In: Operations Management
We are preparing a master production schedule for a given item. For this item the demand forecast and booked orders are as follows:
Week | 1 | 2 | 3 | 4 | 5 | 6 |
Demand Forecast | 60 | 60 | 80 | 80 | 80 | 50 |
Booked Orders | 58 | 63 | 52 | 20 | 4 | 0 |
Our Week 0 projected on-hand is 132 units. Lead time for this item is 2 weeks, and the order policy for this item is a fixed quantity of 180 units. When this master schedule is complete, what will be the projected on-hand in Week 6?
Please find below the filled up MRP table as per data provided:
Lead time of delivery ( i.e. phase lag between quantity received and quantity released ) = 2 weeks
Fixed order Quantity = 180
WEEK |
1 |
2 |
3 |
4 |
5 |
6 |
Booked Order |
58 |
63 |
52 |
20 |
4 |
0 |
Projected on hand:132 |
132 |
74 |
11 |
139 |
119 |
115 |
Ending Inventory |
74 |
11 |
139 |
119 |
115 |
115 |
Quantity received |
0 |
0 |
180 |
0 |
0 |
0 |
Quantity Released |
180 |
0 |
0 |
0 |
0 |
0 |
Here Ending Inventory for a period = Projected on hand for that period – Booked order for that period
Whenever , Projected on hand for a period < Booked order for that period, fixed order quantity of 180 is triggered. Thus an order quantity of 180 is received in week 3 for which order is released in week 1
Ending inventory for a period will feature as Projected on hand inventory for next period
Accordingly, Projected On hand inventory for Week 6 will be 115
PROJECTED ON HAND INVENTORY FOR WEEK 6 WILL BE 115 |