Develop a lot-for-lot solution and calculate total relevant costs for the gross
ID: 409954 • Letter: D
Question
Develop a lot-for-lot solution and calculate total relevant costs for the gross requirements in the following table* Period 12 3 4 56 7 8 9 10 11 12 60 Gross requirements20 30 70 3020 80 Holding cost = $3.50unitweek setup cost $200. lead time = 1 week beginning inventory: 40. Develop a lot for-lot solution (enter your responses as whole numbers) 123567 89 10 112 Period Gross requirements On-hand at beginning of period On-hand at end of period Order receipt Order release 20 40 30 70 30 20 80- 6E 40Explanation / Answer
Please find below the filled up MRP table
Lead time = 1 week,
Period
1
2
3
4
5
6
7
8
9
10
11
12
Gross requirement
20
40
30
70
30
20
80
60
On hand at beginning of period : 40
40
20
20
0
0
0
0
0
0
0
0
0
On hand at end of period
20
20
0
0
0
0
0
0
0
0
0
0
Order receipt
0
0
20
0
30
70
30
0
20
80
0
60
Order release
0
20
0
30
70
30
0
20
80
0
60
0
Total quantity of inventory held per week basis = 20 ( period 1 ) + 20 ( period 2 ) = 40
Therefore, Total cost of holding = $3.5/ unit / week x 40 = $140
We presume that set up cost is incurred every time an order is released . There are total 7 times when orders have been released .
Therefore , Total set up cost = $200 per set up x 7 set ups = $1400
Hence, Total cost = Total set up cost + Total holding cost = $1400 + $140 = $1540
TOTAL RELEVANT COST = $1540
Period
1
2
3
4
5
6
7
8
9
10
11
12
Gross requirement
20
40
30
70
30
20
80
60
On hand at beginning of period : 40
40
20
20
0
0
0
0
0
0
0
0
0
On hand at end of period
20
20
0
0
0
0
0
0
0
0
0
0
Order receipt
0
0
20
0
30
70
30
0
20
80
0
60
Order release
0
20
0
30
70
30
0
20
80
0
60
0
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