XYZ Limited is a medical equipment manufacturer in Victoria. The company received three orders from a local hospital. The order information is listed in Table 2 below. The product information is summarized in Table 3 below. In addition, there are 300 units of item G, 200 units of item H, 100 units of item J, 100 units of item Mask-II Special Edition, 50 units of item L, 3 units of item Ventilator Small, 10 units of item M, and 5 units of item N on hand. The holding cost of each item is AU$0.5/week, and the setup cost is AU$100. We assume that there are 52 weeks in a year.
|
Table 2. Order information |
||||
|
Order |
Item category |
Item version/edition |
Order quantity |
Expected delivery week (at the beginning of) |
|
1 |
Mask-I |
Size S |
700 |
Week 6 |
|
2 |
Mask-II |
Special Edition |
500 |
Week 8 |
|
3 |
Ventilator |
Small |
20 |
Week 8 |
|
Table 3. Product information |
||
|
Item |
Lead time (weeks) |
Components |
|
Mask-I Size S |
1 |
H (2), G (3) |
|
G |
2 |
H (3), J (1) |
|
H |
1 |
– |
|
J |
2 |
– |
|
Mask-II Special Edition |
1 |
L (3), K (2) |
|
K |
1 |
L (1), J (2) |
|
L |
3 |
– |
|
J |
2 |
– |
|
Ventilator Small |
2 |
M (2), N (1) |
|
M |
3 |
N (1), O (2) |
|
N |
1 |
– |
|
O |
1 |
|
Questions:
(a) Develop and draw the product structure for the item Ventilator Small.
(b) Develop material requirements plan for the item J using the lot-for-lot technique.
(c) Develop material requirements plan for the item J using the EOQ technique.
(d) Please compare the costs of using lot-for-lot and EOQ technique and assist the operations manager in identifying a reasonable lot sizing technique for item J based on your calculations and explain why.
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