Krajewski Ism Ch15

Chapter

15

Resource Planning

DISCUSSION QUESTIONS 1. The purpose of this exercise is to get the students to think about the usefulness of ERP for each of their major areas of interest. Because groups consist of different functional area representatives, the discussion is intended to emphasize the cross-functional needs that are satisfied with an information system such as ERP. Some responses to this exercise include: ‰ Marketing—information about the availability of finished products that can be promised for delivery; finished goods inventory performance (service levels, stockouts). ‰ Finance—short-term financing needs for production plans, developed from the order releases and projected inventory levels. ‰ Accounting—billing invoices for products shipped to customers; payments to suppliers of raw materials and purchased components, developed from the schedule of orders actually received. ‰ Operations—the schedule of order releases to support the master schedule; estimates of capacity requirements at critical work centers. 2. Some responses from each functional area could include: ‰ Marketing: The available-to-promise quantities because they determine when orders can be promised to customers, the history of orders accepted for each product by time period because this information can be useful in projecting future demand patterns. ‰ Finance: The projected MPS quantities and inventory levels because they will indicate cash needs. ‰ Operations: The MPS start quantities because they indicate when production of products must begin to meet customer promises and because they provide the basis for estimating capacity needs at critical workstations. 3. A master flight schedule specifies the arrival and departure times for all the flights an airline must produce to meet customer demands. Here, the lead time is the time between departure and arrival, which is similar to the lead time in producing a quantity of a product. The passenger size of the aircraft is analogous to a production quantity, and the available-to-promise quantity in manufacturing bears similarity to the seats available on a given flight. In general, the flight schedule can be used to estimate the needs for resources such as pilots, flight attendants, airport slots, and aircraft.

Resource Planning

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4. The principles of MRP can be used for UPS by identifying bills of resources for resources such as employees, trucks, planes, and equipment. Forecasts of delivery requirements and the BORs can be used to estimate resource needs and project the loads on critical sorting operations. PROBLEMS 1. Bill of materials, Fig. 15.26 a. Item I has only one parent (E). However, item E has two parents (B and C). b. Item A has 10 unique components (B, C, D, E, F, G, H, I, J, and K). c. Item A has five purchased items (I, F, G, H, and K). These are the items without components. d. Item A has five intermediate items (B, C, D, E, and J). These items have both parents and components. e. The longest path is I–E–C–A at 11 weeks. 2. Item A. The bill of materials for item A is shown following. A

B(2)

C(2)

C(2)

E(1)

D(2)

F(2)

3. Lead time is determined by the longest path, C–B–A, at 13 weeks. 4. The bill of materials for item A with lead times is shown following. a. Lead time is determined by the longest path G-E-B-A = 12 weeks. b. If purchased items D, F, G, and H are already in inventory, the lead time is reduced to: A–B–E = 8 weeks. c. Item G with the longest lead time.

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Managing Value Chains

A LT = 1 B(1) LT = 2

C(1) LT = 2

D(1) E(1) F(1) H(1) LT = 6 LT = 5 LT = 6 LT = 3 G(1) LT = 4

H(1) LT = 3

5. Refer to Figure 15.21 and Solved Problem 1. FIGURE 15.21

A LT = 1 B(3) LT = 2

C(1) LT = 3

D(1) E(2) F(1) D(1) LT = 3 LT = 6 LT = 1 LT = 3 G(1) LT = 3

Material requirement to produce 5 units of end-item A: ( 5 A × 3B per A ) = 15B − 2 B on hand = 13B

( 5 A ×1C per A) = 5C

Material requirement to produce 13B: (13B ×1D per B ) = 13D

(13B × 2 E per B ) = 26E

Material requirement to produce 5C:

Resource Planning

( 5C ×1D per C ) = 5D ( 5C ×1F per C ) = 5F − 1F

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on hand = 4F

Material requirement to produce 4F: ( 4 F ×1G per F ) = 4G – 3G on hand = 1G Purchased material requirements net of on-hand inventory: 13 + 5 = 18D , 26E, and 1G. 6. MPS record in Fig. 15.28. The following table is from the Master Production Scheduling Solver in OM Explorer. The ATP row is not required for this problem. Solver Master Production Scheduling Enter data in yellow shaded areas. Lot Size Lead Time

60 1

Quantity on Hand

35 1

2

3

4

5

6

7

8

Forecast

20 18 28 28 23 30 33 38

Customer Orders (Booked)

15 17

Projected On-Hand Inventory

15 57 29

MPS Quantity 60

Available-to-Promise Inv (ATP)

9

8 35 57

60

60 60

60

20 20

10 11 12 13 14 15

7

1 38

60

MPS start

Override Formulas

9 14

9

60 60 51

53 60

Restore Formulas

7. MPS record in Fig. 15.29 Lot Size: 100 Quantity on Hand: 75 Forecast Customer orders (booked) Projected on-hand inventory MPS quantity MPS start

