The MRP gross requirements for Item X are shown here for the next 10 weeks. Lead
ID: 448098 • Letter: T
Question
The MRP gross requirements for Item X are shown here for the next 10 weeks. Lead time for A is two weeks, and setup cost is $9. There is a carrying cost of $0.02 per unit per week. Beginning inventory is 70 units.
WEEK
Use the least total cost cost lot-sizing method to determine when and for what quantity the first order should be released.
Least total cost method indicates that units should be ordered to cover the needs for periods 4 through 8
The MRP gross requirements for Item X are shown here for the next 10 weeks. Lead time for A is two weeks, and setup cost is $9. There is a carrying cost of $0.02 per unit per week. Beginning inventory is 70 units.
Explanation / Answer
Set up cost :Two times material has been ordered.
2 * $ 9 = $ 18
Inventory cost = $0.02 per unit per week
If we summarize the inventory carry in hand from week 1 to 10
Total inventory carried = 1080
So 1080 * $ 0.02 = $ 21.6
Total cost = set up cost + inventory cost
= $ 18 + $ 21.6
=$ 39.6
1 2 3 4 5 6 7 8 9 10 Gross requirements 20 10 15 45 10 30 100 20 40 150 Inventory In Hand 70 50 40 25+160 140 130 100 210 190 150 Order For next week Lead time = 2 weeks 0 160 210Related Questions
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