Question

B.   TOTAL COST________

Develop a lot-for-lot solution and calculate total relevant costs for the gross requirements in the following table*. Period 1 2 3 4 5 6 7 8 9 10 11 12 Gross requirements | 30 30 30 60 20 20 70 60 *Holding cost = $1.50/unit/week; setup cost = $200; lead time = 1 week; beginning inventory = 40. Develop a lot-for-lot solution (enter your responses as whole numbers). 11 9 20 10 70 12 60 Period 1 2 3 4 5 6 7 8 Gross requirements 30 30 30 60 20 On-hand at beginning of period | 40 | NNNNNNNN On-hand at end of period Order receipt Order release

Answer 1

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Period		1	2	3	4	5	6	7	8	9	10	11	12	Total cost
	Gross requirements GR	30	0	30	0	30	60	20	0	20	70	0	60
	Scheduled receipts SR	0	0	0	0	0	0	0	0	0	0	0	0
safety stock, SS=0	on hand at the end PIOH	10	10	0	0	0	0	0	0	0	0	0	0
Beginning inventory-280	on hand at the beginning IOH	40	10	10	0	0	0	0	0	0	0	0	0
	Requirement	-10	-10	20	0	30	60	20	0	20	70	0	60
	Net requirements NR	0	0	20	0	30	60	20	0	20	70	0	60
Q = 100	Planned order receipts (PR)	0	0	20	0	30	60	20	0	20	70	0	60
Lead Time LT=1	Planned order releases POR	0	20	0	30	60	20	0	20	70	0	60	0
	Holding cost= $1.5* PIOH	15	15	0	0	0	0	0	0	0	0	0	0	30
	setup cost (whenever there is new order reciept)	0	0	200	0	200	200	200	0	200	200	0	200	1400

Answer b: Total cost= cost of setup + cost of holding imventory= 30+1400= $1430

repeat these steps for every week
step 1	IOH=	PIOH of last week
step 2	Requirement=	GR-IOH-SR+SS
step 3	NR=	is equal to requirement (if requirement>0) OR 0 (if requirement is negative)
step 4	PR=	in L4L PR=NR	more than or equal to NR in multiples of lot size
step 5	PIOH=	IOH+PR-GR-SR
step 6	POR=	PR of preceding week
step 7 (After completing whole MRP)	Holding cost=	1.5$*PIOH

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