Problem 2: Schedule based on EOQ and give the EOQ and costs. Round down for EOQ.

Question

Problem 2: Schedule based on EOQ and give the EOQ and costs. Round down for EOQ. Multiple Q are not allowed In each week only one order release is possible. Only look for net requirement of the next 2 weeks and then order only if they are not satisfied Lead Time= 2 weeks EOQ= Setup costs 300 $ Setup cost- Holding cost- 15 $/week and consider all weeks Stockout cost20 $/week Holding Cost- cost = Total= Period: 1 2 4 5 6 7 0 3 9 20 20 50 10 Gross requirement On hand begin of period25 On hand end of period Net requirement Planned order receipt Planned order release 15 30 60

Explanation / Answer

Average weekly demand, d = (0+15+20+20+50+10+0+30+60-25)/9 = 20

Unit holding cost, h = 15

Stockout cost, p = 20

Setup cost, k = 300

EOQ = ((2*d*k/h)*(p+h)/h) = ((2*20*300/15)*(15+20)/20) = 37

Setup cost = 5*300 = $ 1,500

Holding cost = 144*15 = $ 2,160

Stockout cost = 6*20 = $ 120

Total = 1500+2160+120 = $ 3,780

Beg. Inv. 1 2 3 4 5 6 7 8 9 Gross Requirements 0 15 20 20 50 10 0 30 60 Scheduled Receipts 0 0 0 0 0 0 0 0 0 Projected on Hand 25 25 10 27 7 0 21 21 28 5 Net Requirements 0 0 10 0 43 16 0 9 32 Planned Order Receipts 0 0 37 0 37 37 0 37 37 Planned Order Releases 37 0 37 37 0 37 37 0 0 Stockout 0 0 0 0 6 0 0 0 0

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