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the gear box requirements chart, however, the product structure shows that the lead time for the input shaft is three weeks, rather than two weeks. Thus, after determining the net requirements, the planned order release number can be inputted three weeks prior to the dates of the net requirements. This information has been carried out below. Engine Assembly Master ScheduleWeeks123456789101112Quantity1557101520108216Gear Box RequirementsWeeks123456789101112Gross requirements1557101520108216On Hand: 1722Scheduled Receipts5Net Requirements5101520108216Planned Order Release5101520108216Input Shaft RequirementsWeeks123456789101112Gross requirements102030402016432On Hand: 403032322Scheduled Receipts22Net Requirements382016432Planned Order Release3820164322.Phil would like to consider the costs that his accountants are currently using for inventory carrying and setup for the gear boxes and input shafts. For question number two, we are asked to consider the costs that are currently being used for inventory and setup. We are given the following information:
PartCostGear BoxSetup= $90/ orderInventory Carrying= $2/unit/periodInput ShaftSetup = $45/orderInventory Carrying = $1/unit/periodBased on this information, we can say that the setup cost for the gear box is $720 and the inventory carrying cost is $8 giving us a total of $728 for the cost of setup and inventory for the gear box. With the input shaft, we can see that the setup cost comes out to $225 and the inventory carrying cost is $96, giving us a total of $321. The overall total for the engine production in terms of setup costs and inventory costs is $1,049. The calculations are shown below.PartCostGear BoxSetup Cost: 8 x $90 = $720Inventory Carrying: 4 x $2 = $8Total: $728Input ShaftSetup Cost: 5 x $45 = $225Inventory Carrying: 96 x $1 = $96Total: $321Total= $1,0493.