16_posting_-_MRP_2 - Material Requirements Planning (MRP) 2...

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10/29/2010 1 Material Requirements Planning (MRP) 2 “The devil is in the details.” Anonymous
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10/29/2010 2 Lot Sizing Cost per item $10.00 Order or setup cost $47.00 Inventory carrying cost/week 0.50% 1 2 3 4 5 6 7 8 50 60 70 60 95 75 60 55 Weekly net requirements: MRP generates material orders Order sizes/lots can be optimized
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10/29/2010 3 Common Lot Sizing Methods Lot-for-Lot (L4L) Economic Order Quantity (EOQ) Least Total Cost (LTC) Least Unit Cost (LUC)
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10/29/2010 4 Lot-for-Lot (L4L) Set orders to exactly match needs No carryover to future periods Minimizes carrying costs No consideration for balancing setup/holding 1 2 3 4 5 6 7 8 50 60 70 60 95 75 60 55 Ending inventory 0 0 0 0 0 0 0 0 Holding Cost 0 0 0 0 0 0 0 0 Setup Cost $47 $47 $47 $47 $47 $47 $47 $47 Total Cost $47 $47 $47 $47 $47 $47 $47 $47 Total $376 Weekly net requirements:
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10/29/2010 5 Economic Order Quantity (EOQ) Requires fairly constant demand period-to-period Estimate annual demand and holding costs EOQ = 2DS H D = H =
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6 Week 1 2 3 4 5 6 7 8 Net Requirements 50 60 70 60 95 75 60 55 Production Qty 351 0 0 0 0 351 0 0 Ending inventory 301 241 171 111 16 292 232 177 Holding Cost $15.05 $12.05 $8.55 $5.55 $0.80 $14.60 $11.60 $8.85 Setup Cost $47.00 $0.00 $0.00 $0.00 $0.00 $47.00
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16_posting_-_MRP_2 - Material Requirements Planning (MRP) 2...

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