1 65 40 10 100

January 2 3 65 65 10 85 45 60 100 100 100

4 45 0 15 100

5 50 35 65 100 100

February 6 7 50 50 70 0 95 45 100 100

8 50 0 95 100

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8. An end-item Lot Size: 100 Quantity on Hand: 80 Forecast Customer orders (booked) Projected on-hand inventory MPS quantity MPS start

1 30 22 50

2 20 30 20

3 35 15 85 100

100

Week 5 6 25 25 0 0 10 85 100

4 50 9 35

7

8 40 3 40

0 5 80

100

9 0 7 33

10 50 0 83 100

100

9. Ball Bearings Prospective MPS a. Solver Master Production Scheduling Enter data in yellow shaded areas. Lot Size Lead Time

500 1

Quantity on Hand

400 1

2

3

4

5

6

7

8

9

10 11 12 13 14 15

Forecast

550 300 400 450 300 350 200 300 450 400

Customer Orders (Booked)

300 350 250 250 200 150 100 100 100 100

Projected On-Hand Inventory

350

100 150 350

300

50 150

MPS Quantity

500

500 500 500

500

500 500

MPS start Available-to-Promise Inv (ATP)

500 500 500 500 500 500 250 250 250 150 300 400 400

Override Formulas

Restore Formulas

The first order for 500 (in week 4) should be accepted. Through week 4, on hand (400) plus three MPS quantities of 500 each = 1900. Of those, (300 + 350 + 250 + 250) = 1150 have been sold, leaving 750 available (250 after this commitment). b. The second order for 400 (in week 5) should be accepted. Through week 5, the 250 remaining after the first order plus one more MPS quantity of 500 = 750. Of those, 200 have been sold in the 5th week and 150 in the 6th week. Therefore, (250 + 500 – 200 – 150) = 400 are still available. There will be zero units remaining for sale even after accepting this order. c. The third order for 300 units (in week 1) should not be accepted. At that time, of the 400 on hand, plus 500 MPS quantity to arrive in the first week, a total of 300 plus 350 has been sold. Note that because no MPS is scheduled for the 2nd week,

Resource Planning

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the 350 ordered for the 2nd week must come from those on hand or those arriving in the 1st week. In total [(400 + 500) – (300 + 350)] = 250 remaining, which will not cover the order for 300. d. The fourth order for 300 units (in week 7) should be accepted. After accepting the second order (part ii), zero units remain. In the 7th week 500 units arrive. Of those, demands of 100 in each of weeks 7 and 8 have been promised, leaving (500 – 200) = 300. This order of 300 units would reduce the quantity available to promise to zero units. 10. Morrison Electronics a. Prospective MPS Quantity on Hand: 100

1

2

3

4

5

6

7

8

Forecast Customer orders (booked) Projected on-hand inventory MPS quantity MPS start

70 50 30

70 60 110 150

65 55 45

60 40 135 150

55 35 80

85 0 145 150

75 0 70

85 0 135 150

150

150

150

150

b. Revised forecast Quantity on Hand: 100

1

2

3

4

5

6

7

8

Forecast Customer orders (booked) Projected on-hand inventory MPS quantity MPS start

70 50 30

70 60 110 150

75 55 35

70 40 115 150

70 35 45

100 0 95 150

100 0 –5

110 0 35 150

150

150

150

150

Although the projected on-hand row indicates a negative balance, this difficulty will occur only if the actual orders meet the new forecast. If the new forecasts are “solid,” we should consider revising the master production schedule or shifting demand to avoid stockouts in week 7.

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11. Completed MPS Record ITEM: 2" Pneumatic Control Valve LEAD TIME: 1 week

ORDER POLICY: 75 units QUANTITY ON HAND: 10 units Week

1 Forecast requirements Customer orders (booked) Projected on-hand inventory MPS quantity MPS start Available-to-promise (ATP) inventory

40 60 25 75 75 25

2

3

40 45 55 75

4

40 30 15

5

40 35 50 75

6

30 10 20

75

7

30 5 65 75

8

50 5 15

75

50 0 40 75

75

30

65

75

Decisions on the arriving orders: ‰ Order 1 for 15 units in week 2 should be accepted because there are 25 units ATP from week 1. After this order is accepted 10 units remain in ATP from Week 1. ‰ Order 2 for 30 units in week 5 should be accepted because there are 30 units ATP from week 4. After this order is accepted 10 units still remain in ATP from week 1 and zero units from week 4. ‰ Order 3 for 25 units in week 3 should NOT be accepted because there are only 10 units remaining in ATP from week 1 and this is not adequate to fill the order completely. After this order is rejected 10 units continue to remain in ATP from week 1. ‰ Order 4 for 75 units in week 7 should be accepted because there will be 65 units in ATP from week 6, which, along with the 10 units that continue to remain in ATP from week 1, will be adequate to fill the order completely. 12. a. Completed MPS Record ITEM: Electric Hand Drill LEAD TIME: 1 week

ORDER POLICY: 60 units QUANTITY ON HAND: 30 units Week 1

Forecast requirements Customer orders (booked) Projected on-hand inventory MPS quantity MPS start Available-to-promise (ATP) inventory

15 20 10 60 10

2

3

40 25 30 60

10 10 20

4 20 20

60 5

5

6

50

30

10 60 60 60

40 60 60

b. The shipping date would be week 2 because we will have 10 units from week 1 and 5 units from week 2 available-to-promise inventory to fill this order.

