Question

Directions:

The Acme Water Pump Company has a problem. The pumps are fairly expensive to make and store, so the company tends to keep the inventory low. At the same time, it is important to respond to demand quickly, since a customer who wants a water pump is very likely to get one from a competitor if Acme doesn’t have one available immediately. Determine what the projected available balance, master production schedule, and the available to promise is for each of the 12 weeks below.

Lot size – 300

Currently starting inventory – 25 units

Demand time fence – Weeks 1-3

Period	1	2	3	4	5	6	7	8	9	10	11	12
Forecast	90	120	110	80	85	95	100	110	90	90	100	110
Cust. orders	105	97	93	72	98	72	53	21	17	6	2	5
Proj. Balance (25)
MPS
ATP

After completing the table, write a brief summary of your planning process. Why did you decide on the numbers you did? What were the important factors to consider?

Submission: The written summary should be 1-2 paragraphs in length and include an introduction with a thesis statement and a conclusion that summarizes the main ideas. Each paragraph should have a topic sentence supported by 3-5 sentences that offer additional details, explanation, and examples.

Answer 1

The Acme Water Company had the objective to create the master production schedule and available to promise for a period of 12 weeks. In this case, we can see forecast and customer orders had already been shared. The production lot size is 300 and is critical. Also the opening inventory is given to be 25.

To check the requirement of production in given month, we take the maximum value between forecast and customer order. Based on that Net inventory before production is calculated by simply deducting the requirement from opening inventory.

To calculate MPS, we check the following condition: If net inventory before production is less than 1 i.e. 0 or negative, then we load the production lot size, i.e. 300 in this case, in the MPS, else MPS amounts to 0.

Based on MPS calculation, we decide the projected inventory:

Projected Inventory=MPS+Opening Inventory-Requirement

The calculation of ATP requires 2 steps: ATP for week 1 has different calculation than ATP for other weeks:

ATP for Week 1= Opening Inventory + MPS - Customer Order

ATP for other weeks=MPS-Customer Order