This document contains sample solutions to questions about materials requirement planning (MRP). It includes:
1) An exploded bill of materials for items J, K, L, and M.
2) A time-phased assembly plan for gift bags requiring production of item M to start by noon.
3) Product structure diagrams and MRP calculations for various products.
4) Explanations and examples of lot-for-lot ordering policy, economic order quantity, and part-period balancing to determine optimal production and inventory levels.
This document contains sample solutions to questions about materials requirement planning (MRP). It includes:
1) An exploded bill of materials for items J, K, L, and M.
2) A time-phased assembly plan for gift bags requiring production of item M to start by noon.
3) Product structure diagrams and MRP calculations for various products.
4) Explanations and examples of lot-for-lot ordering policy, economic order quantity, and part-period balancing to determine optimal production and inventory levels.
Original Description:
facility planning and layout: MRP & ERP CHAPTER 14 SOLUTIONS
This document contains sample solutions to questions about materials requirement planning (MRP). It includes:
1) An exploded bill of materials for items J, K, L, and M.
2) A time-phased assembly plan for gift bags requiring production of item M to start by noon.
3) Product structure diagrams and MRP calculations for various products.
4) Explanations and examples of lot-for-lot ordering policy, economic order quantity, and part-period balancing to determine optimal production and inventory levels.
This document contains sample solutions to questions about materials requirement planning (MRP). It includes:
1) An exploded bill of materials for items J, K, L, and M.
2) A time-phased assembly plan for gift bags requiring production of item M to start by noon.
3) Product structure diagrams and MRP calculations for various products.
4) Explanations and examples of lot-for-lot ordering policy, economic order quantity, and part-period balancing to determine optimal production and inventory levels.
Question 14.1 An exploded bill yields the following: Item J: 200 units Item K: 200 1 = 200 units Item L: 200 4 = 800 units Item M: 200 2 = 400 units. Question 14.2 The time-phased assembly plan for the gift bags is:
Summer II, 2009
Production of item M should be started by noon. Question 14.3 (a) Product structure:
(b)
BUS P301:01
Question 14.11 (a)
Week Item A H C Gross requirement Order release Gross requirement Order release Gross requirement Order release 100 100 100 50 1 2 3 4 5 6 7 100 100 100 50 50 150 8 100 50 100 50 50 150 9 10 50 150 50 11 12 150
(b) Level: 0 Item: A Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release Level: 0 Item: H Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release Level: 1 Item: C Week No. Gross requirement Scheduled receipt On hand Net requirement 50 Planned order receipt Planned order release Parent: A, H Lead Time: 2 2 3 Parent: Lead Time: 1 2 3 Parent: Lead Time: 1 2 3 Quantity: Lot Size: L4L 7 8 9 100 0 100 100 100 50
Week Item A Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release Gross requirement On hand: Net requirement Order receipt Order release 1 2 3 4 5 6 7 8 100 0 100 100 100 0 50 100 0 100 100 100 100 100 100 50 0 50 50 150 100 0 100 100 50 100 100 0 0 50 100 100 0 0 50 50 50 150 0 150 150 150 75 50 75 100 25 75 75 100 0 100 100 100 0 100 100 150 150 0 150 150 150 0 150 150 150 0 150 150 50 0 50 50 150 50 0 50 50 50 0 50 50 50 0 50 50 50 150 0 150 150 150 0 150 150 9 10 50 0 50 50 150 50 0 50 50 11 12 150 0 150 150
50 50 100 50 50 50 50
50 100
100
100
50
75 75 50 75 100 25 75 75 100 100 25 75 75 50
150 50 0 50 50 150 50 0 50 50 100
75 75
50 50 75
75
BUS P301:01
(b)
BUS P301:01
Question 14.13 (a)
(b)
(c) Level: 0 Item: 20 fan Week No. Gross requirement Scheduled receipt On hand 100 Net requirement Planned order receipt Planned order release Level: 1 Item: housing Week No. Gross requirement Scheduled receipt On hand 100 Net requirement Planned order receipt Planned order release Parent: 20 fan Lead Time: 1 week 2 3 4 Parent: Lead Time: 1 2 3 Quantity: Lot Size: 7 8 1,000 100 900 900 900 Quantity: 1X Lot Size: L4L 7 8
10
11
12
6 900 100 800 800
10
11
12
800
BUS P301:01
Level: 1 Item: grills Week No. Gross requirement Scheduled receipt On hand 200 Net requirement Planned order receipt Planned order release
Parent: 20 fan Lead Time: 2 weeks 2 3 4
6 1,800 200 1,600 2,000
Quantity: 2X Lot Size: 500 7 8
10
11
12
400
2,000
Level: 1 Item: fan assembly Week No. Gross requirement Scheduled receipt On hand 150 Net requirement Planned order receipt Planned order release
Parent: 20 fan Lead Time: 3 weeks 1 2 3 4
6 900 150 750 750
Quantity: 1X Lot Size: L4L 7 8
10
11
12
750
Level: 1 Item: electrical unit Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release