Resource Planning

13. Completed MPS record ITEM: Product C LEAD TIME: 2 weeks

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ORDER POLICY: 40 units QUANTITY ON HAND: 10 units 1

Forecast requirements Customer orders (booked) Projected on-hand inventory MPS quantity MPS start Available-to-promise (ATP) inventory

z

2

3

4

Week 6 7

5

8

9

10

11

12

15 25

15 12

15 8

15 10

20 2

20 3

20 0

20 0

15 0

15 0

15 0

15 0

25

10

35

20

0

20

0

20

5

30

15

0

40 40 13

40

40 40 37

40 20

40 40 40

40 40

14. Inventory record. The tables following were generated with the Single-Item MRP solver from OM Explorer. a. Fixed order quantity = 110

Inputs Solver - Single-Item MRP Enter data in yellow shaded areas. Periods Item Description

8 M405-X Table Top Assemby

FOQ Rule

1

2

Gross Requirements

90

Scheduled Receipts

110

Projected On-Hand Inventory

40

60

Planned Receipts Planned Order Releases

Period (P) for POQ 3

4

5

85

60

85

Lot Size (FOQ) Lead Time Safety Stock 6 7 80

85

5

5

110 110

110

110

110 2 0 8 45

90

70

90

110

110

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b. L4L

Inputs Solver - Single-Item MRP Enter data in yellow shaded areas. Periods Item Description

8 M405-X Table Top Assemby

L4L Rule

1

2

Gross Requirements

90

Scheduled Receipts

110

Projected On-Hand Inventory

40

Period (P) for POQ

60

3

5

2 0 8

85

80

45

90

25

80

45

90

80

45

60

Planned Receipts Planned Order Releases

4

Lot Size (FOQ) Lead Time Safety Stock 6 7

25

90

c. POQ, P = 2

Inputs Solver - Single-Item MRP Enter data in yellow shaded areas. Periods Item Description

8 M405-X Table Top Assemby

POQ Rule

1

2

Gross Requirements

90

Scheduled Receipts

110

Projected On-Hand Inventory

40

Period (P) for POQ

60

3

15.

5

85

80

25

2 0 8 45

60

Planned Receipts Planned Order Releases

4

2 Lot Size (FOQ) Lead Time Safety Stock 6 7

90 25

80

80

135

135

Completed inventory records a. FOQ of 150 units Item:

Rotor assembly

Week Gross requirements Scheduled receipts Projected on hand 20 Planned receipts Planned order releases

1 65 150 105

2 15

3 45

Lot Size: 150 units Lead Time: 2 weeks 4 5 6 7 40 80 80 80

90

45

5

150

150

75 150

145 150 150

65

8 80 135 150

90

Resource Planning

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b. L4L Item:

Rotor assembly

Week Gross requirements Scheduled receipts Projected on hand 20 Planned receipts Planned order releases

1 65 150 105

2 15

3 45

90

45

Lot Size: Lead Time: 4 5 6 40 80 80 5 75 80

0 80 80

75

80

2 15

3 45

Lot Size: Lead Time: 4 5 6 40 80 80

90

45

L4L 2 weeks 7 80 0 80

8 80 0 80

c. POQ with P = 2 Item:

Rotor assembly

Week Gross requirements Scheduled receipts Projected on hand 20 Planned receipts Planned order releases

1 65 150 105

5

155

80 155 160

0

2 25

3 15

Lot Size: Lead Time: 4 5 6 20 40 40

30

15

POQ, P = 2 2 weeks 7 8 80 80 80 160

0

16. Completed inventory records a. FOQ of 50 units Item:

Drive shaft

Week Gross requirements Scheduled receipts Projected on hand 10 Planned receipts Planned order releases

1 35 80 55 50

50

45 50 50

5

15 50

Lot Size: Lead Time: 4 5 6 20 40 40

50 units 3 weeks 7 50

8 50

15 50

15 50

50

b. L4L Item:

Drive shaft

Week Gross requirements Scheduled receipts Projected on hand 10 Planned receipts Planned order releases

1 35 80 55

2 25

3 15

30

15

5

40

40

0 5 50

0 40 50

0 40

L4L 3 weeks 7 50 0 50

8 50 0 50

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PART 3

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Managing Value Chains

c. POQ with P = 4 Item:

Drive shaft

Week Gross requirements Scheduled receipts Projected on hand 10 Planned receipts Planned order releases

17.

