ITPEC IP October 2023 Question 71
In order to produce one (1) unit of product A, one (1) unit of component B that is procured externally is required. Component B is ordered on the first business day of every month. It is delivered on the last business day of the same month, and used in production from the next month. When the three-month production plan from April for product A is as shown in the table below, what is the minimum number of units of component B that must be ordered on the first business day in May? Here, the stock of component B at the end of March is 6,000 units, and 6,000 units have been ordered on the first business day of April. Products in progress and safety stock do not need to be considered.
Note: The shaded parts are not shown.
Explanation
6,000 units — the May order arrives at the end of May and must cover June's production after the stock left over.
Track the stock of component B month by month; each order arrives at the end of the month it was placed and is used from the next month.
- •End of March: 6,000 units
- •April: 6,000 − 5,000 = 1,000, plus the April order of 6,000 arriving at the end of April = 7,000
- •May: 7,000 − 6,000 = 1,000 left before the May order arrives
- •June needs 7,000, so the May order must be at least 7,000 − 1,000 = 6,000
Answer (b)
Why not others:
- •(a) 5,000 — gives only 1,000 + 5,000 = 6,000 units for June, 1,000 short of the 7,000 needed
- •(c) 7,000 — orders June's full production and ignores the 1,000 units still in stock at the end of May
- •(d) 8,000 — enough, but leaves 2,000 units unused after June, so it is not the minimum
Key rule: Net order = requirement for the period the delivery covers − stock expected on hand when it arrives, taking the lead time into account.
Business Industry · AI-written, may contain errors
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