A390 Operations Management all 2017 2. [Lot Sizing in Material Requirement Syste

Question

A390 Operations Management all 2017 2. [Lot Sizing in Material Requirement System (MRP) Michael Jordan, senior in the department of management at JSU, recently got a job as a production planner at Honda Automotive Assembly Plant in Lincoln, Alabama. His first task on the job training is to review the master production plan shown below: (Initial inventory 150 units, Ordering cost $200 per order, $1 per unit per week.) cost Part Period Gross requirements Develop an ordering plan and costs for this plant using the following techniques a) Develop the lot-for-lot MRP table and calculate the total relevant costs. Part Lot-for-Lot Lot Siz Gross requirements Scheduled receipts Period 100 | 170 I 200 1501-0112010 Projected available (Beg.) 150 Net requirements Planned order receipts Planned order releases Lead time 1 wk Lot size Holding Cost Ordering Cost = Total Cost b) Develop the Economic Order Quantity (EOQ) lot sizing technique. (Assume EOQ-200) Period Part OG Lal iing Gross requirements Scheduled receipts 100 | 170 | 200 150 120 | 0 Projected available (Beg) 150 End of period) Net requirements Planned order receipts Planned order releases 1 wk Lot size- Ordering Cost = Total Cost = Holding Cost = c Develop the Periodic Order Quantity (POQ) lot sizing technique. (Assume POQ Interval 2 weeks) Period POO Lot Si Gross requirements 100 170 200 150 0 12010 Scheduled receipts Projected available (Beg)L150 hand (End of period) Net requirements Planned order receipts. Planned order releases Lead time 1 wk Lot sizes Total Cost Ordering Cost = (d) Among the three lot sizing techniques above, which has the lowest cost?

Explanation / Answer

d. Among the above three techniques , frist and third are lowest cost.

Period 0 1 2 3 4 5 6 7 Gross requirements 100 170 200 150 0 120 0 Initial inventory 150 units ordering cost $200 per order Lead time 1 week Holding cost $1 per unit per week Part Period Lot-for-lot sizing 0 1 2 3 4 5 6 7 Gross requirements 100 170 200 150 0 120 0 scheduled receipts projected available 150 Inv. On hand (end of the period 150 150 50 0 0 0 0 0 50 Total inventory Carried (Skip first inventory Net reuirements 0 120 200 150 0 120 0 Planned order receipts 0 120 200 150 0 120 0 Planned order releases 200 150 0 120 0 0 Number of orders 3 ordering cost 3*150 450 Inventory holding cost 3*50 150 total cost 450+150 600

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