Annual cost

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1 Example 9.1 - An EOQ Model for Bedrock's Problem
2
Input
Cells are shaded
3
100
4
Annual Demand
12,000
<-------- Graph Table --------->
5
Ordering Cost
50.00
Order Holding Ordering Annual
6
Unit Cost
25.00
size
cost
cost
cost
7
Unit holding cost per year (two options)
100
375
6,000 6,375
8
(i) in s per year
200
750
3,000 3,750
9
(ii) as % of unit cost
30.0%
300 1,125 2,000 3,125
10
Unit holding cost per year =
7.50
400 1,500 1,500 3,000
11
500 1,875 1,200 3,075
12
Output
600 2,250 1,000 3,250
13
EOQ
400.00
700 2,625
857
3,482
14
No. of Orders/Year
30.0
800 3,000
750
3,750
15
Total cost 303,000
Plot cell range F5:I14
16
17
18
19
EOQ graph
7,000
20
21
6,000
22
23
5,000
24
25
26
4,000
27
28
3,000
29
30
2,000
31
32
1,000
33
34
0
35
100
200
300
400
500
600
700
800
36
37
Order quantity
38
Holding cost
Ordering cost
Annual cost
39
40
41

Figure 8.4 Economic order quantity (EOQ) model.

(Note that this model has been modified)

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1 Example 9.2 - The PROQ Model and Solution to Gizmo's Problem.
2
3
Input
Annual Demand
2,100
4
Setup Cost
450.00
5
Unit Cost
30.00
6
Annual production rate
2,500
7
Unit holding cost per year (two options)
8
(i) in s per year
9
(ii) as % of unit cost
20.0%
10
Annual unit holding cost =
6.00
11
12
Output PROQ
1403.12
13
Production run time,Ro (in weeks)
29.18
14
Optimal cycle time, To (in weeks)
34.74
15
Maximum inventory level
224.5
16
Annual holding cost
673
17
Annual setup cost
673
18
Total cost
64,347
19
20
21
Cell
Formula
Copied to
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E10
IF(E9="",E8,E5*E9)
23
E11
IF(E10=0,"Holding cost cannot be zero!","")
24
E12
SQRT(2*E3*E4/E10)*SQRT(E6/(E6 - E3))
25
E13
52*E12/E6
26
E14
52*E12/E3
27
E15
E12*(E6 - E3)/E6
28
E16
0.5*E10*E15
29
E17
E3*E4/E12
30
E18
E16 + E17 + E3*E5
31

Figure 8.5 Production order quantity (PROQ) model.

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Figure 8.5 Production order quantity (PROQ) model.

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1 Example 9.3 - A Quantity Discount Model for the Wheelie Company
2
3
Input Annual Demand
1,500 User input cells
4
Ordering Cost
80.00 are shaded
5
Unit holding cost per year (two options)
6
(i) in s per year
7
(ii) as % of unit cost
30.0%
8
9
DISCOUNT TABLE
Unit Cost = 10.00
8.00
6.00
10
Minimum discount quantity, Mini =
0
1000
2000
11
Annual unit holding cost = 3.00
2.40
1.80
12
13
Output
Qi = 282.8
316.2
365.1
14
Adjusted order quantities =
282.8
1000.0
2000.0
15
Total costs = 15,849 13,320 10,860
16
17
Minimum total cost is 10,860
2
18
Optimal order quantity is 2000.0
19
Cycle time is
weeks
69.3
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Cell
Formula
Copied to
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F11
IF($G6="",$G7*F9,$G6)
G11:H11
24
F12
IF(F11=0,"Holding cost cannot be zero!","")
25
F13
SQRT(2*$G3*$G4/F11)
G13:H13
26
F14
IF(F13>F10,F13,F10)
G14:H14
27
F15
$G3*$G4/F14 + 0.5*F14*F11 + $G3*F9
G15:H15
28
F17
MIN(F15:H15)
29
H17
MATCH(F17,F15:H15,0) - 1
30
F18
OFFSET(F18,-4,H17)
31
F19
52*F18/G3
32

Figure 8.6 Quantity discount model for the Wheelie Company.

