NPTEL POM Week 6 Solutions

1. Consider the following data for an MRP lot sizing problem-

Item cost per unit Rs. 100
Carrying cost 5% of Unit cost/ per week
Set up cost Rs. 500 per set up
Week 1 2 3 4 5 6 7 8 9 10
Net 50 68 42 - 33 30 32 - 30 35
Requiremen
t
What is lot size if we follow the EOQ method?
A. 80
B. 85
C. 70
D. 90
Solution:
Ordering cost = Rs. 500
Carrying cost = 0.05 *100 = Rs 5
Demand = 320
Avg. Demand = 320/10 = 32
EOQ = SQRT (2*32*500)/5) = SQRT (6400) = 80
So, LOT SIZE = 80
2. In Material requirement planning, if the inventory holding cost is very high and the
setup cost is zero, which one of the following lot-sizing approaches should be used?
A. Economic Order Quantity
B. Lot-for-Lot
C. Base Stock Level
D. Fixed period Quantity
3. Consider the following data for an MRP lot sizing problem-
Item cost per unit Rs. 100
Carrying cost 5% of unit cost/ per week
Set up cost Rs. 500 per set up
Week 1 2 3 4 5 6 7 8 9 10
Net 50 68 42 - 33 30 32 - 30 35
Requiremen
t
After how many weeks an order should be placed as per the POQ method? (Assume
52 weeks in a year)
A. 5
B. 7
 C. 6
D. 2
Solution:
Ordering cost = Rs. 500
Carrying cost = 0.05 *100 = Rs 5
Demand = 320
Avg. Demand = 320/10 = 32
EOQ = SQRT (2*32*500)/5) = SQRT (6400) = 80
Demand for 10 weeks = 320
Demand for 1 week = 32
Demand for 52 weeks = 32 * 52 = 1664
Annual Demand = 1664
Number of orders = 1664/80 = 21 orders
Period = 52/ 21 = 2.47 = 2 weeks (approx.)
4. In order to use the "level capacity strategy," variations in demand are met by-
A. Varying output during the regular time without changing employment levels
B. Varying output during regular time by changing employment levels
C. Using a combination of inventories, overtime, part-time, and back orders
D. Price adjustments

5. ____________________ of aggregate planning attempt to alter demand so that it

matches capacity.
A. Proactive Strategies
B. Reactive Strategies
C. Mixed Strategies
D. Marketing Strategies
6. In using the “chase strategy” variations in demand could be met by:
A. Varying output during regular time by changing workforce levels.
B. Varying output during the regular time without changing workforce levels
C. Using a combination of inventories, overtime, part-time, and back orders
D. Price adjustments
7. Which aggregate planning technique is most suitable for a company with predictable
demand and high setup costs?
A. Chase Strategy
B. Level Strategy
C. Mixed Strategy
D. None of the above
8. What is the main benefit of using Closed-Loop MRP?
A. Provides real-time feedback on inventory levels
 B. Reduces planning complexity
C. Improves purchasing accuracy
D. Eliminates the need for forecasting
9. Which lot sizing technique minimizes total setup and inventory holding costs?
A. Fixed lot size
B. Economic order quantity
C. Lot-for-lot
D. Silver-Meal heuristic
10. Lot sizing in MRP systems refers to:
A. Determining the number of units to produce in each production run
B. Calculating the reorder point for inventory replenishment
C. Evaluating the optimal number of suppliers to engage
D. Estimating the demand forecast for future periods