
Concept explainers
a)
To determine: The ordering plan and cost for lot for lot.
Introduction:
Lot for Lot:
The lot for lot method of requirements plan is the process where the planned order release will be equal to the net requirement of the period.
Net requirements plan:
The net requirements plan is the plan which is established on the gross requirements plan formed by deducting the stock on and the
b)
To determine: The ordering plan and cost for EOQ.
Introduction:
Economic order quantity (EOQ):
The economic order quantity is the number of units a firm must add to their stock while making each order. The notion of EOQ is to reduce the total cost of inventory of the firm.
Net requirements plan:
The net requirements plan is the plan which is established on the gross requirements plan formed by deducting the stock on and the scheduled receipts. If the total requirement is below the safety stock levels, a planned order is made based on the given lot sizing technique.
c)
To determine: The ordering plan and cost for POQ.
Introduction:
Periodic order quantity (POQ):
The POQ is the standard quantity of units that will be ordered over a fixed period of time. This method is followed when the usage of raw materials is consistent and is predictable.
Net requirements plan:
The net requirements plan is the plan which is established on the gross requirements plan formed by deducting the stock on and the scheduled receipts. If the total requirement is below the safety stock levels, a planned order is made based on the given lot sizing technique.
d)
To determine: The plan which has the lowest cost.

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Chapter 14 Solutions
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