Please solve and figure out the total cost. Develop a lot-for-lot solution and c
ID: 385404 • Letter: P
Question
Please solve and figure out the total cost.
Develop a lot-for-lot solution and calculate total relevant costs for the gross requirements in the following table* Period 1 23 4 5 6 7 89 10 12 Gross requirements 20 30 30 70 20 20 80 50 Holding cost $2.50/unit/week; setup cost $200; lead time 1 week; beginning inventory 40. cost-$2.50/unitweek; setup cost Develop a lot-for-lot solution (enter your responses as whole numbers). Period Gross requirements On-hand at beginning of period 40 On-hand at end of period Order receipt Order release 1 2 3 4 5 6 789 10 11 12 20 30 30 70 20 20 80 50Explanation / Answer
Please find below the filled up MRP table :
Period ( Lead time = 1 week )
1
2
3
4
5
6
7
8
9
10
11
12
Gross requirement
20
30
30
70
20
20
80
50
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
10
0
30
70
20
0
20
80
0
50
Order release
0
10
0
30
70
20
0
20
80
0
50
0
We assume “set up” cost is involved everytime an order is released
As per above MRP table, Order is released on week 2 , week 4 , week 5 , week 6 , week 8, week 9 and week 11 ( Total of 7 times )
Therefore, total set up cost involved = $ 200/ set up x 7 set ups = $1400
20 units of inventory is carried in each of week 1 and week 2 . Thus a total of 40 units of inventory is carried on per week basis .
Given, inventory holding cost = $2.50 per unit per week
Therefore, total inventory holding cost = $2.50 x 40 = $100
Hence Total cost
= Total set up cost + Total inventory holding cost
= $1400 + $100
= $1500
TOTAL COST = $1500
Period ( Lead time = 1 week )
1
2
3
4
5
6
7
8
9
10
11
12
Gross requirement
20
30
30
70
20
20
80
50
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
10
0
30
70
20
0
20
80
0
50
Order release
0
10
0
30
70
20
0
20
80
0
50
0