Sweet Cookie Co. is selling the cookies for various flavors to retailers and customers in Hong Kong. For the chocolate flavour, Sweet Cookie mainly packs two products, namely a) Individual pack (see Figure 3A), and b) Gift pack (see Figure 3C).

For an individual pack, one piece of finished product will require 1 piece of cookie, and 1 outside plastic pocket (see Figure 3A & 3B)

While for a gift pack product, there needs 6 pieces of cookies and one bigger outside paper bag. The Bill of Materials for both packing versions can be referred as follows:

Followings are the Master Production Schedule (MPS) data, lead time, setup cost and holding cost for the cookies. (Remarks: Gross requirements of cookies table below is finalized and has taken BOM of gift pack quantities into account already.)

Summary of gross requirements of cookies table:

Week	1	2	3	4	5	6	7	8	9
Gross requirements		15	5	20		10	15		25

Lead time = 1 week; setup cost: $200 per setup; holding cost: $10 per unit/week. Assume that there are 52 weeks in one year.

You, as a manager of the company, your job is to develop an ordering plan by using table given below and calculate the total costs, with different lot-sizing techniques requested in part a, b and c for cookie item. Please also note the scheduled receipt and projected on hand status.

 

a)      Lot-for-lot

b)      EOQ 

c)      POQ

d)     Which plan has the lowest cost based on the calculation of part a, b & c? Explain.

Figure 3A: Individual Pack Figure 3B: Cookies Figure 3C: Gift Pack (6 pcs)