Question

Using gross requirements schedule below, prepare an alternative ordering system that always orders 100 units the week prior to a shortage (a fixed order quantity of 100) as a Lot Sizing technique. What is the cost of this ordering system? Period Gross requirements 25 20 50 0 10 40 30 0 30 65 1 2 3 45 6 7 8 9 10 Holding cost $1/unitweek; setup cost $200; lead time 1 week beginning inventory 25 units. Prepare a net requirements plan (enter your responses as whole numbers) Period Gross requirements On-hand at beginning of period25 On-hand at end of period Net requirements Order receipt Order release 1 23 4 5 6 789 10 25 20 50 0 10 40 30 0 30 65 The holding cost of this ordering system is s(enter your response as a whole number). The setup cost of this ordering system is $L (enteryour response as a whole number). The cost of this ordering system is (enter your response as a whole number)

Answer 1

EOQ	100
Holding cost	1	per unit per week
Setup cost	200
Lead time	1	week
Period	1	2	3	4	5	6	7	8	9	10
Gross requirement	25	20	50	0	10	40	30	0	30	65
On hand at beginning of period|25	25	100	80	30	30	120	80	50	50	120
On hand at end of period	0	80	30	30	20	80	50	50	20	55
Net requirement	0	20	0	0	0	20	0	0	0	45
Order receipt		100				100				100
Order release	100				100				100
Average inventory (beginning inventory+onhand inventory at end of period)/2	12.5	90	55	30	25	100	65	50	35	87.5
Average Inventory	55
Holding cost	1	per unit per week
Holding cost per unit per 10 weeks (10 week period)	10
Inventry holding cost	550
Number of orders	3
Ordering or set up cost (no of order*set up cost (200)	600
The cost of this ordering system (Hoding cost+setup cost)	1150