Chapter 12 - MRP and ERP
CHAPTER 12
MRP AND ERP
Solutions
1.
a. Each E requires 2 F + 1 G + 1 H.
Each F requires 2 J + 4 D.
Each G requires 2 L + 2 J.
Each H requires 4 A + 2 D.
Total J required = (2 F * 2 J) + (1 G * 2 J) = 4 + 2 = 6.
Total D required = (2 F * 4 D) + (1 H * 2 D) = 8 + 2 = 10.
Total L required = 1 G * 2 L = 2.
Total A required = 1 H * 4 A = 4.
Total required of each:
F = 2, G = 1, H =1.
J = 6, D = 10, L = 2, A = 4.
b. Product structure tree (tree diagram) for stapler:
Stapler
Top Assembly
Cover
Spring
Base Assembly
Slide Assembly
Base
Slide
Strike Pad
Rubber Pad(2)
Spring
12-1
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Education.
Chapter 12 - MRP and ERP
2.
Given:
We have the following information:
End Item
B(2)
E(2)
C
D(3)
F(3)
G(2)
End
B
C
D
E
F
G
H
LT (wk)
1
2
3
3
1
2
1
2
Amount
on hand
0
10
10
25
12
30
5
0
Item
E(2)
H(4)
E(2)
a. If 20 units of the end item are to be assembled, how many additional units of E are
needed?
Step 1:
Determine the gross requirements and the net requirements for the End Item:
Item
Gross Requirements – On Hand =
Net Requirements
End Item
20 – 0 =
20
Step 2:
Determine the gross requirements and the net requirements for B, C, & D.
Multiply the net requirements for the end item by the usage quantities of B, C, & D to
determine the gross requirements for B, C, & D.
Item
Gross Requirements – On Hand =
Net Requirements
B
(20 * 2) = 40 – 10 =
30
C
(20 * 1) = 20 – 10 =
10
D
(20 * 3) = 60 – 25 =
35
Step 3:
Determine the gross requirements and net requirements for E.
Multiply the net requirements for B, C, & D by the usage quantities of E to determine gross
requirements for E.
Item
Gross Requirements – On Hand =
Net Requirements
E
[(30 B * 2) + (10 C * 2) + (35 D * 2)] = 150 – 12 =
138
12-2
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Chapter 12 - MRP and ERP
b. Given:
An order for the end item is to be shipped at the start of week 11. Determine the latest week
that the order could be started.
To solve this, we need to determine the longest sequence through the product structure tree
moving from the end item down to the lowest items. The lead time for each item is indicated
in bold to the left of each item in the product structure tree shown below.
1 wk End Item
2 wk B(2)
1 wk E(2)
1 wk
3 wk C
2 wk F(3) 1 wk G(2)
1 wk
Total LT = 4 wk
3 wk D(3)
1 wk E(2) 2 wk H(4)
1 wk
5 wk
1 wk
5 wk
5 wk
1 wk E(2)
1 wk
6 wk
5 wk
The longest sequence is 6 weeks (End Item – D – H). 11 – 6 weeks = start of week 5.
3.
Given:
We have the following information:
Item
End
L
C
K
B
J
G
H
LT (wk)
1
2
3
3
2
3
3
2
Amount
on hand
0
10
15
20
30
30
5
0
Item
End
L
C
K
Direct Components
L(2), C(1), K(3)
B(2), J(3)
G(2), B(2)
H(4), B(2)
Using the information above, we can construct a product structure tree as shown below:
End Item
L(2)
B(2)
C
J(3)
G(2)
K(3)
B(2)
H(4)
B(2)
12-3
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Education.
Chapter 12 - MRP and ERP
a. If 40 units of the end item are to be assembled, how many additional units of B are needed?
Step 1:
Determine the gross requirements and the net requirements for the end item:
Item
Gross Requirements – On Hand =
Net Requirements
End Item
40 – 0 =
40
Step 2:
Determine the gross requirements and the net requirements for L, C, & K.
Multiply the net requirements for the end item by the usage quantities of L, C, & K to
determine the gross requirements for L, C, & K.
Item
Gross Requirements – On Hand =
Net Requirements
L
(40 * 2) = 80 – 10 =
70
C
(40 * 1) = 40 – 15 =
25
K
(40 * 3) = 120 – 20 =
100
Step 3:
Determine the gross requirements and net requirements for B.
Multiply the net requirements for L, C, & K by the usage quantities of B to determine gross
requirements for B.
Item
Gross Requirements – On Hand =
Net Requirements
B
[(70 L * 2) + (25 C * 2) + (100 K * 2)] = 390 – 30 =
360
b. Given:
An order for the end item is to be shipped at the start of week 8. Determine the latest week
that the order could be started.
To solve this, we need to determine the longest sequence through the product structure tree
moving from the end item down to the lowest items. The lead time for each item is indicated
in bold to the left of each item in the product structure tree shown below.
1 wk End Item
2 wk L(2)
2 wk B(2)
Total LT = 5 wk
3 wk C
3 wk J(3)
6 wk
3 wk G(2)
7 wk
3 wk K(3)
2 wk B(2) 2 wk H(4)
6 wk
6 wk
2 wk B(2)
6 wk
The longest sequence is 7 weeks (End Item – C – G). 8 – 7 weeks = start of week 1.
12-4
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Education.
Chapter 12 - MRP and ERP
4.
Given:
Eighty units of end item E are needed at the beginning of week 6. Three cases (30 units per case)
of J have been ordered, and one case is scheduled to arrive in week 3, one in week 4, and one in
week 5. Note: J must be ordered by the case, and B must be produced in multiples of 120 units.
There are 60 units of B and 20 units of J on hand. Lead times are 2 weeks each for E and B, and 1
week for J. The product structure tree is shown below:
E
B(2)
J(4)
J(3)
F(2)
a. Determine a material requirements plan for J. We will need to prepare material plans for E, B,
and J. All given information is highlighted in bold in the tables below.
POH is the projected on hand inventory at the beginning of each period.
All MRP problems below will use the following formula to determine POH:
POH (Current Period) = [POH + Planned-Order Receipts – Gross Requirements (Prior
Period)] + Scheduled Receipts (Current Period) or using subscripts, we have the following:
POHt = [POHt-1 + Planned-Order Receiptst-1 – Gross Requirementst-1] + Scheduled Receiptst
Net Requirements = Max[(Gross Requirements – POH), 0].
Note: This ensures that we have net requirements only when the Gross Requirements > POH.
Master
Schedule for:
E
Week
1
2
3
4
5
Quantity
E
LT = 2
Lot size: Lot-for-Lot
Gross requirements
6
80
Beg.
Inv.
1
2
3
4
5
6
80
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
Net requirements
80
Planned-order receipts
80
Planned-order releases
80
12-5
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Chapter 12 - MRP and ERP
B(2)
LT = 2
Lot size: Multiples of 120
Beg.
Inv.
1
2
3
Gross requirements
4
5
6
20
20
160
Scheduled receipts
Projected on hand
60
60
60
60
60
Net requirements
100
Planned-order receipts
120
Planned-order releases
120
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 80 E * 2 = 160.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [60 + 0 – 0] + 0 = 60.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [60 + 120 – 160] + 0 = 20.
J(3) & J(4) LT = 1
Lot size: Multiples of 30
Gross requirements
Beg.
Inv.
1
2
480
Scheduled receipts
Projected on hand
3
20
20
20
4
5
6
240
30
30
30
50
80
50
Net requirements
460
160
Planned-order receipts
480
180
50
Planned-order releases
480
180
Notes:
Gross Requirements (week 2) = Planned-Order Releases of 120 B * 4 = 480.
Gross Requirements (week 4) = Planned-Order Releases of 80 E * 3 = 240.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3.
POH3 = [20 + 480 – 480] + 30 = 50.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4.
POH4 = [50 + 0 – 0] + 30 = 80.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5.
POH5 = [80 + 180 – 240] + 30 = 50.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6.
POH6 = [50 + 0 – 0] + 0 = 50.
Planned-Order Receipts (week 2) = 16 * 30 = 480 (must order in cases of 30).
Planned-Order Receipts (week 4) = 6 * 30 = 180 (must order in cases of 30).
12-6
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Chapter 12 - MRP and ERP
b.
Suppose that in week 4 the quantity of E needed is changed from 80 to 70 units. The
planned-order releases through week 3 have all been executed. How many more Bs and
Js will be on hand in week 6? Note: We are now at the start of week 4.
Step 1:
Before we do the MRP processing, we list what changes have occurred:
1. All Planned-Order Releases in weeks 1 – 3 have been executed.
B had Planned-Order Releases in week 2 (120) corresponding to Planned-Order
Receipts (120) in week 4. Change the Planned-Order Receipts to Scheduled Receipts
in week 4.
J had Planned-Order Releases in week 1 (480) corresponding to Planned-Order
Receipts (480) in week 2. The Planned-Order Receipts would have been changed to
Scheduled Receipts and received in week 2 (this increases inventory).
J had Planned-Order Releases in week 3 (180) corresponding to Planned-Order
Receipts (180) in week 4. These will show up as Scheduled Receipts in week 4 and
will be added to the original amount of Scheduled Receipts (30) in week 4.
2. Scheduled Receipts for J in week 3 (30) would have been received (this increases
inventory).
3. Gross requirements for all items in weeks 1 – 3 would have been disbursed (these
transactions decrease inventory).
Step 2:
Determine the ending inventory for each item at the end of week 3. These will become
the beginning inventory balances in week 4.
Remember: Scheduled receipts increase inventory while gross requirements decrease
inventory.
