Question

Best-Appliance makes high-powered industrial strength microwave oven and wants to create an MRP for their oven assembly with a minimum cost possible. Following table show gross requirements of their product for twelve weeks. Develop a Part Period Balancing (PPB) solution and calculate the total relevant costs for the plan Week 1 2 3 4 5 6 8 10 11 12 7 Gross requirements 20 40 40 70 30 10 80 40 Also, for this plan the Holding cost $2.50/unit/week; setup cost = $150; lead time 1 week; beginning inventory 40 units. - - Use the table below to develop a PPB solution for MRP (enter your responses as whole numbers) Week 1 2 4. 6 7 9 10 11 12 Gross requirements 20 40 40 70 30 10 80 40 On-hand at beginning of week 40 On-hand at end of week Order receipt Order release (enter your response as a whole number) Total relevant cost for this plan is $ C

Answer 1

In this method, a basic unit of PP (Part-Period) is used. When one part is stored for one period, the value is 1 PP, and the total value of all Pp values calculated for each period is an accumulated PP. When accumulated inventory carrying cost excesses the order cost, the quantity of schedule order is set. In order to make these calculations easier, a standard value for lot sizing, called EPP (Economic Part- Period), is used. This value, meaning that the accumulated PP is over the order cost, is calculated by means of the following formula EPP Value Setup cost/Inventory holding cost In the Part Period Balancing, lots are sized with up to one period before the time when the accumulated PP is over EPP Setup Cost Holding Cost= 2.50 EPP Value 150 EPP Value Setup cost/ Inventory holding cost 60 11 12 10 7 6 5 4 3 2 1 Period Net requirements Beginning Inventory Net requirements Inventory carrying period PP Value Accummulated PP Value 80 40 10 30 40 70 40 20 0 0 0 0 0 0 20 40 20 40 0 10 80 30 0 70 40 0 0 20 0 2 C 80 C 80 C 0 1 C Inventory carrying period PP Value Accummulated PP Value Inventory carrying period PP Value Accummulated PP Value Inventory carrying period PP Value 70 0 70 0 4 3 2 1 0 320 30 0 30 380 60 30 30 0 2 1 0 80 C 80 0 0 Accummulated PP Value 40 80 110 40 20 Planned Order Receipt 12 11 10 9 7 5 4 3 2 1 Period Gross requirements On-hand at beginning of period 40 80 10 30 70 40 C 40 20 0 0 0 10 40 10 0 0 20 20 40 40 0 10 10 40 0 C 0 20 20 end of period On-hand 40 0 80 C 0 70 40 C 20 0 Net requirements Order receipt 0 40 30 110 40 20 0 0 40 80 0 0 0 110 40 20 0 Order release based on on-hand inventory at end of period 250 2.5 100 - X Total holding cost 750 150 5 = Total Setup cost 1000 750 250 Total Cost 이위。 이이1 lealele n 40

Total relevant cost for this plan = $ 1,000