Question

The ABC Company builds a computer model called ICU2. The product structure diagram of the ICU2 model is shown in the figure below. Suppose that the forecasted demands of the computer over weeks 6 to 11 are 220, 165, 180, 120, 75, 300. The starting inventory of assembled computers in week 6 will be 75, and the production managers anticipated returns of 30 in week 8 and 10 in week 10.

ICU2 Computer (end item)

    - Disk Drives (2) lead time = 2 weeks

     - Mother Board (1) lead time= 3 weeks

                         -Ad in Boards(3) lead time =1 weeks

                          -Dram Chips (90) lead time = 2 weeks

(a) Determine the net demand of the computers over the 6 months.

(b) Determine the planned order release for the motherboards assuming a lot-for-lot scheduling rule. Estimate its total ordering and holding. Assume the holding cost is $0.5/unit/month and the ordering cost is $100 per order.

(c) Determine the planned order release for the motherboards assuming a EOQ scheduling rule. Estimate its total ordering and holding using the same parameters in part (b).

(d) Determine the planned order release for the motherboards assuming a Silver-Meal scheduling rule. Estimate its total ordering and holding using the same parameters in part (b).

Answer 1

The Noname Computer Company builds a computer with model designation ICU2. It imports the motherboard from Taiwan, whereupon the company inserts chips in the sockets, adds additional circuit boards and assembles the full computer at its plant in Lubbock, TX. Each computer requires three add-in boards, two disk drives and 90 64K dynamic random access (DRAM) memory chips. The company purchases the DRAM memory chips and the disk drives from outside suppliers. The product structure is graphed below.Suppose the forecasted demands for the ICU2 for weeks 6 through 11 are 220, 165, 180, 120, 75, and 300, respectively. The inventory of assembled ICU2s at the beginning of week 6 will be 75, and the production manager anticipates returns of 30 ICU2s from distributors in week 8 and 30 more in week 10. (These returned ICU2s may be used to fill forecasted demands.) At present, no inventories of motherboards, add-in boards, disk drives or DRAM chips are planned for the start of week 6.a. Determine planned order releases for motherboards. Assume no lot sizing is performed and assume the yield of motherboard releases is 100%. MPS (master production schedule) for production of ICU2 computer: Week 6 7 8 9 10 11 Demand 220 165 180 120 75 300 Scheduled receipts 30 30

Projected inventory 75 Net predicted demand 145 165 150 120 45 300 MRP calculations: motherboards Week 1 2 3 4 5 6 7 8 9 10 11 Gross reqts. 145 165 150 120 45 300 Net reqts. 145 165 150 120 45 300 Time phased net reqts. 145 165 150 120 45 300