Ending Inventory = Beginning Inventory + Scheduled Receipts – Gross Requirements
Item E
Ending Inventory
Week 1
0+0–0=0
Week 2
0+0–0=0
Week 3
0+0–0=0
Item B
Ending Inventory
Week 1
60 + 0 – 0 = 60
Week 2
60 + 0 – 0 = 60
Week 3
60 + 0 – 0 = 60
Item J
Ending Inventory
Week 1
20 + 0 – 0 = 20
Week 2
20 + 480 – 480 = 20
Week 3
20 + 30 – 0 = 50
12-7
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Chapter 12 - MRP and ERP
Step 3:
Fill in all beginning inventory balances and scheduled receipts, and then change E to 70
units in week 6 of the master schedule. Our MRP tables are shown for weeks 4 – 6 only.
Master
Schedule for:
E
Week
4
5
Quantity
E
LT = 2
Lot size: Lot-for-Lot
Gross requirements
6
70
Beg.
Inv.
4
5
6
70
Scheduled receipts
Projected on hand
0
0
0
0
Net requirements
70
Planned-order receipts
70
Planned-order releases
B(2)
LT = 2
Lot size: Multiples of 120
70
Beg.
Inv.
4
Gross requirements
140
Scheduled receipts
120
Projected on hand
60
180
5
6
40
40
Net requirements
Planned-order receipts
Planned-order releases
Notes:
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled
Receipts4.
POH4 = [60 + 0 – 0] + 120 = 180.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled
Receipts5.
POH5 = [180 + 0 – 140] + 0 = 40.
12-8
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Chapter 12 - MRP and ERP
J(4) & J(3) LT = 1
Lot size: Multiples of 30
Gross requirements
Beg.
Inv.
5
6
210
Scheduled receipts
Projected on hand
4
50
210
30
260
80
80
Net requirements
Planned-order receipts
Planned-order releases
Notes:
Scheduled Receipts (week 4) = Original amount of 30 + 180 = 210.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled
Receipts4.
POH4 = [50 + 0 – 0] + 210 = 260.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled
Receipts5.
POH5 = [260 + 0 – 210] + 30 = 80.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled
Receipts6.
POH6 = [80 + 0 – 0] + 0 = 80.
Original on hand amounts (week 6):
B = 20 & J = 50.
Revised on hand amounts (week 6):
B = 40 & J = 80.
There will be an additional 20 units of B & 30 units of J on hand.
12-9
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Education.
Chapter 12 - MRP and ERP
5.
a. Given:
120 units of end item Z are needed at the beginning of week 7. On hand balances: Z = 40, A
70, B = 100, and C = 30 units. There is a scheduled receipt of 20 units of C in week 4. Lead
times are 2 weeks for Z and B, and 1 week for other items. Lot-for-lot ordering is used for all
items. The product structure tree is shown below:
Z
A(2)
C(3)
B(4)
D(2)
E(2)
C(2)
Prepare a material requirements plan for component C:
We will need to prepare material plans for Z, A, B, and C.
Master
Schedule for:
Z
Week
1
2
3
4
5
6
Quantity
Z
LT = 2
Lot size: Lot-for-Lot
Gross requirements
7
120
Beg.
Inv.
1
2
3
4
5
6
7
120
Scheduled receipts
Projected on hand
40
40
40
40
40
40
40
40
Net requirements
80
Planned-order receipts
80
Planned-order releases
80
Notes:
POH7 = [POH6 + Planned-Order Receipts6 – Gross Requirements6] + Scheduled Receipts7
POH7 = [40 + 0 – 0] + 0 = 40.
A(2)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
0
0
160
Scheduled receipts
Projected on hand
70
70
70
70
70
70
Net requirements
90
Planned-order receipts
90
Planned-order releases
90
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 80 Z * 2 = 160.
12-10
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Chapter 12 - MRP and ERP
B(4)
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
0
0
320
Scheduled receipts
Projected on hand
100
100
100
100
100
100
Net requirements
220
Planned-order receipts
220
Planned-order releases
220
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 80 Z * 4 = 320.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [100 + 220 – 320] + 0 = 0.
C(3) & C(2) LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
440
270
Scheduled receipts
Projected on hand
5
6
7
0
0
0
20
30
20
Net requirements
410
250
Planned-order receipts
410
250
30
30
30
Planned-order releases
410
250
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 220 B * 2 = 440.
Gross Requirements (week 4) = Planned-Order Releases of 90 A * 3 = 270.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [30 + 410 – 440] + 20 = 20.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [20 + 250 – 270] + 0 = 0.
12-11
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Chapter 12 - MRP and ERP
b. Given:
95 units of end item E are needed at the beginning of week 7. On hand balances: E = 5, B =
50, C = 100, and D = 80 units. There is a scheduled receipt of 30 units of C in week 4. Lead
times are 2 weeks for E and C, and 1 week for other items. Assume lot-for-lot ordering except
for D, where multiples of 40 must be used. The product structure tree is shown below:
E
B(3)
D(2)
C(2)
I(2)
S(2)
D(2)
Prepare a material requirements plan for component D:
We will need to prepare material plans for E, B, C, and D.
Master
Schedule for:
E
Week
1
2
3
4
5
6
Quantity
E
LT = 2
Lot size: Lot-for-Lot
Gross requirements
7
95
Beg.
Inv.
1
2
3
4
5
6
7
95
Scheduled receipts
Projected on hand
5
5
5
5
5
5
5
5
Net requirements
90
Planned-order receipts
90
Planned-order releases
B(3)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
90
Beg.
Inv.
1
2
3
4
5
6
7
0
0
270
Scheduled receipts
Projected on hand
50
50
50
50
50
50
Net requirements
220
Planned-order receipts
220
Planned-order releases
220
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 90 E * 3 = 270.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [50 + 220 – 270] + 0 = 0.
12-12
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Chapter 12 - MRP and ERP
C(2)
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
5
6
7
0
0
180
Scheduled receipts
Projected on hand
4
30
100
100
100
100
130
130
Net requirements
50
Planned-order receipts
50
Planned-order releases
50
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 90 E * 2 = 180.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [100 + 0 – 0] + 30 = 130.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [130 + 0 – 0] + 0 = 130.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [130 + 50 – 180] + 0 = 0
D(2) & D(2) LT = 1
Lot size: Multiples of 40
Gross requirements
Beg.
Inv.
1
2
3
4
100
440
80
20
Net requirements
20
420
Planned-order receipts
40
440
5
6
7
20
20
20
Scheduled receipts
Projected on hand
80
80
80
Planned-order releases
40
440
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 50 C * 2 = 100.
Gross Requirements (week 4) = Planned-Order Releases of 220 B * 2 = 440.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [80 + 40 – 100] + 0 = 20.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [20 + 440 – 440] + 0 = 20.
Planned-Order Receipts (week 3) = 1 * 40 = 40 (multiples of 40 must be used).
Planned-Order Receipts (week 4) = 11 * 40 = 440 (multiples of 40 must be used).
12-13
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Education.
Chapter 12 - MRP and ERP
6.
Given:
The company that makes a table wants to ship 100 units at the beginning of day 4, 150 units at the
beginning of day 5, and 200 units at the beginning of day 7. Receipts of 100 wood sections are
scheduled at the beginning of day 2. On hand balances: Braces = 60 and Legs = 120. Lead times
(in days) for all items are shown in the table below. The product structure tree is shown below
also:
Quantity
Lead Time
1-200
1
201-550
2
551-999
3
Table
Wood Sections(2)
Braces(3)
Legs(4)
Prepare a material requirements plan using lot-for-lot ordering for all items:
Master
Schedule for:
Table
Day
1
2
3
Quantity
Table
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
100
150
4
5
100
150
0
0
100
100
150
200
150
200
200
6
7
200
Scheduled receipts
Projected on hand
0
0
0
Net requirements
Planned-order receipts
0
0
0
Planned-order releases
100
150
200
Notes:
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [0 + 100 – 100] + 0 = 0.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [0 + 150 – 150] + 0 = 0.
Planned-Order Releases (days 3, 4, & 6) were back-scheduled 1 day from their Planned-Order
Receipts because all lead times = 1 day for quantities of 1-200.
12-14
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Chapter 12 - MRP and ERP
Wood Sections(2)
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
200
300
100
0
Net requirements
100
Planned-order receipts
100
300
300
Gross requirements
Scheduled receipts
Projected on hand
5
6
7
400
100
0
0
100
0
0
0
400
400
Planned-order releases
400
400
Notes:
Gross Requirements (day 3) = Planned-Order Releases of 100 Tables * 2 = 200.
Gross Requirements (day 4) = Planned-Order Releases of 150 Tables * 2 = 300.
Gross Requirements (day 6) = Planned-Order Releases of 200 Tables * 2 = 400.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3
POH3 = [100 + 0 – 0] + 0 = 100.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [100 + 100 – 200] + 0 = 0.
Planned-Order Releases (day 2) = 100 from Planned-Order Receipts of 100 in day 3 (lead time = 1
day for quantities of 1-200) + 300 from Planned-Order Receipts of 300 in day 4 (lead time = 2 days
for quantities of 201-550) = 400.
Planned-Order Releases (day 4) = 400 from Planned-Order Receipts of 400 in day 6 (lead time = 2
days for quantities of 201-550).
Braces(3)
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
300
450
60
0
240
240
450
600
450
600
7
600
Scheduled receipts
Projected on hand
60
60
60
Net requirements
Planned-order receipts
0
0
0
Planned-order releases
240
450
600
Notes:
Gross Requirements (day 3) = Planned-Order Releases of 100 Tables * 3 = 300.
