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Consider an end item composed of a single component. Demand for the end item is 20 inweek 1, four in week 2, two in week 3, and zero until week 8 when there is a demand of 50. Currently there are 25 units on hand and no scheduled receipts. For the component there are 10 units on hand and no scheduled receipts. Planned order releases for all items are computed by using the Wagner–Whitin algorithm with a setup cost of $248 and a carrying cost of $1 per week. The planned lead time for the end item is 1 week, and for the component it is 3 weeks. (a) Compute the planned order releases for the end item and the component. Are there any problems? (b) The forecast for demand in week 8 has been changed to 49. Recompute the planned order releases for the end item and the component. Are there any problems? (c) Suppose the ?rst 2 weeks’ planned order releases from part (a) had been converted to ?rm planned orders. Do the computation again after changing the demand in week 8 to 49. Are there any problems? Comment on nervousness and the use of ?rm planned orders
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