Question: Consider a company facing a demand pattern and costs as follow: Month Sequential Number Requirements (units) Jan 1 20 Feb 2 40 Mar 3 110
Consider a company facing a demand pattern and costs as follow:
| Month | Sequential Number | Requirements (units) |
| Jan | 1 | 20 |
| Feb | 2 | 40 |
| Mar | 3 | 110 |
| Apr | 4 | 120 |
| May | 5 | 60 |
| June | 6 | 30 |
| July | 7 | 20 |
| Aug | 8 | 30 |
| Sep | 9 | 80 |
| Oct | 10 | 120 |
| Nov | 11 | 130 |
| Dec | 12 | 40 |
| Total | 800 |
A = $25; r(per month) = $0.05 (carrying costs are very high in this industrial); v = $4
Using a "three-month" decision rule, the replenishment schedule and associated costs are as follows:
| Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total |
| Starting Inventory | 0 | 150 | 110 | 0 | 90 | 30 | 0 | 110 | 80 | 0 | 170 | 40 | |
| Replenishment | 170 | 0 | 0 | 210 | 0 | 0 | 130 | 0 | 0 | 290 | 0 | 0 | 800 |
| Requirements | 20 | 40 | 110 | 120 | 60 | 30 | 20 | 30 | 80 | 120 | 130 | 40 | 800 |
| Ending Inventory | 150 | 110 | 0 | 90 | 30 | 0 | 110 | 80 | 0 | 170 | 40 | 0 | 780 |
Total replenishment costs = $100
Total carrying costs = $156
Total replenishment + carrying = $256
a). Construct a replenishment schedule and calculate the associated costs using the Fixed Economic Order Quantity method
b). Repeat using the Wagner-Whitin Algorithm
c). Repeat using the Silver-Meal Heuristic.
d). Repeat using the Least Unit Cost method
e). Repeat using the Part-period Balancing method
f). Repeat using the Periodic Order Quantity method
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