1 35 80 55

2 25

3 15

30

15

Lot Size: Lead Time: 4 5 6 20 40 40 130 135

135

90

50

POQ, P = 4 3 weeks 7 8 50 50 0

0 50

50

Rear wheel assembly, Fig. 15.35 a. Fixed order quantity = 300 Item: MQ—09 Description: Rear wheel assembly Week 1 2 Gross requirements 205 Scheduled receipts 300 Projected on hand 100 195 195 Planned receipts Planned order releases

3 130 65

Lot Size: FOQ: 300 Lead Time: 1 week 4 5 6 7 8 85 70 60 95 280 300

280

210

150

55

300

b. Lot-for-lot Item: MQ—09 Description: Rear wheel assembly Week 1 2 Gross requirements 205 Scheduled receipts 300 Projected on hand 100 195 195 Planned receipts Planned order releases

3 130 65

Lot Size: Lead Time: 4 5 6 85 70 0 20

20

0 70

0 70 60

L4L 1 week 7 60 0 60 95

8 95 0 95

c. Period order quantity, P = 4 Item: MQ—09 Description: Rear wheel assembly Week 1 2 Gross requirements 205 Scheduled receipts 300 Projected on hand 100 195 195 Planned receipts Planned order releases

3 130 65 150

Lot Size: POQ, P = 4 Lead Time: 1 week 4 5 6 7 8 85 70 60 95 130 150

130

60

0 95

0 95

Resource Planning

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18. Motor subassembly, Fig. 15.36 a. Fixed order quantity = 60 Item: GF—4 Description: Motor assembly Week 1 2 Gross requirements 50 Scheduled receipts 60 Projected on hand 40 40 50 Planned receipts Planned order releases

3

4 35

5

50

15

15

60

Lot Size: FOQ: 60 Lead Time: 3 weeks 6 7 8 9 10 11 55 30 10 20 60

20

50 60

50

40

12 25

40

15

Lot Size: L4L Lead Time: 3 weeks 6 7 8 9 10 11 55 30 10

12 25

0 40

0 25

60

b. Lot-for-lot Item: GF—4 Description: Motor assembly Week 1 2 Gross requirements 50 Scheduled receipts 60 Projected on hand 40 40 50 Planned receipts Planned order releases

3

4 35

5

50

15

15

40

30

0

0 30

10

0

0 10

0

25

c. Period order quantity P = 60/15 = 4. Item: GF—4 Description: Motor assembly Week 1 2 Gross requirements 50 Scheduled receipts 60 Projected on hand 40 40 50 Planned receipts Planned order releases

3

4 35

5

50

15

15

70

Lot Size: POQ, P = 4 Lead Time: 3 weeks 6 7 8 9 10 11 12 55 30 10 25 30 70

30 35

0

0

25 35

25

0

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Managing Value Chains

19. BOM for product A shown in Fig. 15.37 FIGURE 15.37

A

B(2)

D(1)

C(1)

D(2)

C(1)

D(2)

Item: B Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: C Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

0

1

2

0

0

3

4

0

0

Lot Size: L4L Lead Time: 3 weeks 5 6 7 1000 0

8

0 1000

1000

1

0

0

Item: D Description: Week 1 Gross requirements Scheduled receipts 2000 Projected on hand 200 2200 Planned receipts Planned order releases

2

0

3 1000

4

0 1000

0

1000

Lot Size: Lead Time: 5 6 500 0

L4L 1 week 7

8

0 500

500

2 2000

3

4

200

200

200

Lot Size: Lead Time: 5 6 1000 500 1200 2000

FOQ: 2000 1 week 7 8

700

2000

The only action required is to delay the scheduled receipt of item D from week 1 to week 2.

Resource Planning

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20. MRP for Fig. 15.38 A

B

C(2)

D(1)

D(1)

F(2)

E(1)

F(2)

E(1)

F(1)

Item C FOQ = 220 3 weeks 280 (week 1) 25

Lot-size rule Lead time Scheduled receipts On-hand inventory

Item: D Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

F(1)

F(1)

Data Category

Item: C Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

E(2)

25

D L4L 2 weeks None 0

E FOQ = 300 3 weeks 300 (week 3) 150

1

2

3 170

4

280 305

305

135

135

F POQ (P = 2) 2 weeks None 600

Lot Size: Lead Time: 5 6 200 135

155 220

FOQ = 220 3 weeks 7 8

155

155

L4L 2 weeks 7

8

0

0

220

0

Item: E Description: Week Gross requirements Scheduled receipts Projected on hand 150 Planned receipts Planned order releases

