Tutorial Questions 07/11

7.14 A single inventory item is ordered from an outside supplier. The anticipated demand for this
item over the next 12 month is 6, 12, 4, 8, 15, 25, 20, 5, 10, 20, 5, 12. Current inventory of this
item is 4, and ending inventory should be 8. Assume a holding cost of $1 per period and a setup
cost of $40. Determine the order policy for this item based on
a. Silver-Meal.
b. Least unit cost.
c. Part period balancing.
d. Which lot-sizing method resulted in the lowest cost for the 12 periods?

7.18 Anticipated demands for a four-period planning horizon are 22, 86, 40, and 12. The setup
cost is $300 and the holding cost is h=$3 per unit per period.
a. Enumerate all the exact requirements policies, compute the holding and setup costs for each,
and find the optimal production plan.
b. Solve the problem by backward dynamic programing.

7.49 A component used in a manufacturing facility is ordered from an outside supplier. Because
the component is used in a variety of end products, the demand is high. Estimated demand (in
thousands) over the next 10 weeks is
Week
Deman
d

1
22

2
34

3
32

4
12

5
8

6
44

7
54

8
16

9
76

10
30

The component cost 65 cents each and the interest rate used to compute the holding coast is 0.5
percentage per week. The fixed order cost is estimated to be $200. (Hint: Express h as the
holding cost per thousand units.)
a. What ordering policy is recommended by the Silver-Meal heuristic?
b. What ordering policy is recommended by the part period balancing heuristic?
c. What ordering policy is recommended by the least unit cost heuristic?
d. Which method resulted in the lowest-cost policy for this problem?