Question

The MRP gross requirements for Item X are shown here for the next 10 weeks. Lead time for A is two weeks, and setup cost is $9. There is a carrying cost of $0.02 per unit per week. Beginning inventory is 75 units.

	WEEK
	1	2	3	4	5	6	7	8	9	10
Gross requirements	20	10	15	45	10	30	90	20	45	160
Use the least total cost lot-sizing method to determine the quantity to order with the first order released and which periods' requirements will be covered by that order. Least total cost method indicates that  units should be ordered to cover the needs for periods (Click to select)4 through 104 through 94 through 74 through 8.

Answer 1

week	1	2	3	4	5	6	7	8	9	10
Gross requirement	20	10	15	45	10	30	90	20	45	160
Beginning stock	75	55	45	30	0	0	0	0	0	0
Net requirement	0	0	0	15	10	30	90	20	45	160

						Carrying cost
Future requirement	In period	Cumulative order qty	Excess inventory	Weeks carried	Order cost	This period	Cumulative	Total cost
15	4	15	0	0	$9	$0.00	$0.00	$9.0
10	5	25	10	1	$9	$0.20	$0.20	$9.2
30	6	55	30	2	$9	$1.20	$1.40	$10.4
90	7	145	90	3	$9	$5.40	$6.80	$15.8
20	8	165	20	4	$9	$1.60	$8.40	$17.4
45	9	210	45	5	$9	$4.50	$12.90	$21.9
160	10	370	160	6	$9	$19.20	$32.10	$41.1

Note that the cumulative carrying cost of 210 order size is $12.9 which is more than $9 i.e. the ordering cost.

So, we will stick to the previous order size i.e. 165.

So, 165 units should be ordered in the first order for periods 4, 5, 6, 7, and 8