1

2

3 85

0

0

0 85 180

85

1 85

2

65

65 300

3 180 300 185

4

0

Lot Size: Lead Time: 5 6 180 100 0 180

0 100

100

4 100 85

Lot Size: Lead Time: 5 6 360 25 300

25

FOQ = 300 3 weeks 7 8

25

25

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PART 3

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Managing Value Chains

Item: F Description: Week Gross requirements Scheduled receipts Projected on hand 600 Planned receipts Planned order releases

1 170

2 300

3 360

4 200

430

130

200 430

0

Lot Size: Lead Time: 5 6

0

POQ = 2 2 weeks 7

8

0

0

0

430

Two action notices are identified: order 85 units of D and 430 units of F. 21. MRP for Fig. 15.39 A

B(2)

E(2)

Item: B Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: C Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

F(1)

1

50

50

50

2 100 50 0

3

0

C(1)

D(2)

F(2)

E(1)

4

0

0 130

0

130

160 Lot Size: Lead Time: 5 6 85 20

1 20

2 70

3 20

4 20

30

40 80

20

0

80

Lot Size: Lead Time: 5 6 130

125

40 125

20

L4L 2 weeks 7

0

8 160 0 160

POQ = 3 1 week 7 20 0 100

8 100 0 100

Resource Planning

Item: D Description: Week Gross requirements Scheduled receipts Projected on hand 120 Planned receipts Planned order releases Item: E Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: Description:

70

1

2 100

3

4

120

20

20

20

Lot Size: Lead Time: 5 6 130 140 250

250 Lot Size: Lead Time: 5 6 570

1

2

3 510

4

70

70

160 600

160

600

160

140

230 250

FOQ = 600 2 weeks 7 8

190 600

190

190

600

F

Lot Size: Lead Time:

Week Gross requirements Scheduled receipts Projected on hand 250 Planned receipts Planned order releases

CHAPTER 15

FOQ = 250 2 weeks 7 8 160

140

250

z

1 160

2

3 130

4 250

90

90

0 40 250

0 250

40

5

0 160

L4L 1 week

6 160

7 200

8

0 160 200

0 200

0

Action notices signal the need to place orders for 80 Cs and 600 Es. 22. MRP for products A, B, and C in Fig. 15.40 A D(2)

B E(1) F(2)

D(1)

C E(2) F(2)

D(2)

E(2) F(2)

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Managing Value Chains

Item: D Description: Week Gross requirements Scheduled receipts Projected on hand 150 Planned receipts Planned order releases Item: E Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: Description:

0

1

2

150

150

3 160 150 140

150

150

1

2

0

120 120

4 120 20

3 80

4 120

40

0 80 250

80

F

Week Gross requirements Scheduled receipts Projected on hand 100 Planned receipts Planned order releases

1

2

3 160

4 500

100

100

530 590 110

30

590

Lot Size: Lead Time: 5 6 125 110 45 150

85 150

Lot Size: Lead Time: 5 6 250 55 0 250 55

85

L4L 1 week 7

0 55

Lot Size: Lead Time: Safety Stock: 5 6 110 30 110

FOQ = 150 3 weeks 7 8

0

30

23. MRP for Fig. 15.41

D(2)

E(1)

E(2)

B

C(2)

D(1)

E(1)

E(2)

D(1)

E(1)

8

0

POQ, P = 2 2 weeks 30 units 7 8

Action notice: Order 590 of F

A

85

30

30

Resource Planning

Product A B

1

2 125

6 150 70

80

Data Category Lot-size rule Lead time Scheduled receipts On-hand inventory Item: C Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

Date 4 5 95

3

1

85

Item: D Description: Week Gross requirements Scheduled receipts Projected on hand 625 Planned receipts Planned order releases Item: E Description: Week Gross requirements Scheduled receipts Projected on hand 350 Planned receipts Planned order releases

85

2 250 200 35

155

3

4 190

35

0 155

300

2 250

3 380

4 190

470

220

450 610

260

610

8 130

E FOQ = 800 1 week 800 (week l) 350

Lot Size: Lead Time: 5 6 300 0

CHAPTER 15

0 300

L4L 3 weeks 7

0

8 260 0 260

260

1 155

1 610 800 540

7

Item D POQ (P = 3) 2 weeks None 625

C L4L 3 weeks 200 (week 2) 85

z

Lot Size: Lead Time: 5 6 260 370 0

260 630

POQ(P = 3) 2 weeks 7 8 260 260

630

2 250

3 160

4 820

290

130

110 800

800

Lot Size: Lead Time: 5 6 440 110

470 800

800

Action notice: New orders should be opened for 155 Cs and 610 Ds.