Gross Requirements (day 4) = Planned-Order Releases of 150 Tables * 3 = 450.
Gross Requirements (day 6) = Planned-Order Releases of 200 Tables * 3 = 600.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [60 + 240 – 300] + 0 = 0.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [0 + 450 – 450] + 0 = 0.
Planned-Order Releases (day 1) = 240 from Planned-Order Receipts of 240 in day 3 (lead time = 2
days for quantities of 201-550).
Planned-Order Releases (day 2) = 450 from Planned-Order Receipts of 450 in day 4 (lead time = 2
days for quantities of 201-550).
Planned-Order Releases (day 3) = 600 from Planned-Order Receipts of 600 in day 6 (lead time = 3
days for quantities of 551-999).
12-15
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Education.
Chapter 12 - MRP and ERP
Legs(4)
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
Gross requirements
3
4
5
6
400
600
120
0
280
280
600
800
600
800
7
800
Scheduled receipts
Projected on hand
120
120
120
Net requirements
Planned-order receipts
0
0
0
Planned-order releases
880
800
Notes:
Gross Requirements (day 3) = Planned-Order Releases of 100 Tables * 4 = 400.
Gross Requirements (day 4) = Planned-Order Releases of 150 Tables * 4 = 600.
Gross Requirements (day 6) = Planned-Order Releases of 200 Tables * 4 = 800.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3
POH3 = [120 + 0 – 0] + 0 = 120.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [120 + 280 – 400] + 0 = 0.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [0 + 600 – 600] + 0 = 0.
Planned-Order Releases (day 1) = 280 from Planned-Order Receipts of 280 in day 3 (lead time = 2
days for quantities of 201-550) + 600 from Planned-Order Receipts of 600 in day 4 (lead time = 3
days for quantities of 551-999) = 880.
Planned-Order Releases (day 3) = 800 from Planned-Order Receipts of 800 in day 6 (lead time = 3
days for quantities of 551-999).
12-16
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Education.
Chapter 12 - MRP and ERP
7.
Given:
80 units of end item X are needed at the beginning of week 6, and another 30 units are needed at
the beginning of week 8. D can be ordered only in whole cases (50 units per case). One case of D
(50 units) is received automatically every other week, beginning in week 1. On hand balances: B
= 30 and D = 20 units. Lead times are a function of quantity as shown in the table below. The
product structure tree is shown below also:
Quantity
Lead Time
1-100
1 wk
101-200
2 wk
201-300
3 wk
301+
4 wk
X
B(2)
D(2)
D(3)
F(2)
Prepare a material requirements plan for component D using lot-for-lot ordering for all items
except D. We will need to prepare material plans for X, B, and D.
Master
Schedule for: X
Week
1
2
3
4
5
Quantity
X
Lot size: Lot-for-Lot
Gross requirements
6
7
80
Beg.
Inv.
1
2
3
4
5
6
8
30
7
80
8
30
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
0
Net requirements
80
30
Planned-order receipts
80
30
Planned-order releases
80
30
Notes:
Planned-Order Releases (week 5 and week 7) have a lead time of 1 week (lead time = 1 week for
quantities of 1-100).
12-17
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Education.
Chapter 12 - MRP and ERP
B(2)
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
Gross requirements
5
6
160
7
8
60
Scheduled receipts
Projected on hand
30
30
30
30
30
30
0
0
Net requirements
130
60
Planned-order receipts
130
60
0
Planned-order releases
130
60
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 80 X * 2 = 160.
Gross Requirements (week 7) = Planned-Order Releases of 30 X * 2 = 60.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [30 +130 – 160] + 0 = 0.
Planned-Order Releases (week 3) = 130 from Planned-Order Receipts of 130 in week 5 (lead time = 2
weeks for quantities of 101-200).
Planned-Order Releases (week 6) = 60 from Planned-Order Receipts of 60 in week 7 (lead time = 1
week for quantities of 1-100).
D(2) & D(3)
Lot size: Multiples of 50
Gross requirements
Beg.
Inv.
Scheduled receipts
Projected on hand
1
2
50
20
70
70
Net requirements
3
5
6
7
260
240
120
90
50
50
120
140
150
Planned-order receipts
4
10
8
50
60
20
50
180
200
100
100
40
10
50
Planned-order releases
150
200
100
50
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 130 B * 2 = 260.
Gross Requirements (week 5) = Planned-Order Releases of 80 X * 3 = 240.
Gross Requirements (week 6) = Planned-Order Releases of 60 B * 2 = 120.
Gross Requirements (week 7) = Planned-Order Releases of 30 X * 3 = 90.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3
POH3 = [70 + 0 – 0] + 50 = 120.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [120 + 150 – 260] + 0 = 10.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [60 + 200 – 240] + 0 = 20.
POH7 = [POH6 + Planned-Order Receipts6 – Gross Requirements6] + Scheduled Receipts7
POH7 = [20 + 100 – 120] + 50 = 50.
POH8 = [POH7 + Planned-Order Receipts7 – Gross Requirements7] + Scheduled Receipts8
POH8 = [50 + 50 – 90] + 0 = 10.
12-18
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Education.
Chapter 12 - MRP and ERP
8.
Given:
Oh No! Inc. sells three models: A, B, and C. Lead times are 1 week for all items except C (2
weeks). On hand balances: B = 10, C = 10, and D = 25 units. Lot-sizing rules are lot-for-lot for all
items except D, which must be ordered in multiples of 100. There is a scheduled receipt of 100
units of D in week 1. The master schedule shows that 40 units of A are needed at the beginning of
week 4, 60 units of B at the beginning of week 5, and 30 units of C at the beginning of week 6.
The product structure tree for each item is shown below:
A
B
D
E
C
D(2)
F
D(4)
G
Prepare a material requirements plan for component D and its parents. We will need to prepare
material plans for A, B, C, and D.
Master
Schedule for: A
Week
1
2
3
Quantity
A
LT = 1
Lot size: Lot-for-Lot
Gross requirements
4
5
6
5
6
0
0
5
6
40
Beg.
Inv.
1
2
3
4
40
Scheduled receipts
Projected on hand
0
0
0
0
0
Net requirements
40
Planned-order receipts
40
Planned-order releases
Master
Schedule for: B
40
Week
1
2
3
4
Quantity
B
LT = 1
Lot size: Lot-for-Lot
Gross requirements
60
Beg.
Inv.
1
2
3
4
5
6
60
Scheduled receipts
Projected on hand
10
10
10
10
10
10
Net requirements
50
Planned-order receipts
50
Planned-order releases
0
50
12-19
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Education.
Chapter 12 - MRP and ERP
Master
Schedule for: C
Week
1
2
3
4
5
Quantity
C
LT = 2
Lot size: Lot-for-Lot
Gross requirements
6
30
Beg.
Inv.
1
2
3
4
5
6
30
Scheduled receipts
Projected on hand
10
10
10
10
10
10
10
Net requirements
20
Planned-order receipts
20
Planned-order releases
D, D(2), & D(4) LT = 1
Lot size: Multiples of 100
Gross requirements
20
Beg.
Inv.
Scheduled receipts
Projected on hand
1
2
3
4
40
180
125
85
5
6
5
5
100
25
125
125
Net requirements
95
Planned-order receipts
100
Planned-order releases
100
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 40 A * 1 = 40.
Gross Requirements (week 4) = (Planned-Order Releases of 50 B * 2) + (Planned-Order
Releases of 20 C * 4) = 100 + 80 = 180.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [125 + 0 – 40] + 0 = 85.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [85 + 100 – 180] + 0 = 5.
Planned-Order Receipts (week 5) = 1 * 100 = 100 (must order in multiples of 100).
12-20
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Education.
Chapter 12 - MRP and ERP
9.
Given:
50 chain saws are needed at the start of week 8. The inventory information (shown in bold) and
the product structure tree are listed below in the problem solution:
a. Product tree structure:
Saw
A(2)
B
E(3)
D
C(4)
D(2)
F(3)
E(2)
D(2)
D
Assembly time chart:
A
E
F
Saw
B
D
D
C
E
1
2
3
4
5
6
7
8
week
Start of week 2
Start of week 8
Master schedule:
Master
Schedule for:
Saw
Week
1
2
3
4
5
6
7
Quantity
8
50
b. Material requirements plan for E using lot-for-lot ordering for all items. We will need to
prepare material plans for Saw, A, C, and E.
Master
Schedule for:
Saw
Week
1
2
3
4
5
6
7
Quantity
Saw
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Scheduled receipts
Projected on hand
Net requirements
Planned-order receipts
Planned-order releases
8
50
Beg.
Inv.
1
2
3
4
5
6
7
8
50
15
15
15
15
15
15
15
15
15
35
35
35
12-21
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Education.
Chapter 12 - MRP and ERP
A(2)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Scheduled receipts
Projected on hand
Net requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
7
8
0
0
6
7
8
0
0
0
70
10
10
10
10
10
Planned-order receipts
Planned-order releases
10
10
60
60
60
Notes:
Gross Requirements (week 6) = Planned-Order Releases of 35 Saws * 2 = 70.
C(4)
LT = 2
Beg.
1
2
3
4
5
6
Lot size: Lot-for-Lot
Inv.
Gross requirements
140
Scheduled receipts
Projected on hand
65
65
65
65
65
65
65
Net requirements
75
Planned-order receipts
75
Planned-order releases
75
Notes:
Gross Requirements (week 6) = Planned-Order Releases of 35 Saws * 4 = 140.
