4. The Thrifty Computer Company is trying to decide which of several lotsizing procedures to use for its MRP system. The following information pertains to one of the typical component parts:

Setup cost = $100/order.

Inventory cost = $1.50/unit/week.

Current inventory balance = 0 units

a. Apply the EOQ (only integer multiples of the EOQ can be ordered), POQ, and PPB lot-sizing procedures and show the total cost resulting from each procedure. Calculate inventory carrying cost based on the average inventory on hand at the end of each period. Assume orders are received into the beginning inventory.

b. Indicate advantages and disadvantages of using each procedure suggested in part a.

Transcribed Image Text:

Week 1 2 3 4 4 5 6 7 8 Requirements 65 45 35 10 115 25 85 20