FOQ = 800 1 week 7 8 260 470

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Managing Value Chains

24. MRP for Fig. 15.42 A

D(2)

C(3)

E(1)

B(2)

D(1)

F(2)

E(1)

Data Category Lot-size rule Lead time Safety stock Scheduled receipts

B L4L 3 weeks 0 150 (week 2) 125

Beginning (on-hand) inventory Item: B Description: Week Gross requirements Scheduled receipts Projected on hand 125 Planned receipts Planned order releases Item: C Description: Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

1

125

2 240 150 35

205

240

1

0

C FOQ = 700 3 weeks 0 450 (week 2) 0

0 700

2 360 450 90

F(2)

Item D FOQ = 700 4 weeks 0 700 (week 1) 235

3

4 240

35

0 205

3

4 360

90

430 700

E L4L 2 weeks 50 None 750

Lot Size: Lead Time: 5 6 240 0 240 240

0

Lot Size: Lead Time: 5 6 360 70 700

F L4L 1 week 0 1400 (week 1) 0

70

L4L 3 weeks 7

0

8 240 0 240

FOQ = 700 3 weeks 7 8 360 70

410 700

Resource Planning

Item: D Description: Week Gross requirements Scheduled receipts Projected on hand 235 Planned receipts Planned order releases Item: Description:

2 480

3

4 240

250

250

10

700

1 700

2

3

4 700

50

50

50

50 700

230

FOQ = 700 4 weeks 7 8 240 230

690 700

Lot Size: Lead Time: Safety Stock: 5 6

50

50

L4L 2 weeks 50 units 7

8

50

50

700

F

Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

230 700

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700

E

Week Gross requirements Scheduled receipts Projected on hand 750 Planned receipts Planned order releases Item: Description:

1 205 700 730

Lot Size: Lead Time: 5 6 480

z

1 1400 1400 0 0

2

0

3

4 1400 0

Lot Size: Lead Time: Safety Stock: 5 6

0 1400

0

0

1400

Action notices are to issue orders for 700 Ds, 700 Cs, and 205 Bs. 25. MRP for Fig. 15.21 A LT = 1 B(3) LT = 2

C(1) LT = 3

D(1) E(2) F(1) D(1) LT = 3 LT = 6 LT = 1 LT = 3 G(1) LT = 3

L4L 1 week 0 units 7

0

8

0

z

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Data Category Lot-size rule Lead time Safety stock Scheduled receipts On-hand inventory

B L4L 2 weeks 30 150 (wk 2) 30

C L4L 3 weeks 10 50 (wk 2) 20

Item: A Lot Size: 50 Final Asm. Lead Time: 1 wk Quantity On Hand: 5 MPS Start Item: Description:

3

4

1

30

30

2 150 150 30

20

20

2 50 50 20

3

4

30

30

3

4

20

20

40

60

1

2

3 40

60

60

20

180

7

Lot Size: Lead Time: Safety Stock: 5 6 7 150 30

150

1

F L4L 1 week 0 40 (wk 3) 0

50

D

Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

Week 5 6

50

C

Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: Description:

2

B

Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: Description:

1

Item D E POQ (P = 2) L4L 3 weeks 6 weeks 0 0 None 400 (wk 6) 60 400

350

30 150 150

50

10 40 50

0

8

9

50

50

L4L 2 weeks 30 units 8 9 150 150

30

30 150

30 150

L4L 3 weeks 10 units 8 9 50 50

10

10 50

10 50

Lot Size: POQ = 2 Lead Time: 3 weeks Safety Stock: 0 units 4 5 6 7 8 9 150 50 200 150 50 180

0

150 350

10

10

30

150

Lot Size: Lead Time: Safety Stock: 5 6 7 50 02

G FOQ = 100 3 weeks 0 None

0

0

10

10

10

0

0

Resource Planning

Item: Description:

E

Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: Description:

400 400

2

3

400

400

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10

0

100

1

0

2

0

0

3 40 40 0

Lot Size: Lead Time: Safety Stock: 5 6 7 50 50

4

0 50

G

Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases

CHAPTER 15

Lot Size: L4L Lead Time: 6 weeks Safety Stock: 0 units 4 5 6 7 8 9 300 300 300 400 100 100 200 0 0 0 100

F

Week Gross requirements Scheduled receipts Projected on hand Planned receipts Planned order releases Item: Description:

1

z

1

0

2

0

0 50

0

Lot Size: Lead Time: Safety Stock: 4 5 6 7 50 50

3

0

0 50 50

L4L 1 week 0 units 8 9

0

50 100

0

0

0

10

0

FOQ = 100 3 weeks 0 units 8 9

0

0

0

0

10

0

100

CASE: FLASHY FLASHERS, INC. * A. Synopsis Flashy Flashers, Inc. is a company that produces a line of automotive electrical components and serves about 75 auto parts suppliers and car dealers regionally. Recently the company installed an MRP system. After one year’s use, the MRP system was not living up to expectations. Jack Jacobs, the production and inventory control manager, has been assigned the duty of finding out why the system is not performing well. B. Purpose This case provides the data to develop the MRP records for two products of Flashy Flashers, Inc. In addition to reinforcing the skills of developing dependent demand *

This case was prepared by Dr. Soumen Ghosh, Georgia Institute of Technology, as a basis for classroom discussion.