E(3) & E(2) LT = 1
Lot size: Lot-for-Lot
Gross requirements
Scheduled receipts
Projected on hand
Net requirements
Planned-order receipts
Beg.
Inv.
10
1
10
2
10
3
10
4
5
150
180
10
140
140
0
180
180
Planned-order releases
140
180
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 75 C * 2 = 150.
Gross Requirements (week 5) = Planned-Order Releases of 60 A * 3 = 180.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [10 + 0 – 0] + 0 = 10.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [10 + 140 – 150] + 0 = 0.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [0 + 180 – 180] + 0 = 0.
12-22
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Education.
Chapter 12 - MRP and ERP
10.
Given:
40 units of an industrial robot are needed at the beginning of week 7. Subassembly G must be
ordered in multiples of 80 and all other components are ordered lot-for-lot. The inventory
information (shown in bold) and the product structure tree are listed below in the problem
solution. Prepare the material plan for G. We will need to prepare material plans for Robot, C, &
G.
Robot
C(3)
B
E
Master
Schedule for:
Robot
F
G
Week
1
G(2)
2
3
4
H
5
6
Quantity
Robot
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Scheduled receipts
Projected on hand
Net requirements
Planned-order receipts
40
Beg.
Inv.
1
2
3
4
5
6
7
40
10
10
10
10
10
Planned-order releases
C(3)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Scheduled receipts
Projected on hand
Net requirements
Planned-order receipts
Planned-order releases
7
10
10
10
30
30
6
7
0
0
30
Beg.
Inv.
1
2
3
4
5
90
20
20
20
20
20
20
70
70
70
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 30 Robots * 3 = 90.
12-23
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Education.
Chapter 12 - MRP and ERP
G & G(2)
LT = 2
Lot size: Multiples of 80
Gross requirements
Scheduled receipts
Beg.
Inv.
Projected on hand
Net requirements
1
2
15
15
3
15
15
Planned-order receipts
4
5
140
30
15
125
35
6
7
5
5
160
Planned-order releases
160
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 70 C * 2 = 140.
Gross Requirements (week 5) = Planned-Order Releases of 30 Robots * 1 = 30.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [15 + 0 – 0] + 0 = 15.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [15 + 160 – 140] + 0 = 35.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [35 + 0 – 30] + 0 = 5.
11.
a. Given:
Refer back to Solved Problem 3. On hand balances: N = 100 and E = 0. Scheduled receipts: I
= 40 and V = 10 at the beginning of week 3. 120 E are needed at the start of week 5. We have
the product structure tree shown below. Determine material requirements plans for E, I, N,
and V using lot-for-lot ordering as was used in Solved Problem 3:
E
M(3)
R(2)
Master
Schedule for:
E
I(2)
P
N(4)
Period
1
V
2
3
4
Quantity
E
LT = 1
Lot size: Lot-for-Lot
Gross requirements
5
6
7
8
6
7
8
0
0
0
120
Beg.
Inv.
1
2
3
4
5
120
Scheduled receipts
Projected on hand
0
0
0
0
0
0
Net requirements
120
Planned-order receipts
120
Planned-order releases
120
12-24
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Education.
Chapter 12 - MRP and ERP
I(2)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
4
5
6
7
8
0
0
0
0
240
Scheduled receipts
Projected on hand
3
40
0
0
0
40
40
Net requirements
200
Planned-order receipts
200
Planned-order releases
200
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 120 E * 2 = 240.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [40 + 0 – 0] + 0 = 40.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [40 + 200 – 240] + 0 = 0.
N(4)
LT = 2
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
Gross requirements
3
4
5
6
7
8
0
0
0
0
0
800
Scheduled receipts
Projected on hand
100
100
100
100
Net requirements
700
Planned order receipts
700
Planned order releases
700
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 200 I * 4 = 800.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [100 + 700 – 800] + 0 = 0.
V
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
4
5
6
7
8
0
0
0
0
0
200
Scheduled receipts
Projected on hand
3
10
0
0
0
10
Net requirements
190
Planned order receipts
190
Planned order releases
190
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 200 I * 1 = 200.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3
POH3 = [0 + 0 – 0] + 10 = 10.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [10 + 190 – 200] + 0 = 0.
12-25
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
b. Given:
Assume that on hand balances and scheduled receipts remain the same as in part a. On hand
balances: N = 100 and E = 0. Scheduled receipts: I = 40 and V = 10 at the beginning of week
3.
New information: 100 E are needed at the start of week 5 and 55 are needed at the start of
week 7. Determine the material requirements plans for E, I, N, and V using lot-for-lot
ordering for E and I, and multiples of these order sizes: N = 800 and V = 200.
E
M(3)
R(2)
Master
Schedule for:
E
I(2)
P
N(4)
Period
1
V
2
3
4
Quantity
E
LT = 1
Lot size: Lot-for-Lot
Gross requirements
5
6
100
Beg.
Inv.
1
2
3
4
5
7
8
55
6
100
7
8
55
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
Net requirements
100
55
Planned-order receipts
100
55
Planned-order releases
I(2)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
100
Beg.
Inv.
1
2
4
55
5
200
Scheduled receipts
Projected on hand
3
0
6
7
8
0
0
110
40
0
0
0
40
40
0
0
Net requirements
160
110
Planned-order receipts
160
110
Planned-order releases
160
110
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 100 E * 2 = 200.
Gross Requirements (week 6) = Planned-Order Releases of 55 E * 2 = 110.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [40 + 0 – 0] + 0 = 40.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [40 + 160 – 200] + 0 = 0.
12-26
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Education.
Chapter 12 - MRP and ERP
N(4)
LT = 2
Lot size: Multiples of 800
Gross requirements
Beg.
Inv.
1
2
3
4
640
5
6
7
8
620
620
620
440
Scheduled receipts
Projected on hand
100
100
100
Net requirements
100
260
540
800
Planned order receipts
260
180
800
Planned order releases
800
800
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 160 I * 4 = 640.
Gross Requirements (week 5) = Planned-Order Releases of 110 I * 4 = 440.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [100 + 800 – 640] + 0 = 260.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [260 + 800 – 440] + 0 = 620.
V
LT = 2
Lot size: Multiples of 200
Gross requirements
Beg.
Inv.
1
2
4
160
Scheduled receipts
Projected on hand
3
5
6
7
8
140
140
140
110
10
0
0
0
Net requirements
10
150
200
Planned order receipts
50
50
60
200
Planned order releases
200
200
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 160 I * 1 = 160.
Gross Requirements (week 5) = Planned-Order Releases of 110 I * 1 = 110.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3
POH3 = [0 + 0 – 0] + 10 = 10.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [10 + 200 – 160] + 0 = 50.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [50 + 0 – 0] + 0 = 50.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [50 + 200 – 110] + 0 = 140.
12-27
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Education.
Chapter 12 - MRP and ERP
c. Case 1 Given:
Refer back to part b. 1 week has elapsed. It is now the start of week 2. 100 E are needed at
the start of week 9. Assume that all orders were released and received as planned.
Notes:
a. We will drop 1 week (week 1) from the material plans and add 1 week at the end of each
plan.
b. Any Planned-Order Releases from week 1 must now show up as Scheduled Receipts:
Item N: Change Planned-Order Receipts of 800 in week 3 to Scheduled Receipts in week 3.
Item V: Change Planned-Order Receipts of 200 in week 3 to Scheduled Receipts in week 3.
The revised amount of Scheduled Receipts (week 3) = original amount of 10 + 200 = 210.
c. Determine the on hand balances at the start of week 2:
Determine the ending inventory for each item at the end of week 1. These will become the
beginning inventory balances in week 2.
Remember: Scheduled receipts increase inventory while gross requirements decrease
inventory.
Ending Inventory = Beginning Inventory + Scheduled Receipts – Gross Requirements
Item E
Ending Inventory
Week 1
0+0–0=0
Item I
Ending Inventory
Week 1
0+0–0=0
Item N
Ending Inventory
Week 1
100 + 0 – 0 = 100
Item V
Ending Inventory
Week 1
0+0–0=0
E
M(3)
R(2)
I(2)
P
N(4)
V
12-28
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
c. continued
Master
Schedule for:
E
Period
2
3
4
Quantity
E
LT = 1
Lot size: Lot-for-Lot
Gross requirements
5
6
100
Beg.
Inv.
2
3
4
5
7
8
55
6
100
7
9
100
8
55
9
100
Scheduled receipts
Projected on hand
Net requirements
100
55
0
100
Planned-order receipts
100
55
100
0
0
0
Planned-order releases
I(2)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
0
100
Beg.
Inv.
2
3
4
0
0
55
5
200
Scheduled receipts
Projected on hand
0
6
0
100
7
110
8
9
200
40
0
0
40
40
0
0
0
0
Net requirements
160
110
200
Planned-order receipts
160
110
200
0
Planned-order releases
160
110
200
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 100 E * 2 = 200.
Gross Requirements (week 6) = Planned-Order Releases of 55 E * 2 = 110.
Gross Requirements (week 8) = Planned-Order Releases of 100 E * 2 = 200.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [40 + 0 – 0] + 0 = 40.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [40 + 160 – 200] + 0 = 0.
POH9 = [POH8 + Planned-Order Receipts8 – Gross Requirements8] + Scheduled Receipts9
POH9 = [0 + 200 – 200] + 0 = 0.
12-29
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
N(4)
LT = 2
Lot size: Multiples of 800
Gross requirements
Beg.
Inv.
2
4
640
Scheduled receipts
Projected on hand
3
5
6
440
7
8
9
620
620
800
800
100
100
900
260
Net requirements
260
620
180
800
Planned order receipts
620
180
800
Planned order releases
800
800
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 160 I * 4 = 640.