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1 Example 9.4 - A Delivery Charge Model for the Farmers' Co-operative
2
3
Input Daily Demand (in tonnes)
3.0 User input cells
4
Unit Cost
100.00 are shaded
5
Unit holding cost per day (two options)
6
(i) in s per day
1.50
7
(ii) as % of unit cost
8
9
DELIVERY TABLE
Reorder Cost = 80.00 130.00 180.00
10
Maximum delivery quantity, Maxi =
10
20
30
11
Daily unit holding cost = 1.50
1.50
1.50
12
13
Output
Qi =
17.9
22.8
26.8
14
Adjusted order quantities =
10.0
20.0
26.8
15
Total costs =
332
335
340
16
17
Minimum total cost is
332
0
18
Optimal order quantity is
10.0
19
Cycle time is
days
3.3
20
21
Cell
Formula
Copied to
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F13
SQRT(2*$G3*F9/F11)
G13:H13
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F14
IF(F13<F10,F13,F10)
G14:H14
24
F15
$G3*F9/F14 + 0.5*F14*F11 + $G3*$G4
G14:H15
25
F19
F18/G3
26

Figure 8.7

Delivery charge model for the farmers' co-operative.

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2
3
Input
4
5
6
7
8
9
10
11
12
13
Output
14
15
16
17
18
19
20
21
22
23
24
25
26
Cell
27
E10
28
E11
29
E13
30
E14
31
E15
32
E16
33
E17
34
E19
35
E20
36
E21
37
E22
38
E23
39

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- An Inventory Model with Shortages Allowed
Annual Demand
Setup/Ordering Cost
Unit Cost
Holding cost (two options)
(i) in s per year
(ii) as % of unit cost
Shortage cost per unit per year
Unit holding cost per year =

Optimal order size, Qo

Maximum stock level
Back-order size
No. of orders/year
Cycle time
Annual Costs..
Setup/ordering cost
Holding cost
Shortage cost
Purchase cost
Total cost

12,000
50.00 User input cells
25.00 are shaded

30.0%
4.00
7.50

678.2
235.9
442.3
17.7
2.9 weeks
884.65
307.70
576.95
300,000
301,769

Formula
IF(E8="",E7,E8*E5)
IF(E10=0, "Enter a value in either cell E7 or E8!","")
SQRT(2*E3*E4*(E9 + E10)/(E9*E10))
E9*E13/(E9 + E10)
E13 - E14
E3/E13
52/E16
E3*E4/E13
0.5*E10*E14*E14/E13
E9*(E13 - E14)^2/(2*E13)
E3*E5
SUM(E19:E22)

Figure 8.8 Deterministic model with planned storages.

Copied to

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38
39

Figure 8.8 Deterministic model with planned storages.

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1 Example 9.6 - An Inventory Model with Storage Space Constraints
2
3
Setup cost
1,500.0 User input cells
4
Holding cost (as % of unit cost)
30.0% are shaded
5
6
Product Demand
Unit
Space
EOQ
Average Variable
7
cost
(per unit)
(Qo)
space
costs
8
Widget 10,000 18.00
0.3
2357.0
353.6
12,728
9
Gadget 8,000
15.00
0.2
2309.4
230.9
10,392
10
P
3,000
10.00
0.15
1732.1
129.9
5,196
11
Totals = 714.4
28,316
12
13
Product Demand
Unit
Space
EOQ
Average Variable
14
cost
(per unit)
(Qo)
space
costs
15
Widget
7054
18.00
0.3
1979.6
296.9
12,922
16
Gadget
5643
15.00
0.2
1939.6
194.0
10,551
17
P
2116
10.00
0.15
1454.7
109.1
5,275
18
Totals = 600.0
28,749
19
20
Percentage increase in variable costs = 1.53%
21
22
23
Scaling Factor =
(Initially, set Scaling Factor = 1)
0.705
24
25
26
Solver Parameters
27
Set Target Cell: E23
28
Equal to: Max
29
By Changing Cells: E23
30
Subject to Constraints: H18 <= 600
= Storage space constraint
31
E23 >=0
= Answer must be positive
32
33
Cell
Formula
Copied to
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G8
SQRT(2*C8*G$3/(G$4*D8))
G9:G10
35
H8
0.5*E8*G8
H9:H10
36
I8
C8*G$3/G8 + 0.5*G8*D8*G$4
I9:I10
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H11
SUM(H8:H10)
I11
38
Copy range B6:I11 into B13:I18
39
C15
C8*E$23
C16:C17
40
I15
C8*G$3/G15 + 0.5*G15*D15*G$4
I16:I17
41
I20
(I18 - I11)/I11
42
43

