Question

The following table shows the PPB (Part Period Balancing) calculation for an MRP lot sizing problem. If EPP (Economic Part Period) is 200, weekly holding cost per unit is $1 and set up cost is $200, what will be the total cost?

Month	1	2	3	4	5	6	7
Month Requirement	100	150	200	150	100	150	250

0 0 vo 5 50550550 5 3 2 5 0 42341 2 3 5 2 4 ー ,23 .. 45.. 67 3 3

A) $450

B) $600

C) $1050

D) $1250

E) None of the above

Answer 1

Alternative	Order Cost	Carrying Cost	Remarks
Order 100 to cover the needs of period 1	200	50	Continue until carrying costs pass order cost
Order 250 to cover the needs of periods 1 and 2	200	125	Continue until carrying costs pass order cost
Order 450 to cover the needs of periods 1, 2 and 3	200	225	Stop as carrying costs are larger than order cost
Decision: since 225 is closer to 200 than 125 is, order 450 to cover the needs of periods 1, 2 and 3
Order 100 to cover the needs of periods 4	200	75	Continue until carrying costs pass order cost
Order 250 to cover the needs of periods 4 and 5	200	125	Continue until carrying costs pass order cost
Decision: order 250 to cover the needs of periods 4 and 5
Order 150 to cover the needs of period 6	200	75	Continue until carrying costs pass order cost
Order 400 to cover the needs of periods 6 and 7	200	200	Continue until carrying costs pass order cost
Total cost is = 200+225+200+125+200+200 = 1150