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Using gross requirements schedule below, prepare an alternative ordering system that always orders 100 units the week prior t

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Answer #1
EOQ 100
Holding cost 1 per unit per week
Setup cost 200
Lead time 1 week
Period 1 2 3 4 5 6 7 8 9 10
Gross requirement 25 20 50 0 10 40 30 0 30 65
On hand at beginning of period|25 25 100 80 30 30 120 80 50 50 120
On hand at end of period 0 80 30 30 20 80 50 50 20 55
Net requirement 0 20 0 0 0 20 0 0 0 45
Order receipt 100 100 100
Order release 100 100 100
Average inventory (beginning inventory+onhand inventory at end of period)/2 12.5 90 55 30 25 100 65 50 35 87.5
Average Inventory 55
Holding cost 1 per unit per week
Holding cost per unit per 10 weeks (10 week period) 10
Inventry holding cost 550
Number of orders 3
Ordering or set up cost (no of order*set up cost (200) 600
The cost of this ordering system (Hoding cost+setup cost) 1150
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