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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CHAPTER 15
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431
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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CHAPTER 15
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433
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
434
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PART 3
z
Managing Value Chains
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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CHAPTER 15
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435
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.
436
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PART 3
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Managing Value Chains
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
CHAPTER 15
z
437
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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PART 3
z
Managing Value Chains
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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CHAPTER 15
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
z
439
440
z
PART 3
z
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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CHAPTER 15
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
z
441
442
z
PART 3
z
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
z
CHAPTER 15
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
z
443
444
z
PART 3
z
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)
z
445
446
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PART 3
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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
210
z
447
448
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PART 3
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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
CHAPTER 15
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
449
450
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PART 3
z
Managing Value Chains
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
z
451
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.
452
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PART 3
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Managing Value Chains
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
Resource Planning
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CHAPTER 15
z
453
‰ 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
454
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PART 3
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Managing Value Chains
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
z
455
456
z
PART 3
z
Managing Value Chains
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
z
457