Figure 8.9 Multiple-product model with storage space constraint.

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Figure 8.9 Multiple-product model with storage space constraint.

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1 Example 9.7 - The Newsboy Problem: A Probabilistic Model with Discrete Demand
2
3
Input
Unit Cost, C =
3.00
4
Selling Price, S =
5.00 User input cells are shaded
5
Scrap value, V =
0.75
6
7
8
Output
<- Probabilities -> <-- Expected -->
9
Indiv. Cumul.
profit, EPi
10
Demand, Di
Pi
CUMi
Sales
Profit
11
1
10
0.05
1
10
20
12
2
20
0.1
0.95
19.5
38
13
3
30
0.15
0.85
28
52
14
4
40
0.2
0.7
35
59
15
5
50
0.2
0.5
40
58
16
6
60
0.15
0.3
43
48
17
7
70
0.1
0.15
44.5
32
18
8
80
0.05
0.05
45
11
4
19
20 Optimal demand, Q o = 40
Maximum profit = 59
21
22
23
Cell
Formula
Copied to
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E11
SUM(D11:D$18)
E12:E18
25
F11
SUMPRODUCT(C$11:C11,D$11:D11) + C11*E12
F12:F17
26
F18
SUMPRODUCT(C$11:C18,D$11:D18)
27
G11
E$4*F11 - E$3*C11 + E$5*(C11 - F11)
G12:G18
28
I18
MATCH(H20,G11:G18,0)
29
D20
OFFSET(C10,I18,0)
30
H20
MAX(G11:G18)
31

Figure 8.10 The Newsboy problem - a probabilistic model with discrete demand.

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1 Example 9.8 - A Probabilistic Model with Shortages
2
3
Input
Holding cost, H = 40.00 All user input cells
4
Shortage cost, B = 500.00 are shaded
5
B/(B + H) = 0.93
6
7
8
Output
<- Probabilities ->
9
Indiv.
Sum
10
Demand, Di
Pi
SUMi
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1
3
0.4
0.4
12
2
4
0.25
0.65
13
3
5
0.13
0.78
14
4
6
0.11
0.89
15
5
7
0.05
0.94
= Optimal amount
16
6
8
0.04
0.98
17
7
9
0.01
0.99
18
8
10
0.01
1
19
20
21
Cell
Formula
Copied to
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E5
E4/(E4 + E3)
23
E11
SUM(D$11:D11)
E12:E18
24
F11
IF(E11>=H$5)," = Optimal amount","")
25
F12
IF(AND(E11<H$5,E12>=H$5)," = Optimal amount","") F13:F18
26

Figure 8.11

Probabilistic model with shortages.

