Develop a lot-for-lot solution and calculate total relevant costs for the gross
ID: 378689 • Letter: D
Question
Develop a lot-for-lot solution and calculate total relevant costs for the gross requirements in the following table Period 1 23 45 6 78 9 10 12 Gross requirements 30 30 40 70 20 10 70 60 "Holding cost= $3.50/unit/week; setup costs $200; lead time= 1 week; beginning inventory-40. Develop a lot-for-lot solution (enter your responses as whole numbers) Period 1 2 3 45 678 910 11 12 Gross requirements 30 30 40 70 20 10 70 60 On-hand at beginning of period 40LLL On-hand at end of period Order receipt Order releaseExplanation / Answer
Steps to follow:
I) Start with writing the on-hand inventory in beginning
II) Calculate on-hand at end by subtracting gross requirements from sum of on-hand at beginning and order receipt
III) Order receipt will be the value as the one in order release in the previous period (since lead time = 1)
IV) Calculate order receipt by checking the gros requirement in the next period with respect to the inventory on hand.
In Lot for lot, we can order exactly as much is required, this eliminates holding costs.
As we see the 'on-hand at end' row, we carry 10 units in week 1 and week 2
Total holding cost = 10 * $3.50 + 10 * $3.50 = $70
And, as we see in the 'order release' row, we order 7 times
Total ordering cost = 7 * $200 = $1,400
Total cost = $1,470
Period 1 2 3 4 5 6 7 8 9 10 11 12 Gross requirements 30 30 40 70 20 10 70 60 On-hand at start (40) 40 10 10 0 0 0 0 0 0 0 0 0 On-hand at end 10 10 0 0 0 0 0 0 0 0 0 0 Order receipt - 0 20 0 40 70 20 0 10 70 0 60 Order release 0 20 0 40 70 20 0 10 70 0 60 0Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.