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    Techniq

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    Amar Maharana
    This document discusses and compares different lot sizing techniques: 1) Lot-for-lot technique orders for each period individually and has the highest total cost of $70.7. 2) Economic order quantity (EOQ) technique calculates the optimal order quantity of 343 units to minimize total costs of $34.96. 3) Silver-Meal heuristic technique orders in batches and has the lowest periodic cost when ordering for 5 weeks, with a total cost of $114.8. 4) Least unit cost technique also compares periodic costs of different batch lengths and finds ordering for 6 weeks yields the lowest unit cost of $0.0562 per unit.

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    Techniq

    Uploaded by

    Amar Maharana
    22 views6 pages
    This document discusses and compares different lot sizing techniques: 1) Lot-for-lot technique orders for each period individually and has the highest total cost of $70.7. 2) Economic order quantity (EOQ) technique calculates the optimal order quantity of 343 units to minimize total costs of $34.96. 3) Silver-Meal heuristic technique orders in batches and has the lowest periodic cost when ordering for 5 weeks, with a total cost of $114.8. 4) Least unit cost technique also compares periodic costs of different batch lengths and finds ordering for 6 weeks yields the lowest unit cost of $0.0562 per unit.

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    This document discusses and compares different lot sizing techniques: 1) Lot-for-lot technique orders for each period individually and has the highest total cost of $70.7. 2) Economic order quantity (EOQ) technique calculates the optimal order quantity of 343 units to minimize total costs of $34.96. 3) Silver-Meal heuristic technique orders in batches and has the lowest periodic cost when ordering for 5 weeks, with a total cost of $114.8. 4) Least unit cost technique also compares periodic costs of different batch lengths and finds ordering for 6 weeks yields the lowest unit cost of $0.0562 per unit.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    22 views6 pages

    Techniq

    Uploaded by

    Amar Maharana
    This document discusses and compares different lot sizing techniques: 1) Lot-for-lot technique orders for each period individually and has the highest total cost of $70.7. 2) Economic order quantity (EOQ) technique calculates the optimal order quantity of 343 units to minimize total costs of $34.96. 3) Silver-Meal heuristic technique orders in batches and has the lowest periodic cost when ordering for 5 weeks, with a total cost of $114.8. 4) Least unit cost technique also compares periodic costs of different batch lengths and finds ordering for 6 weeks yields the lowest unit cost of $0.0562 per unit.

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    of 6

    LOT - SIZING TECHNIQUES

    I.

    Lot-for-Lot :

    Period
    Gross
    Requirements
    Beginning
    Inventory
    Net
    Requirements
    Time Phased
    Net
    Requirements
    Planned Order
    Release
    Planned
    Deliveries
    Ending
    Inventory

    1
    2
    30 50

    3 4
    10 20

    5
    70

    6
    80

    7
    20

    8
    60

    9
    200

    10
    50

    90 60

    10

    20

    70

    80

    20

    60

    200

    50

    20 70

    80 20

    60

    200

    50

    20 70

    80 20

    60

    200

    50

    20

    70

    80

    20

    60

    200

    50

    60 10

    Total Cost:
    Holding Cost = (60 * $0.01) + (10 * $0.01) = $0.6 + $0.1 = $ 0.7
    Ordering Cost = (7 orders * $10) = $70
    Total Cost = Holding Cost + Ordering Cost = $0.7 + $70 = $70.7

    II.

