A Company Assembles Microcomputers for Sale to Computer Stores

question 81

Essay

A company assembles microcomputers for sale to computer stores.They are trying to decide which lot sizing approach to use for developing their MRP schedules: lot-for-lot (LFL), fixed order quantity (FOQ) using the EOQ approach, or period order quantity (POQ).The set-up cost is $1000 per order, the inventory carrying cost is $2.50 per week per unit and the annual demand for the computers is 10,000 units.The company is using a 50-week work year and disregarding the effects of initial inventory and safety stock.The estimated net requirements for the microcomputers for the next six weeks are:
a.Using the LFL method, what is the size of the production lot for week 2?
b.What is the total cost using the LFL method?
c.What is the economic order quantity (EOQ)?
d.What is the ending inventory in week 3 using the EOQ approach?
e.What is the total cost using the EOQ method?
f.What is the period order quantity (POQ)?
g.What is the beginning inventory in week 4 using the POQ approach?
h.What is the total cost using the POQ method?

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Definitions:

No-Par

No-par refers to shares of stock issued without a par value, which means the stock's face value is not set and is determined by the market.

Sub-Par

A term indicating something is below an expected level of quality, performance, or standard.

Directors And Officers

Individuals appointed or elected to oversee and manage a corporation or organization and make strategic decisions.

Criminal Behavior

Actions that violate laws and are punishable by the government, including felonies and misdemeanors.