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ID: 463019 • Letter: D
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docs.google.com File Edit View Insert Format Tools Table Add-ons Help All changes saved in Drive Normal text Times New... 4. Given setup cost of $350 per setup and holding cost of $2.50 per unit per week, develop lot sizes (a) Lot-for-lot, (b) EOQ, and (c) POQ. Determine the total cost for each method. Use lead time of one week. (a) Lot-for-lot Week 1 3 4 5 7 8 150 100 110 120 130 140 Gross requirement 110 120 Scheduled receipts Projected on-hand Net Requirement Planned receipts Planned order releases Total ending inventory No. of setup Carrying cost Setup cost Total cost Comments a shExplanation / Answer
Given Information :
Set up cost = $350
Holding cost = $2.50 per unit
Lot For Lot
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EOQ
From given information , I calculated following
Per week avg Demand = 122.5
So Annual demand = 122.5 * 52 =6370
616 -150 = 466 (Ending inventory)
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Period Order Quantity
Formula
POQ = P *EOQ / Demand
= (52 weeks * 1336 ) / 6370
= 10.90 weeks
= Approximately 11 weeks
Assumption Avg 1 week requires 122.5
So For 11 weeks = 122.5 *11 = 1347.5
Ending Inventory = 627.5 - 150 =477.5 = 478
EOQ , POQ are calculated on annual basis . So If Lot for lot is calculated on annual basis then it is also costlier.
Lot For Lot Week Lead time : 1 weeks Week 1 2 3 4 5 6 7 8 Gross Requirement 100 110 120 140 110 120 130 150 Scheduled Receipt 100 120 140 110 120 130 150 Projected on Hand 110 110 10 0 0 0 0 0 0 Net Requirement 0 100 120 140 110 120 130 150 Planned Receipt 100 120 140 110 120 130 150 0 Planned order Release 100 120 140 110 120 130 150Related Questions
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