The demand for item T in the next 10 weeks is presented in the table below....
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The demand for item T in the next 10 weeks is presented in the table below. Demand for T (10-week period) 2 4 5 6 10 45 10 30 1 Demand Level 20 3 15 Total Number of Orders Total Ordering Cost 7 45 To simplify the matter, let's assume that the lead time for the items is 0. The ordering cost is $15 each time and the holding cost is S 0.3 per unit per week. The demand pattern is not expected to change in years. Let's try to compare the total inventory cost under the following two methods: EOQ and L4L. L4L (lot for lot) is essentially an "order as much as you need each time" approach. For example, you will order 20 units in week 1, 10 units in week 2, ctc. (Hint: You need to evaluate each parameter carefully in order to obtain values needed to calculate EOQ.) Average End of Period Inventory Total Holding Cost Total Inventory Cost 8 9 20 40 Please set up this problem properly in Excel. No matter what set up you use, you will need to complete the following table to find out the answer. Which inventory ordering method has the least total inventory cost during this 10-week period? L4L 10 150 EOQ The demand for item T in the next 10 weeks is presented in the table below. Demand for T (10-week period) 2 4 5 6 10 45 10 30 1 Demand Level 20 3 15 Total Number of Orders Total Ordering Cost 7 45 To simplify the matter, let's assume that the lead time for the items is 0. The ordering cost is $15 each time and the holding cost is S 0.3 per unit per week. The demand pattern is not expected to change in years. Let's try to compare the total inventory cost under the following two methods: EOQ and L4L. L4L (lot for lot) is essentially an "order as much as you need each time" approach. For example, you will order 20 units in week 1, 10 units in week 2, ctc. (Hint: You need to evaluate each parameter carefully in order to obtain values needed to calculate EOQ.) Average End of Period Inventory Total Holding Cost Total Inventory Cost 8 9 20 40 Please set up this problem properly in Excel. No matter what set up you use, you will need to complete the following table to find out the answer. Which inventory ordering method has the least total inventory cost during this 10-week period? L4L 10 150 EOQ
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To compare the total inventory cost under the EOQ Economic Order Quantity and L4L LotforLot methods we need to calculate various parameters and fill i... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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