Posted: January 4th, 2014
A company wants to determine the best lot-sizing technique to determine the ordering schedule for a component Y that they are ordering from one of their suppliers.
A company wants to determine the best lot-sizing technique to determine the ordering schedule for a
component Y that they are ordering from one of their suppliers. They would like to compare the
following three options:
– lot-for-lot
– EOQ lot sizes
– Silver-Meal method
The best technique would be the one that will guarantee the lowest costs of managing the inventories,
that is inventory holding and ordering costs. Ordering/setup cost is estimated to be 80 EUR and the
holding cost per week is 1 EUR per unit. Delivery lead time is 1 week.
They have already determined the gross requirements for the component Y through the following 10
weeks and they are given in the following table:
1 2 3 4 5 6 7 8 9 10
Gross requirements 30 50 0 20 40 0 60 0 30 40
On-hand inventory 65
Net requirements
Planned order receipts
First determine the net requirements and then think about using different lot sizing options to satisfy
these requirements.
Questions:
For the proposed three lot sizing techniques determine the ordering schedule (Planned order releases)
for the following 10 weeks and calculate the cost of managing the inventories. Which technique
performs the best?
What is the difference if the holding cost per week changes to 2 EUR per unit?
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.