ABC plant buys a certain component CC from an outside supplier for the populatio
ID: 455595 • Letter: A
Question
Explanation / Answer
a. Determine the gross demand of CC from FF. I unit of FF requires two units of CC.
1
2
3
4
5
6
7
8
Demand for FF
15
25
50
25
50
50
Demand for CC
30
50
100
50
100
100
b. No inventory at the end of day, thus, the lot sizing method used is Lot-for-lot sizing method. Order is released for quantity equal to net requirement for each period.
1
2
3
4
5
6
7
8
Gross Req.
30
50
100
50
100
100
Scheduled receipts
Adj. SRs
Projected-on-hand (20)
20
20
20
0
0
0
0
0
Net Requirement
10
50
100
50
100
100
Planned order Receipts
10
50
100
50
100
100
Planned order releases
10
50
100
50
100
100
C. EOQ method
Total demand for eight days = 410
Average demand, d = 52
Carrying cost = $10.5 per unit per week
Carrying cost per day = 10.5/7 = $1.5
EOQ = Sqrt. (2*52*150/1.5) = 102 units
Lot size according to EOQ = 102 units
1
2
3
4
5
6
7
8
9
Gross Req.
30
50
100
50
100
100
Scheduled receipts
Adj. SRs
Projected-on-hand (20)
20
20
20
92
42
44
96
98
100
Net Requirement
10
0
58
6
4
2
Planned order Receipts
102
0
102
102
102
102
Planned order releases
102
0
102
102
102
0
c. Fixed order period
P = 2 days, Inventory at the end of 8th day = 60 units
1
2
3
4
5
6
7
8
Gross Req.
30
50
100
50
100
100
Scheduled receipts
Adj. SRs
Projected-on-hand (20)
20
20
20
50
0
50
0
100
60
Net Requirement
10
0
100
0
100
0
Planned order Receipts
60
150
260
Planned order releases
60
150
260
In period 7 , to have 60 units at the end of day 8, 60 units are added to fixed order period quantity (100+100)
1
2
3
4
5
6
7
8
Demand for FF
15
25
50
25
50
50
Demand for CC
30
50
100
50
100
100
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