Gross Requirements (week 5) = Planned-Order Releases of 110 I * 4 = 440.
Gross Requirements (week 7) = Planned-Order Releases of 200 I * 4 = 800.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3
POH3 = [100 + 0 – 0] + 800 = 900.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [900 + 0 – 640] + 0 = 260.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [260 + 800 – 440] + 0 = 620.
POH8 = [POH7 + Planned-Order Receipts7 – Gross Requirements7] + Scheduled Receipts8
POH8 = [620 + 800 – 800] + 0 = 620.
V
LT = 2
Lot size: Multiples of 200
Gross requirements
Beg.
Inv.
2
4
160
Scheduled receipts
Projected on hand
3
5
6
110
7
8
9
140
140
200
210
0
0
210
Net requirements
50
50
60
200
Planned order receipts
140
140
60
200
Planned order releases
200
200
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 160 I * 1 = 160.
Gross Requirements (week 5) = Planned-Order Releases of 110 I * 1 = 110.
Gross Requirements (week 7) = Planned-Order Releases of 200 I * 1 = 200.
POH3 = [POH2 + Planned-Order Receipts2 – Gross Requirements2] + Scheduled Receipts3
POH3 = [0 + 0 – 0] + 210 = 210.
POH4 = [POH3 + Planned-Order Receipts3 – Gross Requirements3] + Scheduled Receipts4
POH4 = [210 + 0 – 160] + 0 = 50.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [50 + 0 – 0] + 0 = 50.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [50 + 200 – 110] + 0 = 140.
POH8 = [POH7 + Planned-Order Receipts7 – Gross Requirements7] + Scheduled Receipts8
POH8 = [140 + 200 – 200] + 0 = 140.
12-30
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Case 2 Given:
Refer back to the previous update. It is now the start of week 4. Assume that all orders were
released and received as planned in weeks 2 and 3.
Notes:
a. We will drop 2 weeks (weeks 2 & 3) from the material plans and add 2 weeks at the end of
each plan.
b. Any Planned-Order Releases from weeks 2 & 3 must now show up as Scheduled Receipts:
Item I: Change Planned-Order Receipts of 160 in week 4 to Scheduled Receipts in week 4.
Item N: Change Planned-Order Receipts of 800 in week 5 to Scheduled Receipts in week 5.
Item V: Change Planned-Order Receipts of 200 in week 5 to Scheduled Receipts in week 5.
c. Determine the on hand balances at the start of week 4:
Determine the ending inventory for each item at the end of week 3. These will become the
beginning inventory balances in week 4.
Remember: Scheduled receipts increase inventory while gross requirements decrease
inventory.
Ending Inventory = Beginning Inventory + Scheduled Receipts – Gross Requirements
Item E
Ending Inventory
Week 2
0+0–0=0
Item I
Ending Inventory
Item N
Ending Inventory
Item V
Ending Inventory
Week 3
0+0–0=0
Week 2
0+0–0=0
Week 3
0 + 40 – 0 = 40
Week 2
100 + 0 – 0 = 100
Week 3
100 + 800 – 640 = 260
Week 2
0+0–0=0
Week 3
0 + 210 – 160 = 50
E
M(3)
R(2)
I(2)
P
N(4)
V
12-31
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Master
Schedule for:
E
Period
4
Quantity
E
LT = 1
Lot size: Lot-for-Lot
Gross requirements
5
6
100
Beg.
Inv.
4
5
7
8
55
6
100
7
9
10
11
10
11
0
0
9
10
11
0
0
0
100
8
55
9
100
Scheduled receipts
Projected on hand
Net requirements
100
55
0
100
Planned-order receipts
100
55
100
0
Planned-order releases
I(2)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
0
100
Beg.
Inv.
4
0
0
55
5
200
Scheduled receipts
Projected on hand
0
6
0
100
7
110
8
200
160
40
200
0
0
0
0
Net requirements
110
200
Planned-order receipts
110
200
Planned-order releases
110
200
Notes:
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [200 + 0 – 200] + 0 = 0.
12-32
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
N(4)
LT = 2
Lot size: Multiples of 800
Beg.
Inv.
4
5
Gross requirements
440
Scheduled receipts
800
Projected on hand
260
260
1060
6
7
8
9
10
11
620
620
620
620
800
620
620
Net requirements
180
Planned order receipts
800
Planned order releases
800
Notes:
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [1060 + 0 – 440] + 0 = 620.
V
LT = 2
Lot size: Multiples of 200
Gross requirements
Beg.
Inv.
4
6
110
Scheduled receipts
Projected on hand
5
7
8
9
10
11
140
140
140
140
200
200
50
50
250
140
140
Net requirements
60
Planned order receipts
200
Planned order releases
200
Notes:
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [50 + 0 – 0] + 200 = 250.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [250 + 0 – 110] + 0 = 140.
12-33
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
12.
Given:
200 carts must be ready at the beginning of week 8. The product structure tree, assembly time
chart, and inventory information are shown in the solutions below:
a. Product structure tree:
Golf
Cart
Top
Supports(4)
Base
Cover
Motor
Body
Frame
Controls
Seats(2)
Wheels(4)
Assembly Time Chart
Supports
Top
b.
Cover
Cart
Motor
Frame
Body
Controls
Base
Wheels
Seats
2
3
4
5
6
7
week
Start of week 2
Start of week 8
12-34
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
c. Develop a material requirements plan that will provide 200 golf carts by week 8 assuming
lot-for-lot ordering.
Master
Schedule for:
Golf Cart
Week
1
2
3
4
5
6
7
Quantity
Golf Cart
LT = 1
Lot size: Lot-for-Lot
Gross requirements
8
200
Beg.
Inv.
1
2
3
4
5
6
7
8
200
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
0
Net requirements
200
Planned-order receipts
200
Planned-order releases
Top
LT = 1
Lot size: Lot-for-Lot
Gross requirements
200
Beg.
Inv.
1
2
3
4
5
6
7
8
200
Scheduled receipts
Projected on hand
40
40
40
40
40
40
40
40
Net requirements
160
Planned-order receipts
160
0
Planned-order releases
160
Notes: Gross Requirements (week 7) = Planned-Order Releases of 200 Golf Carts * 1 = 200.
Supports(4)
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
640
Scheduled receipts
Projected on hand
200
200
200
200
200
200
200
Net requirements
440
Planned-order receipts
440
Planned-order releases
440
Notes: Gross Requirements (week 6) = Planned-Order Releases of 160 Tops * 4 = 640.
12-35
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
12. c. (continued)
Cover
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
7
8
160
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
Net requirements
160
Planned-order receipts
160
Planned-order releases
160
Notes: Gross Requirements (week 6) = Planned-Order Releases of 160 Tops * 1 = 160.
Base
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
200
Scheduled receipts
Projected on hand
20
20
20
20
20
20
20
20
Net requirements
180
Planned-order receipts
180
0
Planned-order releases
180
Notes: Gross Requirements (week 7) = Planned-Order Releases of 200 Golf Carts * 1 = 200.
Motor
LT = 2
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
Gross requirements
6
7
8
120
120
180
Scheduled receipts
Projected on hand
300
300
300
300
300
300
300
Net requirements
Planned-order receipts
Planned-order releases
Notes: Gross Requirements (week 6) = Planned-Order Releases of 180 Bases * 1 = 180.
12-36
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
12. c. (Continued)
Body
LT = 3
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
7
8
0
0
180
Scheduled receipts
Projected on hand
50
50
50
50
50
50
50
Net requirements
130
Planned-order receipts
130
Planned-order releases
130
Notes: Gross Requirements (week 6) = Planned-Order Releases of 180 Bases * 1 = 180.
Seats(2)
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
360
Scheduled receipts
Projected on hand
120
120
120
120
120
120
120
Net requirements
240
Planned-order receipts
240
Planned-order releases
240
Notes: Gross Requirements (week 6) = Planned-Order Releases of 180 Bases * 2 = 360.
Frame
LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
Gross requirements
3
4
5
6
7
8
0
0
0
0
0
130
Scheduled receipts
Projected on hand
35
35
35
35
Net requirements
95
Planned-order receipts
95
Planned-order releases
95
Notes: Gross Requirements (week 3) = Planned-Order Releases of 130 Body * 1 = 130.
12-37
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
12. c. (Continued)
Controls
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
0
0
130
Scheduled receipts
Projected on hand
0
0
0
0
Net requirements
130
Planned-order receipts
130
Planned-order releases
130
Notes: Gross Requirements (week 3) = Planned-Order Releases of 130 Body * 1 = 130.
Wheel Assemblies(4) LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
0
0
520
Scheduled receipts
Projected on hand
240
240
240
240
Net requirements
280
Planned-order receipts
280
Planned-order releases
280
Notes: Gross Requirements (week 3) = Planned-Order Releases of 130 Body * 4 = 520.
12-38
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
13.
Given:
Refer back to Problem 12. The revised plan calls for 100 golf carts to be available at the start of
week 6, 100 at the start of week 8, and 100 at the start of week 9.
a. Develop a master schedule for this revised plan.
Master
Schedule for:
Golf Carts
Week
1
2
3
4
5
Quantity
6
7
100
8
9
100
100
8
9
100
100
0
0
b. Determine the timing and quantities for orders for tops and bases.
Golf Cart
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
100
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
Net requirements
100
100
100
Planned-order receipts
100
100
100
Planned-order releases
Top
LT = 1
Lot size: Lot-for-Lot
Gross requirements
100
Beg.
Inv.
Inv.