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1 Example 9.9 - A Service-Level Model with Variable Demand/ Fixed Lead-Time
2
3
Input - must be in consistent time units
Demand is normally-distributed
4
Time (day, week, month, year)
week
5
Ordering/Setup Cost
100.00
Mean =
500
6
Unit Cost
10.00
Standard deviation =
60
7
Holding cost (two options)
Service Level %, SL = 95%
8
(i) in s per year
Lead Time, Lt =
5 week
9
(ii) as % of unit cost
30.0%
10
Unit holding cost per week
0.058
52
11
12
Output
13
Reorder level/point, R
2721.0
Holding cost of safety stock
13
14
Order quantity, Q
1316.6
Holding cost of normal stock
38
15
Safety stock
221.0
Ordering/setup costs
38
16
Total costs per week
89
17
18
19
Cell Formula
Copied to
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D8 E4
D10, K8, H16
21
E10 IF(E9="",E8/G10,E9*E6/G10)
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G10 IF(E4="day",365,IF(E4="week",52,IF(E4="month",12,1)))
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E11 IF(E10=0,"Enter a value in either cell E8 or E9!","")
24
D13 J5*J8 + D15
25
D14 SQRT(2*J5*E5/E10)
26
D15 ROUNDUP(NORMSINV(J7)*J6*SQRT(J8),0)
27
J13 D15*E10
28
J14 D14*E10/2
29
J15 IF(D14=0,"",E5*J5/D14)
30
J16 SUM(J13:J15)
31

Figure 8.12 Service-level model with variable demand/fixed lead-time.

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1 Example 9.10 - A Service-Level Model with Fixed Demand/ Variable Lead-Time
2
3
Input - must be in consistent time units
Lead-time is normally-distributed
4
Time (day, week, month, year)
week
5
Demand
500
Mean =
5
6
Ordering/Setup Cost
100.00
Standard deviation =
1
7
Unit Cost
10.00
Service Level %, SL =
95%
8
Holding cost (two options)
9
(i) in s per year
User input cells are shaded
10
(ii) as % of unit cost
30.0%
11
Unit holding cost per week
0.058
52
12
13
Output
14
Lead time
6.6 week
Holding cost of normal stock
38
15
Reorder level/point, R
3322.4
Ordering/setup costs
38
16
Order quantity, Q
1316.6
Total costs per week
76
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Cell Formula
Copied to
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D14 J5 + NORMSINV(J7)*J6
21
E14 E4
22
D15 E5*D14
23
D16 SQRT(2*E5*E6/E11)
24
J14 D16*E11/2
25
J15 E6*E5/D16
26
J16 SUM(J14:J15)
27

Figure 8.13 Service-level model with variable demand/variable lead-time.

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1 Example 9. 11 - A Periodic Review (i.e. Fixed-Period) Model
2
Demand is normally-distributed
3
Input - must be in consistent time units
4
Time (day, week, month, year)
day
Mean =
40
5
Ordering/Setup Cost
50.00
Standard deviation =
15
6
Unit Cost
10.00
Service Level %, SL =
95%
7
Holding cost (two options)
Lead Time, Lt =
8 day
8
(i) in s per year
20.00
Review Period =
16 day
9
(ii) as % of unit cost
Stock On-hand =
60
10
Unit holding cost per day
0.055
365
11
12
Output
13
Reorder level/point, R
1081.0
Holding cost of safety stock
6.63
14
Order quantity, Q
1021.0
Holding cost of normal stock 27.97
15
Safety stock
121.0
Ordering/setup costs
1.96
16
Total costs per day
36.56
17
18
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Cell Formula
Copied to
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D13 J4*(J7 + J8) + D15
21
D14 D13 - J9
22
D15 ROUNDUP(NORMSINV(J6)*J5*SQRT(J7+J8),0)
23

Figure 8.14

Periodic review (fixed-period) model.