Parent: 20 fan Lead Time: 1 week 1 2 3 4
6 900
Quantity: 1X Lot Size: L4L 7 8
10
11
12
900 900 900
Level: 2 Item: frame Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release
Parent: housing Lead Time: 2 weeks 2 3 4
5 800
Quantity: 1X Lot Size: L4L 7 8
10
11
12
800 800 800
Level: 2 Item: supports Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release
Parent: housing Lead Time: 1 week 2 3 4
5 1,600 50 1,550 1,600
Quantity: 2X Lot Size: 100 7 8
10
11
12
1,600
Level: 2 Item: handle Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release
Parent: housing Lead Time: 1 week 2 3 4
5 800 400 400 500
Quantity: 1X Lot Size: 500 7 8
10
11
12
100
500
BUS P301:01
Level: 2 Item: hub Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release
Parent: fan assembly Lead Time: 1 week 2 3 4 5 750
Quantity: 1X Lot Size: L4L 7 8
10
11
12
750 750 750
Level: 2 Item: blades Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release
Parent: fan assembly Lead Time: 2 weeks 2 3 4 3,750 50 3,750 3,800
Quantity: 5X Lot Size: 100 7 8
10
11
12
3,800
Level: 2 Item: motor Week No. Gross requirement Scheduled receipt On hand Net requirement Planned order receipt Planned order release
Parent: electrical unit Lead Time: 1 week 2 3 4 5 900
Quantity: 1X Lot Size: L4L 7 8
10
11
12
900 900 900
Level: 2 Item: switch Week No. Gross requirement Scheduled receipt On hand 20 Net requirement Planned order receipt Planned order release
Parent: electrical unit Lead Time: 1 week 2 3 4 5 900 20 880 888 888
Quantity: 1X Lot Size: 12 7 8
10
11
12
Level: 2 Item: knob Week No. Gross requirement Scheduled receipt On hand: 20 Net requirement Planned order receipt Planned order release
Parent: electrical unit Lead Time: 1 week 2 3 4 5 900 200 200 200 200 700 700
Quantity: 1X Lot Size: 25 7 8
10
11
12
BUS P301:01
Question 14.17
Lot-for-lot (L4L) Ordering Policy
Week 5 30 0 0 30 70
1 Gross requirements Beginning inventory Ending inventory Order receipts Order releases 30 40 10
2 10 10 30
3 40 10 0 30
4 0 0 30
6 70 0 0 70 20
7 20 0 0 20
8 0 0 10
9 10 0 0 10 80
10 80 0 0 80
11 0 0 50
12 50 0 0 50
40
CT = Order cost + holding cost = 7 orders
$150/order + 20 units
$2.50/unit/period = $1,100
Question 14.18
Economic Order Quantity (EOQ)
2 DS H 2 330 150 2.50 12
57.4, or 57 units
where D = period demand, S = setup or order cost, H = holding cost.
Reorder point
Demand during lead time 27.5, or 28 units
330 units week 12
1 week
1 Gross requirement Beginning inventory Ending inventory 40 Order receipts Order release 30 40 10
2 0 10 57
3 40 67 27 57
4 27 27 57
5 30 84 54 57
6 70 54 16* 57
Week 7 20 16 21 57
8 21 21 57
9 10 78 68 57
10 80 68 12*
11 12 12 57
12 50 12 5* 57 57
* Stockouts = 16 + 12 + 5 = 33
Total inventory = 10 + 10 + 27 + 27 + 54 + 21 + 21 + 68 = 238 Actual total cost: CT = Order cost + Holding cost + Stockout cost = 6 orders x $150/order + 238 units x $2.50 + 33 units x $10/unit stockout = 900.00 + 595.00 + 330.00 = $1,825.00 DS Q 2.50) QH 2
Theoretical total cost:
CT Order cost 330 Holding cost =
150 57 (12 57 2 868.42 855.00 $1,723.42
Note: Order and carrying costs are not equal due to rounding of the EOQ to a whole number.
BUS P301:01
Note: The actual cost of using the EOQ policy under this case of varying demand is more than the theoretical cost. In addition, we were forced to use back orders when stockouts occurred. The poor performance with respect to stockout is due to the fact that average demand during lead time is not a very good measure of the necessary reorder point. You may wish to double the size of the fourth order in order to get: Level: Item: Week No. Gross requirements On hand 40 Net requirement Planned order receipt Planned order release Parent: Lead Time: 1 2 3 10 40 10 30 57 Quantity: Lot Size: EOQ 7 8 9 20 41 21 10 21
1 30 40 0
4 27
5 30 27 3 57 57
6 70 54 16 57
10 80 11 69 114
11 45
12 50 45 5 57 52
57
57
114
57
Total cost with this approach: Setups: 5 150 = $750 364 = $910 Holding: 2.50
Setup + holding = total cost = $1,660.00
Question 14.19
Part-Period Balancing (PPB)
First, calculate the EPP: Setup cost EPP Holding cost
150 2.50
60
Next, determine the cumulative part periods that are closest to your computed EPP: Periods Combined 1 1, 2 1, 2, 3 1, 2, 3, 4 1, 2, 3, 4, 5* 1, 2, 3, 4, 5, 6 Cumulative Net Req. 0 0 30 30 60 130 Part Periods Costs Order Hold 0 0 150 150 150 150 + + + + + + 25 50 50 50 200 725
30 30
0 + 30 0 + 30
2 = 60 2 + 70
3 = 270
* The part periods for an order encompassing periods 1, 2, 3, 4, and 5 most nearly approximates the EPP of 60.
Note: (1) We have assumed that: (a) a product ordered during a calendar week is available at the beginning of the following week; (b) shipments during a week take place at the beginning of the week. (2) DS and POM for Windows will produce the same result.
