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This document provides background information to develop a master production schedule (MPS) for an end item called F over an 8-week period. F is assembled from subassemblies A, B, and C, which are made from components M, N, P, Q, X, and Y. The tasks involve: 1) Developing an MPS for F using lot-for-lot ordering and given forecasts and orders. 2) Creating a bill of materials (BOM) tree for F. 3) Using the MPS to create an MRP for subassembly A with a 2-week order policy. 4) Using the MRP for A to create an MRP for component N

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38 views

Assignment4 Question

This document provides background information to develop a master production schedule (MPS) for an end item called F over an 8-week period. F is assembled from subassemblies A, B, and C, which are made from components M, N, P, Q, X, and Y. The tasks involve: 1) Developing an MPS for F using lot-for-lot ordering and given forecasts and orders. 2) Creating a bill of materials (BOM) tree for F. 3) Using the MPS to create an MRP for subassembly A with a 2-week order policy. 4) Using the MRP for A to create an MRP for component N

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Background Information:

A company produces an end item 'F', which is composed of three subassemblies: 2 units of A, 1 unit of B, and 3 units of C.
A is made of 3 Ms and 2 Ns; B is assembled using 1 P and 2 Qs; and C is made of 2 Xs and 3 Ys. On- hand inventories are 120
As and 220 Ns. Scheduled receipts are 120 Ns at the start of week 2. Lead times are one week for all subassemblies and two
weeks for all components. Final assembly of F requires one week.

1. Fill in the following table to prepare a master production schedule (MPS) for end item 'F' using the lot-for-lot
rule. The beginning inventory for F is 112 units; the forecast and committed customer orders for end item F
are provided in the table. [4 marks]

Week 1 2 3 4 5 6 7 8
Forecast 40 50 50 50 45 45 50 50
Customer orders (committed) 45 52 30 23 16 8 5
Projected on-hand inventory
Net Inventory before MPS
MPS Receipt
MPS Start
Available-to-promise inventory (uncommitted)

2. Construct a product structure tree of the end item ‘F’ (i.e., a BOM chart). [4 marks]

2
BUS 2211: Operations Management Assignment 4

3. Use your master production schedule (MPS) in Table 1 to develop a material requirement plan (MRP) for the
subassembly A using the fixed-period-of-2 ordering policy. [4 marks]

Week 1 2 3 4 5 6 7 8
MPS for F
A Lead time: 1 week On hand: 120units
Gross Requirement
Scheduled Receipts
Projected On Hand
Net Requirements
PO Receipts
PO Releases

4. Use your MRP schedule for the subassembly A to develop material requirements plan (MRP) for the
component N using the lot-for-lot ordering policy. [4 marks]

Week 1 2 3 4 5 6 7 8
N Lead time: 2 weeks On hand: 220 units
Gross Requirement
Scheduled Receipts
Projected On Hand
Net Requirements
PO Receipts
PO Releases

5. You are required to calculate the total inventory cost for the component N during the eight weeks. Note
that, for each week, the inventory cost includes a fixed cost and a holding cost. We assume that the per order
fixed cost is $100/order, and the unit holding cost is $1 per item per week. The fixed cost is incurred each time
when the firm places an order. More precisely, if the firm places an order at the beginning of a week, then the
firm incurs the fixed cost for this week; otherwise, the fixed cost for the week is zero. The holding cost is
calculated according to the number of remaining items at the end of each week. For example, if 10 units of the
component N are remaining at the end of a week, then the holding cost for this week is 10 x
$1 = $10. [4 marks]
3
BUS 2211: Operations Management Assignment 4

6. Use your MRP schedule for the subassembly A to develop material requirements plan (MRP) for the
component N using the ordering policy of "fixed order quantity of 200 units". [4 marks]

Week 1 2 3 4 5 6 7 8
N Lead time: 2 weeks On hand: 220units
Gross Requirement
Scheduled Receipts
Projected On Hand
Net Requirements
PO Receipts
PO Releases

7. Calculate the total inventory cost for the fixed order quantity in Question 6. The per order fixed cost is still
$100/order, and the unit holding cost is still $1 per item per week. Among the two ordering policies, lot-for-lot
ordering policy and fixed order quantity of 200 units, which one is better in the 8-week period. You should
provide justification to support your answer. [4 marks]
4

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