Economic Order Quantity method.

b/ Repeat using the Wagner-Whitin algorithm.

c/ Repeat using the Silver Meal heuristic.

d/ Repeat using the Least Unit cost method.

e/ Repeat using the Part-period balancing method.

f/ Repeat using the Periodic Ordering Quantity method.