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(Solved): Problem 21-21 (Algo) The MRP gross requirements for Item X are shown here for the next 10 weeks. Le ...
Problem 21-21 (Algo)
The MRP gross requirements for Item X are shown here for the next 10 weeks. Lead time for A is two weeks, and setup cost is $13. There is a carrying cost of $0.02 per unit per week. Beginning inventory is 75 units.
The MRP gross requirements for Item are shown here for the next 10 weeks. Lead time for is two weeks, and setup cost is There is a carrying cost of per unit per week. Beginning inventory is 75 units. Use the least total cost lot-sizing method to determine when and for what quantity the first order should be released.
Expert Answer
To determine when and for what quantity the first order should be released, we can use the least total cost lot-sizing method, also known as the Economic Order Quantity (EOQ) method. This method minimizes the total inventory costs, which are the sum of setup costs and carrying costs.The formula for EOQ is:EOQ = sqrt((2DS) / H)Where:D = Demand per weekS = Setup costH = Carrying cost per unit per week