Using the gross requirements schedule below*, prepare an alternative ordering sy

Question

Using the 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). What is the cost of this ordering system? *Holding cost = $1/unit/week; setup cost = $200; lead time = 1 week; beginning inventory = 45 units. Prepare a net requirements plan (enter your responses as whole numbers).

Explanation / Answer

Item = XX Lot Size - 100 LT : 1 Week Period 0 1 2 3 4 5 6 7 8 9 10 Gross Requirement 45 20 40 0 10 40 30 0 30 55 Scheduled Receipts 0 0 0 0 0 0 0 0 0 0 Projected On Hand 45 0 80 40 40 30 90 60 60 30 75 Net Requirements 0 20 0 0 0 10 0 0 0 25 Planned Receipts 0 100 0 0 0 100 0 0 0 100 Planned Order Release 100 0 0 0 100 0 0 0 100 0 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 # Orders 3 Order Cost Per order $200.00 Total Ordering Cost = 3 * 200 = $600

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