The answer is 1540 just need to know how they got there. Please be as descriptiv

Question

The answer is 1540 just need to know how they got there. Please be as descriptive as possible- thanks!

The gross requirements for item A are specified for weeks 1 through 12 in the table that follows. Question 4 Incorrect 0.00 points out of 2.00 P Flag question Item A, Level 0 00 01 02 03 0405 06 07 08 09 10 11 12 ross 0 0 050 0 60 050 0 60050 uirements Projected on 10 hand lanned order lanned order release The lead time is 2 weeks; current on hand inventory is 100 units, the ordering cost is $85 per order, and the holding cost is $3 per unit per week. For a lot-for-lot scheduling policy, determine the total cost for the 12 week period. Answer:400 The correct answer is: 1540

Explanation / Answer

Projected On Hand Calculation = Last Period Closing + Scheduled Receipt + Planned Receipt - Gross Requirement Net Requirement = Last Period Closing + Scheduled Receipt - Gross Requirement (If the above calculation results in negative amount, then such amount is taken as Net Requirement, else 0) Planned Receipt = If Net Requirement > 0, Planned Receipt as per Lot Size Planned Order Release = If Planned Receipt >0, Order as per Lead Time to be placed, Here 1 week before Item = A, Level = 0 LT : 2 Weeks Period 0 1 2 3 4 5 6 7 8 9 10 11 12 Gross Requirement 0 0 0 50 0 60 0 50 0 60 0 50 Scheduled Receipts 0 0 0 0 0 0 0 0 0 0 0 0 Projected On Hand 100 100 100 100 50 50 0 0 0 0 0 0 0 Net Requirements 0 0 0 0 0 10 0 50 0 60 0 50 Planned Receipts 0 0 0 0 0 10 0 50 0 60 0 50 Planned Order Release 0 0 0 0 10 0 50 0 60 0 50 0 Calculation of Total Cost of Inventory Number of Orders = 4 Ordering Cost = $85 per order Total Ordering Cost = 4 * $85 = $340 Holding Cost per week per inventory = $3 Inventory in hand calculation Week 1 100 Week 2 100 Week 3 100 Week 4 50 Week 5 50 Total 400 Total Holding Cost = 400 * $3 = $1200 Total Inventory Cost = Holding Cost + Ordering Cost Total Inventory Cost = $340 + $1200 = $1540

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