Given the following MRP matrix for Item C: If each order cost $500 and the holding cost is $0.75 per item per period,then using the Periodic Order Quantity lot sizing technique,the planned order release for period 4 is
A)270.
B)290.
C)340.
D)560.

Question

Given the following MRP matrix for Item C:  If each order cost $500 and the holding cost is $0.75 per item per period,then using the Periodic Order Quantity lot sizing technique,the planned order release for period 4 is
A)270. 
B)290. 
C)340. 
D)560.

Quizplus · Accepted Answer

Using the Periodic Order Quantity method, we calculate the total quantity needed until the next planned order release date (which is period 4 in this case) and then subtract the current inventory level to determine the planned order release quantity.
For period 4:
Total quantity needed = gross requirements for period 4 (150) + planned receipts for period 2 (200) + planned receipts for period 3 (0) - projected on-hand inventory for period 4 (60)
Total quantity needed = 150+200+0-60 = 290
Planned order release quantity = total quantity needed - current inventory level = 290 - 0 = 290
Therefore, the planned order release for period 4 is 290.

Given the Following MRP Matrix for Item C: If