A company that makes construction equipment is exploring different lot sizing approaches to its MRP schedule: lot for?lot LFL), fixed order quantity FOQ) using the EOQ, and period order quantity POQ). It costs $100 to set up the production line to produce hydraulic jacks and the carrying cost per unit per week is $1. Annual demand is expected to be 1550 jacks. For planning purposes, the company uses a 50-week work year and disregards the effects of initial inventory and safety stock. The net requirements for hydraulic jacks for the next six weeks are:
$$\begin{array} { | l | c | c | c | c | c | c | }
\hline \text { Wekk } & 1 & 2 & 3 & 4 & 5 & 6 \
\hline \text { Net Requirements } & 35 & 30 & 40 & 10 & 40 & 30 \
\hline
\end{array}$$
a. Using a LFL approach, what is the lot size in week 3?
b. What is the total cost for the LFL method?
c. What is the Fixed order quantity FOQ) using the EOQ approach?
d. What is the beginning inventory for week 5 using the FOQ approach?
e. What is the total cost using the FOQ method?

Question

A company that makes construction equipment is exploring different lot sizing approaches to its MRP schedule: lot for?lot LFL), fixed order quantity FOQ) using the EOQ, and period order quantity POQ). It costs $100 to set up the production line to produce hydraulic jacks and the carrying cost per unit per week is $1. Annual demand is expected to be 1550 jacks. For planning purposes, the company uses a 50-week work year and disregards the effects of initial inventory and safety stock. The net requirements for hydraulic jacks for the next six weeks are:
 $$\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Wekk } & 1 & 2 & 3 & 4 & 5 & 6 \
\hline \text { Net Requirements } & 35 & 30 & 40 & 10 & 40 & 30 \
\hline
\end{array}$$ 
a. Using a LFL approach, what is the lot size in week 3?
b. What is the total cost for the LFL method?
c. What is the Fixed order quantity FOQ) using the EOQ approach?
d. What is the beginning inventory for week 5 using the FOQ approach?
e. What is the total cost using the FOQ method?

Quizplus · Accepted Answer

The Answer of A company that makes construction equipment is exploring different lot sizing approaches to its MRP schedule: lot for?lot LFL), fixed order quantity FOQ) using the EOQ, and period order quantity POQ). It costs $100 to set up the production line to produce hydraulic jacks and the carrying cost per unit per week is $1. Annual demand is expected to be 1550 jacks. For planning purposes, the company uses a 50-week work year and disregards the effects of initial inventory and safety stock. The net requirements for hydraulic jacks for the next six weeks are:
 $$\begin{array} { | l | c | c | c | c | c | c | } 
\hline \text { Wekk } & 1 & 2 & 3 & 4 & 5 & 6 \
\hline \text { Net Requirements } & 35 & 30 & 40 & 10 & 40 & 30 \
\hline
\end{array}$$ 
a. Using a LFL approach, what is the lot size in week 3?
b. What is the total cost for the LFL method?
c. What is the Fixed order quantity FOQ) using the EOQ approach?
d. What is the beginning inventory for week 5 using the FOQ approach?
e. What is the total cost using the FOQ method?

A Company That Makes Construction Equipment Is Exploring Different Lot