Chapter 8.2, Problem 17P

a)

Summary Introduction

Interpretation: Determine the lot sizing obtained from the EOQ formula.

Concept Introduction: EOQ (Economic Order Quantity) is a Firm should include the inventory with each and every order to reduce the total number of costs of inventory like order cost, setup holding cost, Shortage cost. Etc.

b)

Summary Introduction

Interpretation: Determine the lot sizes using the silver-meal heuristic.

Concept Introduction: Silver-Meal Heuristic method is the one of the forward method that determines the average cost per period as the process of the total number of periods to the current order to be expand and stop the process when the process enter into the increase level.

c)

Summary Introduction

Interpretation: Determine the lot sizes using Least Unit Cost heuristic.

Concept Introduction: one of the lot-sizing technique method is Least Unit Cost (LUC) method. The main advantage is that it is more complete analysis technique and also concentrate on the setup cost will change when the size of the order increases.

d)

Summary Introduction

Interpretation: Determine the lot sizes using Part Period Balancing method.

Concept Introduction: Part Period Balancing (PPB) method is the same as the EOQ (Economic Order Quantity).PPB is the Lot-sizing method to recover the lowest cost in interrelated between order cost and inventory cost.

e)

Summary Introduction

Interpretation: Compare the holding and setup costs obtained over the six periods using the policies found in Part (a) and Part (b) with the cost of a lot-for-lot policy.

Concept Introduction: one of the flexible policy is lot-for-lot policy. In this policy, the system reacts on the original demand with adding the anticipated demand from the forecast order and finally settle the quantity of the order based on the demand.