    Economic Order Quantity (EOQ) :

    Annual Demand (D) = Total demand over 10 weeks * 52 weeks / year


    10
    = 30+50+10+20+70+80+20+60+200+50 * 52
    10
    = 590 * 52
    10
    = 3,068 units / year
    Holding Cost (h) per unit = $0.01 / unit / week
    = $0.52 / unit / week
    Ordering Cost (S) per order = $10 / order
    EOQ =

    = 343.51

    Period

    10

    Gross
    Requirements

    30

    50

    10

    20

    70

    80

    20

    60

    200

    50

    Beginning
    Inventory

    90

    60

    10

    324

    254

    174

    154

    94

    238

    Net
    Requirements
    Time Phased
    Net
    Requirements
    Planned Order
    Release

    20

    200

    20

    200

    344

    344

    Planned
    Deliveries
    Ending Inventory

    344
    60

    10

    324 254

    344
    174

    154

    94

    238

    188

    Holding Cost = (60 * $0.01) + (10 * $0.01) + (324* $0.01) + (254* $0.01) +
    (174* $0.01) + (154* $0.01) + (94* $0.01) + (238* $0.01) +
    (188* $0.01)
    = 0.6 + 0.1+3.24+2.54+1.74+1.54+0.94+2.38+1.88
    = $14.96
    Ordering Cost = (2 orders * $10) = $20
    Total Cost = Holding Cost + Ordering Cost = $14.96 + $20 = $34.96

    III.

    Silver-Meal-Heuristic :
    j
    rj

    Order for
    weeks
    1 week, week
    4
    2week, weeks
    4to5
    3week, weeks
    4to6
    4week, weeks
    4to7
    5week, weeks
    4to8
    6week, weeks
    4to9
    7week, weeks
    4to10
    Total

    1
    2
    3
    4
    5
    6
    7
    20
    70 80 20 60 200 50
    Units in the inventory at the end of week H.C
    ($)
    Q 4
    5
    6
    7
    8
    9
    10

    Per
    O.C Period
    ($) Cost($)

    20

    0.00

    10

    10.0

    0.70

    10

    5.35

    90

    70

    170 150

    80

    2.30

    10

    4.10

    190 170

    100 20

    2.90

    10

    3.23

    250 230

    160 80

    5.30

    10

    3.06

    450 430

    360 280 260 200

    15.30 10

    4.22

    500 480

    410 330 310 250 50

    18.30 10

    4.04

    60

    44.8

    Total Cost = Holding Cost + Ordering Cost = $44.8 + $70 = $114.8

    70

    In Silver-Meal-Heuristic Technique, the periodic cost is decreasing at a


    certain point and then increasing. In the above example, the periodic cost is
    decreasing till the 5th week and then increasing.
    If we compare the period cost of each week, the cost is minimum on the 5th
    week.
    So it is suggested that we should order together for 5 weeks because the
    periodic cost is minimum i.e. $3.06

    Cost ($)
    12
    10
    8
    6

    Cost ($)

    4
    2

    Period (Weeks)

    0
    0

    IV.

    Least Unit Cost:


    j
    rj

    Order for
    weeks
    1 week, week
    4
    2week, weeks
    4to5
    3week, weeks
    4to6
    4week, weeks
    4to7
    5week, weeks
    4to8
    6week, weeks
    4to9
    7week, weeks
    4to10
    Total

    1
    2
    3
    4
    5
    6
    7
    20
    70 80 20 60 200 50
    Units in the inventory at the end of week H.C
    ($)
    Q 4
    5
    6
    7
    8
    9
    10

    Per
    O.C Period
    ($) Cost($)

    20

    0.00

    10

    0.5

    0.70

    10

    0.118

    90

    70

    170 150

    80

    2.30

    10

    0.072

    190 170

    100 20

    2.90

    10

    0.067

    250 230

    160 80

    5.30

    10

    0.061

    450 430

    360 280 260 200

    15.30 10

    0.0562

    500 480

    410 330 310 250 50

    18.30 10

    0.0566

    60

    44.8

    70

    Total Cost = Holding Cost + Ordering Cost = $44.8 + $70 = $114.8


    If we compare the period cost of each week, the cost is minimum on the 6th
    week.
    So it is suggested that we should order together for 6 weeks because the
    periodic cost is minimum i.e. $0.0562

    Cost ($)
    0.6
    0.5
    0.4
    0.3

    Cost ($)

    0.2
    0.1

    Period (Weeks)

    0
    0

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