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production plans, the case affords the opportunity to discuss the causes of some of the implementation problems experienced by the company. The instructor may want to assign the Master Production Scheduling supplement prior to discussing this case because the linkage between the MPS (available to promise quantities) and MRP can be fruitfully discussed. The case also emphasizes the role and value of action notices in the operation of an MRP system. C. Analysis A summary of the planned order release schedule is contained in Exhibit TN.1. The MRP records for both of the end items and each of the component items are contained in Exhibit TN.2. Examination of the MRP records indicates that some of them show shortages (negative projected on-hand balances). Some of these shortages are due to bad timing of outstanding scheduled releases. Often, expediting the scheduled receipt will rectify the record imbalance. Whether or not the scheduled receipt can indeed be expedited is debatable, given the case description. In addition, three of the shortages must be rectified by releasing a planned order with less than the normal lead time. In one instance, a scheduled receipt can be delayed because it is scheduled for arrival too early. These are symptoms of an MRP system that is not working well. D. Recommendations Recommendations to management include the following: 1. Stabilize the master production schedule so that new orders are not inserted into the schedule with less than normal lead times. 2. Synchronize the operations in the shop with the material planners so that priorities are valid. This will require updating priorities (scheduled dates of need for a component) as they change. 3. Train all employees who provide information to the MRP system in addition to those who must update the system. Only selected employees received training in the past. Everyone should be aware of the need for accurate and timely data. Also train those who will be primary users of the MRP information. E. Teaching Suggestions Initially the instructor should get agreement on the planned order release form (Exhibit TN.1). Be sure to rationalize any differences in the student forms because they will spur the discussion of the mechanics of producing MRP reports. The results lay the foundation for the conclusion that something definitely is wrong. After the mechanics are understood, the instructor should raise the question, “What are the causes of these problems?” The students will provide a host of possibilities, including: ‰ Ambitious salespeople accepting orders on short notice ‰ Poor estimates for lead times ‰ Bad priority planning system ‰ Lack of capacity ‰ Bad input data

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‰ Ineffective follow-up with suppliers ‰ Blaming everyone else

The issue of whether the problem is one of capacity or priority scheduling is one that merits some discussion. Although specific data are not available to provide a definitive answer, the symptoms could be entirely the result of poor priorities—working on components that are not needed at the cost of those that are needed. EXHIBIT TN.1

Completed Planned Order Release Form Week

Item Description and Part Number 1)* RELEASE ACTION NOTICE Side Lens (SL111P) Side Lens Rubber Gasket (SL113P) Side Frame Subassembly (SL112A) 2)* RELEASE ACTION NOTICE (with 2 wk. lt) 3)* EXPEDITE NOTICE FOR SR (70) BY 1 WK. Side Frame (SL121F) Side Bulb Subassembly (SL122A) 4)* RELEASE ACTION NOTICE Flasher Bulb Subassembly (SL123A) 5)* RELEASE ACTION NOTICE Side Cable Grommet and Receptacle (SL131F) 6)* EXPEDITE NOTICE FOR SR (180) BY 1 WK. Flasher Cable Grommet and Receptacle (SL133F) Side Bulb (SL132P) 7)* RELEASE ACTION NOTICE Flasher Bulb (SL134P) 8)* DELAY NOTICE FOR SR(50) BY 2 WKS. Head Frame Subassembly (HL211A) Head Lens (HL212P) 9)* RELEASE ACTION NOTICE (with 3 wk. lt) 10)* EXPEDITE NOTICE FOR SR (110) BY 2 WKS. Head Lamp Module (HL222P) Head Frame (HL223F) Back Rubber Gasket (C3 I 0P) Screws (C206P)

11

12

13

14

15

100

100

350 100 60

110

100 110 60

110

110

100

60 350

90

80 180 2500

75 180

75

75

16

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EXHIBIT TN.2

Completed MRP Worksheets

Item: SL111P Description: Side Lens Date Gross requirements Scheduled receipts Projected on hand: 15 Planned receipts Planned order releases

11

12

13 140

14

15 80

16 145

15

15

225 350

225

145

0

Lot Size: Lead Time: Safety Stock:

350 units 2 weeks 0 units

Lot Size: Lead Time: Safety Stock:

L4L 3 weeks 0 units

Lot Size: Lead Time: Safety Stock:

100 units 1 week 20 units

Lot Size: Lead Time: Safety Stock:

L4L 3 weeks 0 units

350

RELEASE ACTION NOTICE Item: SL112A Description: Side Frame Subassembly Date Gross requirements Scheduled receipts Projected on hand: 20 Planned receipts Planned order releases

11

12

20

20

13 100 100 20

60

110

14

15 80

16 110

20

0 60

0 110

Item: SL113P Description: Side Lens Rubber Gasket Date Gross requirements Scheduled receipts Projected on hand: 20 Planned receipts Planned order releases

11

12

13 100

14

15 80

16 110

20

20

20 100

20

40 100 100

30 100

100

100

Item: SL121F Description: Side Frame Date Gross requirements Scheduled receipts Projected on hand: 0 Planned receipts Planned order releases

11

0 100

12 60

13 110 70 –60 –100

14

15

16

0 100

0

0

Resource Planning

EXHIBIT TN.2 (Cont.)