1
40
40
2
3
4
5
6
100
100
100
7
8
100
100
0
0
9
Scheduled receipts
Projected on hand
40
40
40
40
0
Net requirements
60
100
100
Planned-order receipts
60
100
100
Planned-order releases
Base
LT = 1
Lot size: Lot-for-Lot
60
Beg.
Inv.
1
2
3
4
Gross requirements
5
100
100
6
7
8
100
100
0
0
100
0
9
Scheduled receipts
Projected on hand
20
20
20
20
20
20
0
Net requirements
80
100
100
Planned-order receipts
80
100
100
Planned-order releases
80
100
0
100
12-39
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
c. The firm’s capacity limits the assembly of bases to 50 units per week. Revise the plan, but
still meet delivery dates. Note: We should try to minimize inventory also.
The key will be to move Planned-Order Receipts and Planned-Order Releases earlier in the
plan.
Consider the plan for Bases in b above:
Planned Order-Receipts (week 8) = 100
Planned Order-Receipts (week 7) = 100
Planned Order-Receipts (week 5) = 80
Given the capacity limit of 50 per week, we could divide the Planned-Order Receipts as
follows:
Week 8 (100): Week 7 (50) & Week 8 (50)
Week 7 (100): Week 5 (50) & Week 6 (50)
Week 5 (80): Week 3 (30) & Week 4 (50)
Note: Because some of these Planned-Order Receipts need to be planned earlier than they
should be, the planner will have to lock in the timing and quantity of these Planned-Order
Receipts by designating them as Firm Planned Orders so that the MRP system does not reschedule them automatically.
Master
Schedule for:
Golf Carts
Week
1
2
3
4
5
Quantity
Golf Cart
LT = 1
Lot size: Lot-for-Lot
Gross requirements
6
7
100
Beg.
Inv.
1
2
3
4
5
6
7
100
8
9
100
100
8
9
100
100
0
0
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
Net requirements
100
100
100
Planned-order receipts
100
100
100
Planned-order releases
Base
LT = 1
Lot size: Lot-for-Lot
100
Beg.
Inv.
1
2
3
4
Gross requirements
5
6
100
100
100
7
8
100
100
9
Scheduled receipts
Projected on hand
20
20
20
20
50
100
50
100
50
30
50
50
50
50
50
50
50
50
50
50
0
Net requirements
Planned-order receipts
Planned-order releases
30
12-40
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
14.
Given:
a. Draw a product structure tree (tree diagram) for the scissors. Lead times are 1 day for each
component and final scissor assembly, but 2 days for the plastic grips. 600 scissors are
needed on Day 6. On hand inventory: Straight blades = 200, bent blades = 350, and top blade
assembly = 40.
Scissors
Bottom Blade Assembly
Straight Blade
Screw
Top Blade Assembly
Straight Plastic Grip
Bent Blade
Bent Plastic Grip
b. Material plans:
Master
Schedule for:
Scissors
Week
Beg.
Inv.
1
2
3
4
5
Quantity
Scissors
LT = 1
Lot size: Lot-for-Lot
Gross requirements
6
7
8
7
8
0
0
6
7
8
0
0
0
600
Beg.
Inv.
1
2
3
4
5
6
600
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
Net requirements
600
Planned-order receipts
600
Planned-order releases
Bottom Blade Assembly
LT = 1
Lot size: Lot-for-Lot
Gross requirements
600
Beg.
Inv.
1
2
3
4
5
600
Scheduled receipts
Projected on hand
0
0
0
0
0
0
Net requirements
600
Planned-order receipts
600
Planned-order releases
600
Notes: Gross Requirements (week 5) = Planned-Order Releases of 600 Scissors * 1 = 600.
12-41
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Top Blade Assembly
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
600
Scheduled receipts
Projected on hand
40
40
40
40
40
40
Net requirements
560
Planned-order receipts
560
Planned-order releases
560
Notes: Gross Requirements (week 5) = Planned-Order Releases of 600 Scissors * 1 = 600.
Screw
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
600
Scheduled receipts
Projected on hand
0
0
0
0
0
0
Net requirements
600
Planned-order receipts
600
Planned-order releases
600
Notes: Gross Requirements (week 5) = Planned-Order Releases of 600 Scissors * 1 = 600.
Straight Blade LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
0
600
Scheduled receipts
Projected on hand
200
200
200
200
200
Net requirements
400
Planned-order receipts
400
Planned-order releases
400
Notes: Gross Requirements (week 4) = Planned-Order Releases of 600 Bottom Blade Assembly * 1 =
600.
12-42
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Straight Plastic Grip
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
0
600
Scheduled receipts
Projected on hand
0
0
0
0
0
Net requirements
600
Planned-order receipts
600
Planned-order releases
600
Notes: Gross Requirements (week 4) = Planned-Order Releases of 600 Bottom Blade Assembly * 1 =
600.
Bent Blade
LT = 1
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
0
560
Scheduled receipts
Projected on hand
350
350
350
350
350
Net requirements
210
Planned-order receipts
210
Planned-order releases
210
Notes: Gross Requirements (week 4) = Planned-Order Releases of 560 Top Blade Assembly * 1 = 560.
Bent Plastic Grip LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
2
3
4
5
6
7
8
0
0
0
0
560
Scheduled receipts
Projected on hand
0
0
0
0
0
Net requirements
560
Planned-order receipts
560
Planned-order releases
560
Notes: Gross Requirements (week 4) = Planned-Order Releases of 560 Top Blade Assembly * 1 = 560.
12-43
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Education.
Chapter 12 - MRP and ERP
15.
Given:
A company has the following demand for its products, labor and machine standards, and available
capacities:
Week number
Material (tons)
1
40
2
80
Production standard
(hours per ton)
Weekly production
capacity (hours)
3
60
4
70
Labor
4
Machine
3
300
200
a. Determine capacity utilization for labor and machine for each of the four weeks:
Capacity Requirements (Load) =
Units * Standard Labor and/or Machine Requirements per Unit
Week number
Material (tons)
Labor standard
Labor
requirements
(load)
Machine standard
Machine
requirements
(load)
Week number
Labor
requirements
Labor capacity
Labor
utilization
Machine
requirements
Machine capacity
Machine
utilization
Labor and Machine Capacity Requirements (Load)
1
2
3
40
80
60
4
4
4
4
70
4
40 * 4 = 160
80 * 4 = 320
60 * 4 = 240
70 * 4 = 280
3
3
3
3
40 * 3 = 120
80 * 3 = 240
60 * 3 = 180
70 * 3 = 210
Capacity Utilization (round % to two decimals)
1
2
3
160
320
240
4
280
300
160/300 * 100 =
53.33%
120
300
320/300 * 100 =
106.67%
240
300
240/300 * 100 =
80.00%
180
300
280/300 * 100 =
93.33%
210
200
120/200 * 100 =
60.00%
200
240/200 * 100 =
120.00%
200
180/200 * 100 =
90.00%
200
210/200 * 100 =
105.00%
b. Capacity utilization exceeds 100% for both labor and machine in week 2, and for machine in
week 4.
Production could be shifted to earlier or later weeks in which capacity is underutilized.
Shifting to an earlier week would result in added carrying costs; shifting to later weeks would
mean backorder costs.
Another option could be to work overtime. Labor cost would increase due to overtime
premium, a probable decrease in productivity, and a possible increase in accidents.
12-44
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
16.
Given:
A company produces 2 products that go through a 3-day sequence of fabrication, assembly, and
packaging. Each step requires 1 day for a lot to be processed and moved to the next department.
Processing requirements for the departments (hours per unit) are:
Product
A
B
FABRICATION
Labor
Machine
2
1
1
1
ASSEMBLY
Labor
Machine
1.5
1
1
1
PACKAGING
Labor
Machine
1
.5
1.5
.5
Department capacities are all 700 hours of labor and 500 hours of machine time, except Friday,
when capacities are 200 hours for both labor and machine time. The following production
schedule is for next week:
Product
A
B
Mon
200
300
Tue
400
200
Wed
100
200
Thu
300
200
Fri
100
200
a. Determine the labor and machine capacity requirements for each product and the total load at
each department for each day.
For example, the 200 units of Product A & 300 units of Product B will be processed at
Fabrication on Monday, Assembly on Tuesday, and Packaging on Wednesday.
Monday Fabrication Labor Load = (200 A * 2 = 400) + (300 B * 1 = 300) = 700.
Monday Fabrication Machine Load = (200 A * 1 = 200) + (300 B * 1 = 300) = 500.
Tuesday Assembly Labor Load = (200 A * 1.5 = 300) + (300 B * 1 = 300) = 600.
Tuesday Assembly Machine Load = (200 A * 1 = 200) + (300 B * 1 = 300) = 500.
Wednesday Packaging Labor Load = (200 A * 1 = 200) + (300 B * 1.5 = 450) = 650.
Wednesday Packaging Machine Load = (200 A * .5 = 100) + (300 B * .5 = 150) = 250.
12-45
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Education.
Chapter 12 - MRP and ERP
Day Product
Fabrication
Labor
Machine
Assembly
Labor
Machine
Packaging
Labor
Machine
Mon
A
B
Load
Capacity
400
300
700
700
200
300
500
500
Tue
A
B
Load
Capacity
800
200
1000
700
400
200
600
500
300
300
600
700
200
300
500
500
Wed
A
B
Load
Capacity
200
200
400
700
100
200
300
500
600
200
800
700
400
200
600
500
200
450
650
700
100
150
250
500
Thu
A
B
Load
Capacity
600
200
800
700
300
200
500
500
150
200
350
700
100
200
300
500
400
300
700
700
200
100
300
500
Fri
A
B
Load
Capacity
200
200
400
200
100
200
300
200
450
200
650
200
300
200
500
200
100
300
400
200
50
100
150
200
b. Evaluate the loading for the first 3 days of the week:
Monday:
Fabrication: Load = capacity for both labor and machine.
