Question

Assume that you are the manager of a shop that assembles power tools. You have just received an order for 59 chain saws, which are to be shipped at the start of week 8. Pertinent information on the saws is

Item	Lead Time (weeks)	On Hand	Components
Saw	2	15	A(2), B(1), C(4)
A	1	10	E(3), D(1)
B	2	5	D(2), F(3)
C	2	65	E(2), D(2)
D	1	20
E	1	10
F	2	30

a.	Develop the material requirements plan for component E using lot-for-lot ordering. (Leave no cells blank - be certain to enter "0" wherever required.)

Item: E(3) & E(2) LT = 1 wk.	Beg. Inv.	1	2	3	4	5	6	7	8
Gross requirements
Scheduled receipts
Projected on hand
Net requirements
Planned order receipt
Planned order release

Answer 1

First calculate the material requirement for each component -

Components	Gross requirement	Stock On-hand	Net requirement = (Gross requirement – Stock in hand)
Saw	59	15	59 -15 = 44
A	Net requirement of Saw *2 = 44 * 2 =88	10	88 -10 = 78
B	Net requirement of Saw *1 = 44 * 1 = 44	5	44 -5 = 39
C	Net requirement of Saw *4 = 44 * 4 =176	65	176 -65 = 110
D	Net requirement of A *1 + Net requirement of B *2 + Net requirement of C *2 = 78 *1 + 39 * 2 + 110 *2 = 376	20	376 -20 =356
E	Net requirement of A * 3 + Net requirement of C *2 = 78 * 3 + 110 *2 = 454	10	454 -10 = 444
F	Net requirement of B *3 = 39 * 3 = 117	30	117 -30 = 87

Gross requirement of each sub-components are calculated based on net requirement of their main components multiplied by number of sub-components required for each component.

The material requirement plan for component E:

• 78*3 = 234 number of component E required for component A at the week 5 as the lead time of component A is 1 weeks and lead time for end product Saw is also 2 weeks; [8 weeks – (1+2) weeks = 5 weeks]
• 110 * 2 =220 number of component E required for component C at the week 4 as the lead time of component C is 2 week and lead time for end product Saw is also 2 weeks; [8 weeks – (2+2) weeks = 4 weeks]

The material requirements plan for component E using lot-for-lot ordering

Item E(3) & E(2)	Period	Inv	1	2	3	4	5	6	7	8
	Gross requirements		0	0	0	220	234	0	0	0
OH = 10	Scheduled receipts		0	0	0	0	0	0	0	0
LT = 1	Projected On Hand	10	10	10	10	0	0	0	0	0
Q = L4L	Net requirements		0	0	0	210	234	0	0	0
	Planned order receipts		0	0	0	210	234	0	0	0
	Planned order releases		0	0	210	234	0	0	0	0