It Is Time for a Company to Do Its MRP

question 27

Essay

It is time for a company to do its MRP schedule, but they aren't sure which lot sizing approach to use: lot-for-lot (LFL), fixed order quantity (FOQ) using the EOQ approach, or period order quantity (POQ).They have the following information regarding the product they wish to produce:
Carrying costs = $1 per unit per week
Set-up costs = $125
Annual demand = 2000 units
Work year = 50 weeks
a.What is the production lot size for week 2 using the LFL method?
b.What is the total cost using the LFL approach?
c.What is the fixed order quantity (EOQ) using the EOQ approach?
d.What is the beginning inventory in week 3 using the FOQ approach?
e.What is the total cost using the FOQ method?
f.What is the period order quantity (POQ)?
g.What is the ending inventory in week 4 using the POQ approach?
h.What is the total cost using the POQ method?

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Definitions:

Carriers

Individuals who are heterozygous for a trait with a dominant and recessive allele and thus express only the characteristics associated with the dominant allele but may pass the recessive allele, including one for a recessive disorder, on to their offspring.

Different Alleles

Variants of the same gene that exist at the same locus on a chromosome but encode for different traits.

Intermediate

A level of proficiency that falls between beginner and advanced, often indicating a moderate grasp of skills or knowledge.

Homozygous

Having inherited two genes of the same allelic form for a trait.