14.

17

Week 1 2 3 4 5 6 7 8 9 10 11 12
Gross 30 0 40 0 30 70 20 0 10 80 0 50
requirement
Scheduled
receipts
Projected 40 40 10 10 0 0 0 0 0 0 0 0 0
on hand
Net requirements 0 0 30 0 30 70 20 0 10 80 0 50
Planned order 30 30 70 20 10 80 50
receipts
Planned oreder 30 30 70 20 10 80 50
releases

Holding cost = $2.50/unit/week; setup cost = $150; lead time = 1 week;

Beginning inventory = 40; stockout cost = $1

- Because in week 2 and week 3, there are totally 20 units on hand , the holding
cost will be: The number of units on hand x holding cost
= 20 x $2.5 = $50
- The ordering cost will be : setup cost x the number of time ordering
= 150 x7 = $1,050

- The total relevant costs for Lot- for-Lot will be : Holding costs + ordering costs

= $1050 + $50= $1100

14.18: For the EOQ lot size,

Given information:

- Annual usage = 330 units for 12 weeks;

 Weekly usage = 330/12= 27.5 units per week

Therefore, Annual demand in units for the inventory item: D = 27.5 x 52= 1430 units
per year.

- Holding cost= $2.50/unit/week

 Annual Holding costs= H= $2.5×52=130/unit/year
- setup cost = S= $150

The economic order quantity will be:

 Q=
√ 2 DS
H

=
√ 2 ×1430 ×150
130
=57.44 ≈ 57units

Week 1 2 3 4 5 6 7 8 9 10 11 12
Gross 30 0 40 0 30 70 20 0 10 80 50
requirement
Scheduled
receipts
Projected 40 40 10 10 27 27 54 41 21 21 11 45 45 52
on hand
Net 0 0 30 0 3 16 0 0 0 69 0 5
requirements
Planned order 57 57 57 114 57
receipts
Planned oreder 57 57 57 114 57
releases

-The holding cost will be: The number of units on hand x holding cost

= 364 x $2.5 = $910

-The ordering cost will be : setup cost x the number of time ordering

= 150 x5 = $750

- The total relevant costs for EOQ will be : Holding costs + ordering costs

= $910 + $750= $1660