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1 Example 9.12 - A Multi-Period Model with Several Constraints
2
3
Input
All user input cells are shaded
4
Annual Demand
3,600
5
Ordering Cost
5.00
Output
6
Unit Cost
2.00
EOQ
300.00
7
Unit holding cost per year (two options)
Cycle time
8
(i) in s per year
(in months)
1.0
9
(ii) as % of unit cost
20.0%
Total cost 7,320
10
Unit holding cost per year
0.40
11
12
Monthly
Order
Ending Cost per
13
Month Demand Quantity Inventory Period
14
1
240
270
30
546
15
2
270
330
90
668
16
3
450
360
0
725
17
4
210
270
60
547
18
5
240
270
90
548
19
6
300
270
60
547
20
7
330
330
60
667
21
8
420
360
0
725
22
9
240
270
30
546
23
10
330
300
0
605
24
11
300
300
0
605
25
12
270
270
0
545
26
Annual demand = 3,600
7,274 = Annual cost
27
Objective: Minimize surplus stock =
420
28
29 Note: Switch on the "Assume Linear Model" parameter in the Solver Options dialog box

Figure 8.15 Multi-period model with several constraints.

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Solver Parameters
Set Target Cell:
Equal to:
By Changing Cells:
Subject to Constraints:

Cell
I6
I8
I9
F10
F11
F14
G14
D26
F27

F27
Min
E14:E25
E14:E25 >= 270
E14:E25 <= 360
E14:E25 = int(eger)
F14:E25 >= 0

= Quantity discount constraint

= Order size - upper limit
= Answers must be integer
= No stockouts allowed!

Formula
SQRT(2*F4*F5/F10)
12*I6/F4
F4*F5/I6 + 0.5*F10*I6 = F4*F6
IF(F9="",F8,F6*F9)
IF(F10=0,"Enter a value in eithe cell F8 or F9!","")
SUM(E$14:E14) - SUM(D$14:D14)
F$5 + F14*F$10/12 = E14*F$6
SUM(D14:D25)
SUM(F14:F25)

Figure 8.15 Multi-period model with several constraints.

Copied to

F15:F25
G15:G25
G26

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Figure 8.15 Multi-period model with several constraints.

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Figure 8.15 Multi-period model with several constraints.

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1 Example 9.13 - A Simulation Model for Inventory Control
2
3
Demand table
Lead-time table
4
<-- Limits --> Dem<-- Limits --> No. of
5
Lower Upper
and
Pi
Lower Upper days
Pi
6
0
0.03
0
0.03
0
0.20
1
0.20
7
0.03 0.08
1
0.05
0.20
0.70
2
0.50
8
0.08 0.21
2
0.13
0.70
1.00
3
0.30
9
0.21 0.46
3
0.25
1.00
10
0.46 0.68
4
0.22
11
0.68 0.88
5
0.20
Reorder level =
15
12
0.88 1.00
6
0.12
Order quantity =
30
13
1.00
14
15
Output table
16
Units Begin. RAND Dem- Ending New Lost
17
Day Recvd. Invntry. No.
and Invntry. Level sales Order?
18
1
30
0.31
3
27
27
0
No
19
2
0
27
0.48
4
23
23
0
No
20
3
0
23
0.52
4
19
19
0
No
21
4
0
19
0.52
4
15
15
0
Yes
22
5
0
15
1.00
6
9
39
0
No
23
6
30
39
0.05
1
38
38
0
No
24
7
0
38
0.20
2
36
36
0
No
25
8
0
36
0.97
6
30
30
0
No
26
9
0
30
0.74
5
25
25
0
No
27
10
0
25
0.49
4
21
21
0
No
28
11
0
21
0.22
3
18
18
0
No
29
12
0
18
0.77
5
13
13
0
Yes
30
13
0
13
0.95
6
7
37
0
No
31
14
0
7
0.15
2
5
35
0
No
32
55
0
33
34
Service Level = 100.0%
35