11

10

12 60 50 0

13 110

14

15

16

0 110

0

0

0

Lot Size: Lead Time: Safety Stock:

L4L 1 week 0 units

Lot Size: Lead Time: Safety Stock:

L4L 1 week 0 units

Lot Size: Lead Time: Safety Stock:

POQ (P = 2) 2 weeks 0 units

110

Item: SL123A Description: Flasher Bulb Subassembly Date Gross requirements Scheduled receipts Projected on hand: 0 Planned receipts Planned order releases

CHAPTER 15

Completed MRP Worksheets

Item: SL122A Description: Side Bulb Subassembly Date Gross requirements Scheduled receipts Projected on hand: 10 Planned receipts Planned order releases

z

11

12 60

13 110

14

15

16

0

0 60 110

0 110

0

0

0

60

RELEASE ACTION NOTICE Item: SL131F Description: Side Cable Grommet & Receptacle Date Gross requirements Scheduled receipts Projected on hand: 0 Planned receipts Planned order releases

11

12 110

13

14

15

16

0

–110

0 110

0

0

0

110

RELEASE ACTION NOTICE (WITH 1-WK LT) Item: SL132P Description: Side Bulb Date Gross requirements Scheduled receipts Projected on hand: 35 Planned receipts Planned order releases

Lot Size: Lead Time: Safety Stock: 11

35

12 110 100 25

13

14

15

16

25

25

25

25

100 units 1 week 25 units

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EXHIBIT TN.2 (Cont.)

Completed MRP Worksheets

Item: SL133F Description: Flasher Cable Grommet & Receptacle Date Gross requirements Scheduled receipts Projected on hand: 0 Planned receipts Planned order releases

11 60 –60

12 110 180 10

Lot Size: Lead Time: Safety Stock:

13

14

15

16

10

10

10

10

POQ (P = 2) 2 weeks 0 units

EXPEDITE NOTICE FOR SR(180) BY 1 WK Item: SL134P Description: Flasher Bulb Date Gross requirements Scheduled receipts Projected on hand: 20 Planned receipts Planned order releases

11 60 100 60

12 110

13

14

15

16

50 100

50

50

50

50

Lot Size: Lead Time: Safety Stock:

100 units 1 week 25 units

Lot Size: Lead Time: Safety Stock:

L4L 2 weeks 0 units

Lot Size: Lead Time: Safety Stock:

350 units 2 weeks 15 units

100

RELEASE ACTION NOTICE Item: HL211A Description: Head Frame Subassembly Date Gross requirements Scheduled receipts Projected on hand: 10 Planned receipts Planned order releases

11

12

13

14 120

15 90

16 75

10

50 60

60

0 60 75

0 90

0 75

60

90

DELAY SR(50) BY 2 WKS Item: HL212P Description: Head Lens Date Gross requirements Scheduled receipts Projected on hand: 15 Planned receipts Planned order releases

11

12

13

14 120

15 90

16 75

15

15

15

245 350

155

80

350

Resource Planning

EXHIBIT TN.2 (Cont.)

CHAPTER 15

Completed MRP Worksheets

Item: HL222P Description: Head Lamp Module Date Gross requirements Scheduled receipts Projected on hand: 50 Planned receipts Planned order releases

z

11

50

12 60

Lot Size: Lead Time: Safety Stock: 13 90

14 75 110 –10 –100 –65

15

16

10 75

10

POQ (P = 4) 4 weeks 10 units

75

RELEASE ACTION NOTICE (WITH 3-WK LT) EXPEDITE NOTICE FOR SR(110) BY 2 WKS Item: HL223F Description: Head Frame Date Gross requirements Scheduled receipts Projected on hand: 70 Planned receipts Planned order releases

11

12 60

13 90

14 75

15

16

70

10

0 80 75

0 75

0

0

80

Item: C310P Description: Back Rubber Gasket Date Gross requirements Scheduled receipts Projected on hand: 30 Planned receipts Planned order releases

11

30

12 120 180 90 180

13 200

14 75

15

16

70 180 180

175 180

175

175

Item: C206P Description: Screws Date Gross requirements Scheduled receipts Projected on hand: 150 Planned receipts Planned order releases

11

12 120

13 380

150

30

2150 1520 1000 480 2500

2500

14 630

15 520

16 520

Lot Size: Lead Time: Safety Stock:

L4L 1 week 0 units

Lot Size: Lead Time: Safety Stock:

180 units 1 week 20 units

Lot Size: Lead Time: Safety Stock:

2500 units 1 week 30 units

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