Question

In: Operations Management

We are preparing a master production schedule for a given item. For this item the demand...

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?

Solutions

Expert Solution

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


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