User input
cells are
shaded

Lead Recpt.
time Day

16

A
B
C
D
E
F
G
H
1 Case Study 9.1 - A Material Requirements Planning (MRP) Model
2
3
The BOM Table
4
Part Number: Description
BOM
Id. No. of Lead On Planned
5
Level Code Units Time Hand Order
6
Table
0
1
1
1
50 Rel. Row
7
Top Assembly
1
1001
1
2
50
25
8
Table Top
2
2001
1
1
180
35
9
Drawer
2
2002
1
1
200
35
10
Leg Assembly
1
1002
1
1
100
25
11
Legs
2
2003
4
1
250
65
12
Side Rung
2
2004
2
1
50
65
13
Connecting Rung
2
2005
1
1
110
65
14
15
16
The MRP Output Table
17
1
18
Table
Lead Time =
1
19
Week Number
Overdue
1
2
3
4
5
20
Master Production Schedule
0
0
180 180
100
21
Scheduled Receipts
0
0
0
0
0
22
On Hand
50
50
50
0
0
23
Net Requirements
0
0
130 180
100
24
Planned Order Receipts
0
0
130 180
100
25
Planned Order Releases
0
0
130 180 100
0
26
27
2
28
Top Assembly
Lead Time =
2
29
Week Number
Overdue
1
2
3
4
5
30
Gross Requirements
0
130 180 100
0
31
Scheduled Receipts
0
100
0
0
0
32
On Hand
50
50
20
0
0
33
Net Requirements
0
0
160 100
0
34
Planned Order Receipts
0
0
160 100
0
35
Planned Order Releases
0
160 100
0
0
0
36
37
3
38
Table Top
Lead Time =
1
39
Week Number
Overdue
1
2
3
4
5
40
Gross Requirements
160 100
0
0
0
41
Scheduled Receipts
0
0
0
0
0
42
On Hand
180
20
0
0
0
43
Net Requirements
0
80
0
0
0
44
Planned Order Receipts
0
80
0
0
0
45
Planned Order Releases
0
80
0
0
0
0
46

Figure 8.20

MRP model for the kitchen table example.

User input
cells are
shaded

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

A
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
Figure96
8.20

B
4
Drawer
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
5
Leg Assembly
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases

Overdue

Overdue

7
Side Rung
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
8
Connecting Rung
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases

Overdue

Overdue

10

10

Overdue

1
160
0
200
0
0
60

Lead Time =
2
3
4
100
0
0
0
0
0
40
0
0
60
0
0
60
0
0
0
0
0

5
0
0
0
0
0
0

1
0
0
100
0
0
30

2
130
0
100
30
30
180

Lead Time =
3
4
180 100
0
0
0
0
180 100
180 100
100
0

5
0
0
0
0
0
0

1
120
0
250
0
0
490

2
720
100
130
490
490
400

Lead Time =
3
4
400
0
0
0
0
0
400
0
400
0
0
0

5
0
0
0
0
0
0

1
60
0
50
10
10
360

2
360
0
0
360
360
200

Lead Time =
3
4
200
0
0
0
0
0
200
0
200
0
0
0

5
0
0
0
0
0
0

1
30
0
110
0
0
100

2
180
0
80
100
100
100

Lead Time =
3
4
100
0
0
0
0
0
100
0
100
0
0
0

5
0
0
0
0
0
0

6
Legs
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases

MRP model for the kitchen table example.

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46

Figure 8.20

MRP model for the kitchen table example.

M
N
47 Page-break
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
Figure96
8.20 MRP model for the kitchen table example.

A
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96

Figure 8.20

B
4
Drawer
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
5
Leg Assembly
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases

Overdue

1
160
0
200
0
0
60

2
100
0
40
60
60
0

1
0
0
100
0
0
30

Lead Time =
2
3
4
130 180 100
0
0
0
100
0
0
30
180 100
30
180 100
180 100
0

1
120
0
250
0
0
490

2
720
100
130
490
490
400

Lead Time =
3
4
400
0
0
0
0
0
400
0
400
0
0
0

5
0
0
0
0
0
0

1
60
0
50
10
10
360

2
360
0
0
360
360
200

Lead Time =
3
4
200
0
0
0
0
0
200
0
200
0
0
0

5
0
0
0
0
0
0

1
30
0
110
0
0
100

2
180
0
80
100
100
100

Lead Time =
3
4
100
0
0
0
0
0
100
0
100
0
0
0

5
0
0
0
0
0
0

Overdue

6
Legs
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
7
Side Rung
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
8
Connecting Rung
Week Number
Gross Requirements
Scheduled Receipts
On Hand
Net Requirements
Planned Order Receipts
Planned Order Releases

(cont.)

