Reducing lead times
Computer-aided manufacturing (CAM)
gross requirements – amount on-hand – scheduled receipts.
It is a batch-type system that is periodically updated.
Approximately 10 percent of demand during lead time will be satisfied.
master production schedule.
1-B, 2-C, 3-A
Factor Old System New System
Output 60 60(1.25) = 75
# of workers 5 6
Worker cost $12/hr $12/hr
Material $16/unit $10/unit
Overhead 1.6(labor cost) 1.6(labor cost)
Price 31 31
If instantaneous replenishment is assumed when given the same demand, setup/ordering costs, and carrying costs, then the EOQ calculated using incremental replenishment will be greater than EOQ.