Tuesday:
Fabrication: Labor load is over capacity by 300 hours. Machine load is over capacity by 100
hours.
Assembly: Labor load is under capacity by 100 hours. Machine load = capacity.
Wednesday:
Fabrication: Labor load is under capacity by 300 hours. Machine load is under capacity by
200 hours.
Assembly: Labor load is over capacity by 100 hours. Machine load is over capacity by 100
hours.
Packaging: Labor load is under capacity by 50 hours. Machine load is under capacity by 250
hours.
The schedule does not appear to be feasible. Fabrication is overloaded for labor and machine
on Tuesday and underloaded for labor and machine on Wednesday. In addition, Assembly is
overloaded for labor and machine on Wednesday.
One solution could be to shift some of the 400 A & 200 B scheduled in Fabrication on
Tuesday to Wednesday. For example, we could shift 150 A in Fabrication from Tuesday to
12-46
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Wednesday. We now would schedule 250 A on Tuesday (400-150) and 250 A on Wednesday
(100+150). The new load values are highlighted in bold in the table below:
Day Product
Fabrication
Labor
Machine
Assembly
Labor
Machine
Packaging
Labor
Machine
Mon
A
B
Load
Capacity
400
300
700
700
200
300
500
500
Tue
A
B
Load
Capacity
500
200
700
700
250
200
450
500
300
300
600
700
200
300
500
500
Wed
A
B
Load
Capacity
500
200
700
700
250
200
450
500
375
200
575
700
250
200
450
500
200
450
650
700
100
150
250
500
Thu
A
B
Load
Capacity
600
200
800
700
300
200
500
500
375
200
575
700
250
200
450
500
250
300
550
700
125
100
225
500
Fri
A
B
Load
Capacity
200
200
400
200
100
200
300
200
450
200
650
200
300
200
500
200
250
300
550
200
125
100
225
200
12-47
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
17.
Given:
The MRP department’s computer died just as it spit out the following information: Planned-Order
Releases for Item J27 = 640 units in week 2. We have the following product structure tree and
inventory information shown below:
565
X43
Y36(2)
J27(4)
N78
X43
Part Number
565
X43
On Hand
0
60
N78
Y36
J27
0
200
0
Lot Size
Lot-for-lot
Multiples
of 120
Lot-for-lot
Lot-for-lot
Lot-for-lot
Lead Time
1 week
1 week
2 weeks
1 week
2 weeks
Step 1:
Look at which items are linked together by the Planned-Order Releases for J27: J27, Y36, and
565.
Step 2:
Work from the bottom to the top of the product structure tree. Start with J27 to determine its
Planned-Order Receipts, Net Requirements, and Gross Requirements.
a. We know that J27 has a Planned-Order Release = 640 in week 2.
The lead time for J27 = 2 weeks. This means that the Planned-Order Receipts = 640 in week
4 (2 weeks later).
The lot size for J27 = lot-for-lot. This means that the Net Requirements = Planned-Order
Receipts in week 4 = 640.
The on hand balance for J27 = 0. This means that the Gross Requirements in week 4 = Net
Requirements + On Hand = 640 + 0 = 640.
b. If the Gross Requirements for J27 = 640 in week 4, then the Planned-Order Releases for Y36
= 160 (640 / 4) in week 4.
The lead time for Y36 = 1 week. This means that the Planned-Order Receipts = 160 in week
5 (1 week later).
The lot size for Y36 is lot-for-lot. This means that the Net Requirements = Planned-Order
Receipts in week 5 = 160.
The on hand balance for Y36 = 200. This means that the Gross Requirements in week 5 = Net
Requirements + On Hand = 160 + 200 = 360.
12-48
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Education.
Chapter 12 - MRP and ERP
c. If the Gross Requirements for Y36 = 360 in week 5, the Planned-Order Releases for 565 =
180 (360 / 2) in week 5.
The lead time for 565 = 1 week. This means that the Planned-Order Receipts = 180 in week 6
(1 week later).
The lot size for 565 is lot-for-lot. This means that the Net Requirements = Planned-Order
Receipts in week 6 = 180.
The on hand balance for 565 = 0. This means that the Gross Requirements in week 6 = Net
Requirements + On Hand = 180 + 0 = 180.
Conclusion: There should be a quantity of 180 listed in week 6 of the master schedule for
Item 565.
Below are the MRP tables verifying the proof discussed above:
Master
Schedule for:
565
Week
1
2
3
4
5
7
8
7
8
0
0
6
7
8
0
0
0
5
6
7
8
0
0
0
0
Quantity
565
LT = 1
Lot size: Lot-for-Lot
6
180
Beg.
Inv.
1
2
3
4
5
Gross requirements
6
180
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
Net requirements
180
Planned-order receipts
180
Planned-order releases
Y36(2)
LT = 1
Lot size: Lot-for-Lot
180
Beg.
Inv.
1
2
3
4
Gross requirements
5
360
Scheduled receipts
Projected on hand
200
200
200
200
200
200
Net requirements
160
Planned-order receipts
160
Planned-order releases
J27(4)
LT = 2
Lot size: Lot-for-Lot
Gross requirements
160
Beg.
Inv.
1
2
3
4
640
Scheduled receipts
Projected on hand
0
0
0
0
0
Net requirements
640
Planned-order receipts
640
Planned-order releases
640
12-49
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
18.
Given:
Develop a material requirements plan for component H. Use lot-for-lot ordering for all items.
Lead times for the end item and each component (except B) = 1 week. The lead time for B = 3
weeks. On hand balances: B = 15 & E = 130. Scheduled Receipts for H = 50 in week 2. 60 units
of A are needed at the start of week 8. We have the following product structure tree:
A
C
B(2)
D(2)
E(2)
D(2)
H(3)
E(4)
K
H(3)
K
We will need material plans for A, B, C, E, & H.
Master
Week
Schedule
for: A
Quantity
A
LT = 1
Lot size: Lot-for-Lot
1
2
3
4
5
6
7
8
60
Beg.
Inv.
1
2
3
4
5
6
7
Gross requirements
8
60
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
0
Net requirements
60
Planned-order receipts
60
Planned-order releases
60
12-50
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
B(2)
LT = 3
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
Gross requirements
7
8
120
Scheduled receipts
Projected on hand
15
15
15
15
15
15
15
15
Net requirements
105
Planned-order receipts
105
Planned-order releases
C
LT = 1
Lot size: Lot-for-Lot
0
105
Beg.
Inv.
1
2
3
4
5
6
Gross requirements
7
8
60
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
Net requirements
60
Planned-order receipts
60
Planned-order releases
E(2) & E(4)
LT = 1
Lot size: Lot-for-Lot
0
60
Beg.
Inv.
1
2
3
Gross requirements
4
5
210
6
7
8
0
0
240
Scheduled receipts
Projected on hand
130
130
130
130
130
0
0
Net requirements
80
240
Planned-order receipts
80
240
Planned-order releases
80
240
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 105 B * 2 = 210.
Gross Requirements (week 6) = Planned-Order Releases of 60 C * 4 = 240.
12-51
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Education.
Chapter 12 - MRP and ERP
H(3)
LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
Gross requirements
4
240
Scheduled receipts
Projected on hand
3
5
6
7
8
0
0
0
720
50
0
0
50
50
0
0
Net requirements
190
720
Planned-order receipts
190
720
Planned-order releases
190
720
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 80 E * 3 = 240.
Gross Requirements (week 5) = Planned-Order Releases of 240 E * 3 = 720.
Case: Promotional Novelties
Given:
Promotional Novelties has received an order for 20,000 toy Tractor-Trailers to be ready at the beginning
of week 8. The company can complete final assembly of the Tractor-Trailers at a rate of 10,000 a week.
Tractors and Trailers are purchased and have a lead time = 3 weeks. The company has sufficient supply of
Brackets on hand. Assembly time = 1 week for Tractors, Trailers, and Wheel Assembly. However, the
Wheel Department can assemble a maximum of 100,000 Wheels a week. The manager plans to use the
Wheel Department to full capacity, starting in week 2 of the schedule, and order additional Wheels from a
supplier as needed. Wheels are ordered in sets (multiples) of 6,400, and the lead time from the supplier =
2 to 3 weeks. All items use lot-for-lot ordering except for the purchased Wheels (lot size = multiples of
6,400).
Comments on the product structure tree shown in the text:
The Wheel Assembly of the Tractor differs from the Wheel Assembly of the Trailer.
The Body of the Tractor differs from the Body of the Trailer.
The Tractor and the Trailer use the same Wheel.
We will develop material plans for Tractor-Trailer, Tractor, Trailer, Tractor Wheel Assembly, Trailer
Wheel Assembly, & Wheels.
If the order of 20,000 tractor-trailers is due at the start of week 8 and final assembly is limited to 10,000
per week, then we must list 10,000 in week 7 and 10,000 in week 8 of the master schedule.
