Question
QUESTION 2 Ricardo is currently working on a lot sizing decision in his shop. The net requirements for a material from an MRP schedule are:
QUESTION 2
Ricardo is currently working on a lot sizing decision in his shop. The net requirements for a material from an MRP schedule are:
Week | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Net requirements | 600 | 800 | 1200 | 1650 | 2100 | 1350 | 700 | 800 |
- Annual Demand = 60,000 over a 50-week-per-year (average of 1,200 units per week)
- It costs $3,000 to set up the machines
- It costs $2.00 when one unit of product is kept in inventory for one week
- No beginning inventory
a) Develop a lot-sizing schedule for lot-for-lot (LFL)
Week | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Net requirements | 600 | 800 | 1200 | 1650 | 2100 | 1350 | 700 | 800 |
Beginning Inventory | ||||||||
Production Lot | ||||||||
Ending Inventory | ||||||||
Average Inventory |
Setup Costs =
Inventory Holding Costs =
Total Costs =
b)Develop a lot-sizing schedule for Economic Order Quantity (EOQ)
EOQ =
Week | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Net requirements | 600 | 800 | 1200 | 1650 | 2100 | 1350 | 700 | 800 |
Beginning Inventory | ||||||||
Production Lot | ||||||||
Ending Inventory | ||||||||
Average Inventory |
Setup Costs =
Inventory Holding Costs =
Total Costs =
c)Develop a lot-sizing schedule for Least Total Cost (a.k.a. Part Period Balancing (PPB))
Target Economic Part Period (EPP) =
Periods Combined Lot Size EPP
Week | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
Net requirements | 600 | 800 | 1200 | 1650 | 2100 | 1350 | 700 | 800 |
Beginning Inventory | ||||||||
Production Lot | ||||||||
Ending Inventory | ||||||||
Average Inventory |
Setup Costs =
Inventory Holding Costs =
Total Costs =
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