The MRP gross requirements for Item A are shown here for the next 10 weeks. Lead time for A is three weeks and setup cost is \(10. There is a carrying cost of \)0.01 per unit per week. The beginning inventory is 90 units.

Use the least total cost or the least unit cost lot-sizing method to determine when and for what quantity the first order should be released.

Material requirements planning (MRP) is a computer-based information system that aids in the ordering as well as the timing of the parts, pieces, as well as raw materials that comprise a firm's finished product.

Lead time = 3 weeks

Set up cost = $10

Carrying Cost = $0.01 per unit

Beginning Inventory = 90 units

The strategy with the lowest overall cost selects the order quantity with the smallest disparity among holding as well as ordering expenses.

Compute the total requirements for each week, which is the amount required after taking the quantity of that product on hand into consideration.

Because on-hand inventory is 90 units, it may meet the gross requirement for weeks 1, 2, as well as 3, which is 30 units for week 1, 50 units for week 2, as well as 10 units for week 3.

The lead time for item A is 3 weeks, therefore its requirement every week must be adjusted accordingly.

The final ending inventory is as follows: