Question
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
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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started