aicu lations. 15, You are given this net requirements schedule: Week 5 2.000 100

Question

aicu lations. 15, You are given this net requirements schedule: Week 5 2.000 100x0 assemble batches and 52 weeks com- Net requirements (units) 500 500 1,000 3,000 1,500 2 If it costs $6,000 to get the final assembly department ready to ass of this product, it costs $30 to carry one unit in inventory for a year per year are worked by the final assembly department, develop a schedul week pleted production lots for the product and calculate the cost of your sc develop a schedule of using these methods:

Explanation / Answer

b. EOQ policy

Average weekly net requirement = (500+500+1000+3000+1500+2500+2000+1000)/8 = 1500

Weekly inventory carrying cost = 30/52

Economic order quantity for EOQ policy = SQRT(2*1500*6000/(30/52)) = 5586

An order for 5586 units is released in week, when the projected ending inventory is less than 0.

c. POQ policy

Review period for POQ policy = EOQ / average weekly requirement = 5586/1500 = 3.7 ~ 4 weeks

Order is placed every 4 weeks of quantity equal to 4 weeks' requirement

a. Lot-for-Lot (LFL) Week 1 2 3 4 5 6 7 8 Net requirements 500 500 1,000 3,000 1,500 2,500 2,000 1,000 Projected ending inventory 0 0 0 0 0 0 0 0 Production Schedule 500 500 1,000 3,000 1,500 2,500 2,000 1,000 Total ending inventory 0 Inventory carrying cost = 0 Number of orders 8 Ordering cost = 48,000 Total cost = 48,000

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