12-52
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Master
Week
Schedule
Quantity
1
2
3
4
5
6
7
8
10,000
10,000
7
8
10,000
10,000
0
0
Net requirements
10,000
10,000
Planned-order receipts
10,000
10,000
Tractor-Trailer
LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
Gross requirements
Scheduled receipts
Projected on hand
0
0
0
0
0
0
Planned-order releases
0
10,000
10,000
6
7
10,000
10,000
0
0
Net requirements
10,000
10,000
Planned-order receipts
10,000
10,000
Tractor
LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
Gross requirements
8
Scheduled receipts
Projected on hand
0
0
0
0
0
Planned-order releases
0
10,000
10,000
5
6
7
10,000
10,000
0
0
Net requirements
10,000
10,000
Planned-order receipts
10,000
10,000
Trailer
LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
Gross requirements
0
8
Scheduled receipts
Projected on hand
0
0
0
0
Planned-order releases
0
0
10,000
0
10,000
12-53
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Tractor Wheel
Assembly
LT = 1
Beg.
Inv.
5
6
10,000
10,000
0
0
Net requirements
10,000
10,000
Planned-order receipts
10,000
10,000
Lot size: Lot-for-Lot
1
2
3
4
Gross requirements
7
8
0
0
7
8
0
0
Scheduled receipts
Projected on hand
0
0
0
0
Planned-order releases
0
10,000
10,000
4
5
6
10,000
10,000
0
0
Net requirements
10,000
10,000
Planned-order receipts
10,000
10,000
Trailer Wheel
Assembly
LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
Gross requirements
Scheduled receipts
Projected on hand
0
0
0
0
Planned-order releases
0
10,000
10,000
12-54
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Wheels (6) & (12)
LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
Gross requirements
4
5
180,000
180,000
100,000
20,000
80,000
160,000
6
7
8
4,000
4,000
4,000
Scheduled receipts
Projected on hand
0
0
0
0
Net requirements
Planned-order receipts
Planned-order releases
100,000
64,000*
100,000
100,000
100,000
100,000
100,000
64,000*
Notes:
Gross Requirements (week 4) = Planned-Order Releases of (10,000 Tractor Wheel Assembly * 6) +
(10,000 Trailer Wheel Assembly * 12) = 60,000 + 120,000 = 180,000.
Gross Requirements (week 5) = Planned-Order Releases of (10,000 Tractor Wheel Assembly * 6) +
(10,000 Trailer Wheel Assembly * 12) = 60,000 + 120,000 = 180,000.
The Planned-Order Receipts in weeks 3, 4, & 5 would be entered as Firm Planned Orders locked in by the
MRP planner so that the MRP system does not re-schedule these amounts automatically.
Planned-Order Releases (week 2) = [Planned-Order Receipts (week 3) of 100,000] + [Planned-Order
Receipts (week 5) of 64,000] = 100,000 + 64,000 = 164,000.
1.
The company will need a total of 360,000 Wheels. It will be able to produce only 300,000 during
weeks 2, 3, & 4. The company will need to order at least 60,000 Wheels as indicated with the * in
week 2. The company actually would have to purchase 10 sets of 6,400 Wheels per set = 64,000.
2.
The company will need the Wheels in week 5. If lead time will be 2-3 weeks, then assume that it
will be 3 weeks, and order the Wheels from the supplier in week 2.
12-55
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Case: DMD Enterprises
Given:
Marty wants to assemble 15 Arrows and 10 Darts each week to have them ready at the start of weeks 4
through 8. The product structure trees are given in the text along with inventory information on lead
times, on hand amounts, and lot sizing rules. Scheduled Receipts: Arrows = 20 in week 1 & W = 18 in
week 1. Darts = 20 in week 2 & F = 15 in week 2. Develop the material plans for all items.
Master
Schedule for:
Arrows
Week
Master
Schedule for:
Darts
Week
1
2
3
4
5
6
7
8
15
15
15
15
15
4
5
6
7
8
10
10
10
10
10
4
5
6
7
8
15
15
15
15
15
25
10
0
0
0
Net requirements
5
15
15
15
Planned-order receipts
5
15
15
15
Quantity
1
2
3
Quantity
Arrows
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
Scheduled receipts
Projected on hand
1
2
3
20
5
25
25
25
5
15
15
15
3
4
5
6
7
8
10
10
10
10
10
22
12
2
0
0
Net requirements
8
10
10
Planned-order receipts
8
10
10
7
8
5
5
Planned-order releases
Darts
LT = 2
Lot size: Lot-for-Lot
Gross requirements
Beg.
Inv.
1
Scheduled receipts
Projected on hand
2
20
2
2
22
22
8
10
10
3
4
5
6
5
15
15
15
5
0
10
20
Net requirements
15
5
Planned-order receipts
25
25
Planned-order releases
X
LT = 1
Lot size: Multiples of 25
Gross requirements
Beg.
Inv.
1
2
Scheduled receipts
Projected on hand
5
5
5
25
Planned-order releases
25
12-56
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Chapter 12 - MRP and ERP
Case: DMD Enterprises (continued)
M
LT = 1
Lot size: Lot-for-lot
Gross requirements
Beg.
Inv.
3
4
5
6
5
15
15
15
0
0
0
0
Net requirements
5
15
15
15
Planned-order receipts
5
15
15
15
5
15
15
15
2
3
4
5
6
16
20
20
3
0
0
Net requirements
13
20
20
Planned-order receipts
13
20
20
Scheduled receipts
Projected on hand
0
1
0
Planned-order releases
K(2)
LT = 1
Lot size: Lot-for-lot
Beg.
Inv.
1
2
0
Gross requirements
Scheduled receipts
Projected on hand
3
3
3
3
7
8
0
0
7
8
0
0
7
8
7
7
Planned-order releases
13
20
20
Gross Requirements (week 4) = Planned-Order Releases of 8 Darts * 2 = 16.
Gross Requirements (week 5) = Planned-Order Releases of 10 Darts * 2 = 20.
Gross Requirements (week 6) = Planned-Order Releases of 10 Darts * 2 = 20.
F&F
LT = 1
Lot size: Multiples of 30
Gross requirements
Beg.
Inv.
3
4
5
6
25
33
10
10
25
0
27
17
Net requirements
33
0
0
Planned-order receipts
60
Scheduled receipts
Projected on hand
1
2
15
10
10
25
Planned-order releases
60
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 25 X * 1 = 25.
Gross Requirements (week 4) = Planned-Order Releases of (8 Darts * 1) + (25 X * 1) = 8 + 25 = 33.
Gross Requirements (week 5) = Planned-Order Releases of 10 Darts * 1 = 10.
Gross Requirements (week 6) = Planned-Order Releases of 10 Darts * 1 = 10.
12-57
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Education.
Chapter 12 - MRP and ERP
W & W(2) LT* = 2 or 3
Lot size: Multiples of 12
Gross requirements
Scheduled receipts
Projected on hand
Beg.
Inv.
1
2
3
4
5
6
31
55
55
15
7
8
8
8
18
20
1
6
11
Net requirements
11
49
4
Planned-order receipts
12
54
60
60
12
2
Planned-order releases
20
72
20
60
12
Notes:
Gross Requirements (week 3) = Planned-Order Releases of (5 Arrows *1) + (13 K * 2) = 5 + 26 =
31.
Gross Requirements (week 4) = Planned-Order Releases of (15 Arrows * 1) + (20 K * 2) = 15 + 40
= 55.
Gross Requirements (week 5) = Planned-Order Releases of (15 Arrows * 1) + (20 K * 2) = 15 + 40
= 55.
Gross Requirements (week 6) = Planned-Order Releases of 15 Arrows * 1 = 15.
*Lead time = 2 weeks for orders < 36 & 3 weeks for orders ≥ 36.
Planned-Order Releases (week 1) = [Planned-Order Receipts (week 3) = 12] + [Planned-Order
Receipts (week 4) = 60] = 72.
Q
LT = 1
Lot size: Multiples of 30
Gross requirements
Beg.
Inv.
3
4
5
13
20
20
15
2
12
Net requirements
18
8
Planned-order receipts
30
30
Scheduled receipts
Projected on hand
15
1
15
2
15
6
7
8
22
22
22
Planned-order releases
30
30
Gross Requirements (week 3) = Planned-Order Releases of 13 K * 1 = 13.
Gross Requirements (week 4) = Planned-Order Releases of 20 K * 1 = 20.
Gross Requirements (week 5) = Planned-Order Releases of 20 K * 1 = 20.
12-58
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Education.
Chapter 12 - MRP and ERP
Operations Tour: Stickley Furniture
1.
Batch processing is used with typical lot sizes of 25 to 60 pieces of different types of furniture,
such as tables, chairs, desks, dressers, etc. Repetitive processing is used at sawing, drilling,
finishing, etc. Job shop processing is used for expensive one-of-a-kind special orders that may be
received.
2.
Each job is accompanied by a set of bar codes that identifies the job and the operation. As each
operation is completed, the operator removes a bar code sticker and delivers it to the scheduling
office, where it is scanned into a computer, thereby enabling production control to keep track of
progress on a job, and to know its location in the shop.
3.
The information needed to plan, schedule, and process the order for 40 mission oak dining room
sets includes:
a. Number of finished units presently in inventory
b. Type of wood
c. Type of furniture
d. Style of furniture
e. Number of finished products needed
f.
List of component parts for each finished product
g. Operations required for each component part
h. Inventory for each component part
i.
Sequence of operations for each component
j.
Sequence of operations for each finished product
k. Orders already in progress or scheduled to precede this order
l.
Unutilized equipment and labor
m. Processing times for each component and total processing time for the finished product
4.
One benefit would be the stability and improved morale brought about by maintaining a constant
size workforce. A problem could be the buildup of inventories during certain quarters of the year.
5.
Because there is a dependent demand situation for all of the components that go into the finished
products, the installation of an MRP system might be of great help to this company in meeting its
delivery dates and in keeping inventory costs down.
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