Overdue

Overdue

10

10

Overdue

Lead Time =
3
4
0
0
0
0
0
0
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

6
0
0
0
0
0
0

7
0
0
0
0
0
0

8
0
0
0
0
0
0

1
5
0
0
0
0
0
0

1
5
0
0
0
0
0
0

A
B
C
D
E
F
G
H
I
J
K
L
M
1 Example 9. 14 - A Model for the Part Period Balancing (PPB) Method
2
3
Input
Ordering (or Setup) Cost = 200
User input cells
4
Unit holding cost = 1.00
are shaded
5
Economic part period (EPP) =
200
6
<----------- Net requirements, REQP, for each period P --------------->
7
REQP
8
150
100
150
0
50
75
100
25
20
9
Period, P
1
2
3
4
5
6
7
8
9
10
11
Weighted REQi
0
100
300
0
200
375
600
175
160
12
CUMi
0
100
400
400
600
975 1575 1750 1910
13
(CUMi - EPP)/EPP -1.0
-0.5
1.0
1.0
2.0
3.9
6.9
7.8
8.6
14
0.5
1.0
0.5
1.0
1.0
2.0
3.9
6.9
7.8
8.6
15
Order Data =
150
100
16
0
Answer: Place an order for 250 units in period
1
17
New Factor, NFi
0
0
1
2
3
4
5
6
7
18
19
Weighted REQi
-150 -100
0
0
100
225
400
125
120
20
CUMi
0
0
0
0
100
325
725
850
970
21
(CUMi - EPP)/EPP -1.0
-1.0
-1.0
-1.0
-0.5
0.6
2.6
3.3
3.9
22
0.5
1.0
1.0
1.0
1.0
0.5
0.6
2.6
3.3
3.9
23
Order Data =
150
0
50
24
2
Answer: Place an order for 200 units in period
3
25
New Factor, NFi
0
0
0
0
0
1
2
3
4
26
27
Weighted REQi
-150 -100 -150
-1
-50
0
100
50
60
28
CUMi
0
0
0
0
0
0
100
150
210
29
(CUMi - EPP)/EPP -1.0
-1.0
-1.0
-1.0
-1.0
-1.0
-0.5
-0.3
0.1
30
0.1
1.0
1.0
1.0
1.0
1.0
1.0
0.5
0.3
0.1
31
Order Data =
75
100
25
20
32
5
Answer: Place an order for 220 units in period
6
33
New Factor, NFi
0
0
0
0
0
0
0
0
0
34
35
36
Copy cell range B11:L17 repeatedly down the spreadsheet, placing the cursor in cells B19,
37
B27. until the 'New Factor, NFi' row contains nothing but zeros (e.g. see row 33 above).
38

Figure 8.21 Model for the part-period balancing (PBB) method.

(Note that this model has been modified)

A
1
2
3
4
5
6
7
8
9

Product
name
Gizmo
Gadget
Widget
Sprocket

No. in
stock
10
25
8
40

Product
price
10.00
12.50
20.00
4.50

Sample Figure

Year

Cash
flow
1
4
8
16

1
2
3
4
5

A
10
11
12
13
14
15
16
17

Column(B3) =
Column(D5:D9) =

2
4

INDEX(B4:D7,2,3) =

12.50

Row(B3) =
Row(D5:D9) =

H
3
5

NORMSINV(0.95) =

I
1
2
3
4
5
6
7
8
9

I
10
11
12
13
14 1.6449
15
16
17