Question

# Consider the following requirements for a certain product. Period 1 2 3 4 5 6 7...

Consider the following requirements for a certain product.

 Period 1 2 3 4 5 6 7 8 Gross requirements 0 200 200 500 0 400 0 400

Beginning inventory = 500 units

Setup cost = \$500 per setup

Holding cost = \$3 per unit per week

a. Develop the lot-for-lot MRP table.

b. Calculate the total relevant costs.

 Period 1 2 3 4 5 6 7 8 Gross requirements 0 200 200 500 0 400 0 400 Projected on hand 500 Net Requirement Planned Reciept Planned Order

Setup Cost=

Holding Cost=

Total Cost =

Kindly, Explain the methods used in details !

 Item   Period 1 2 3 4 5 6 7 8 Gross requirements 0 200 200 500 0 400 0 400 Scheduled receipts 0 0 0 0 0 0 0 0 Projected on hand 500 500 300 100 0 0 0 0 0 Net requirements 0 0 0 400 0 400 0 400 Planned order receipts 0 0 0 400 0 400 0 400 Planned order releases 0 0 400 0 400 0 400 0

Avg inventory ( ending inventory) = 900

Inventory cost = 900*3 =2700

Number of set ups = 3

Set up cost = 3*500=1500

Total cost = 4200

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