Question

Company X produces an end product Afor the market. One unit of Ais made by assembling 1 unit of K, 2 units of L, and 1 unit of M. One unit of K is made of 2 units of G and 3 units of H; one unit of L is assembled using 1 unit of M and 2 units of N. Current on-hand inventories for L and M are 130 and 60, respectively. Scheduled receipts are 300 for L at the beginning of week 1 and 150 for M at the beginning of week 2.
Lead times for K and L are one week, and lead times for other components are two weeks. The final assembly time for A is one week.
1. Fill in Table 1 to prepare a master production schedule for end product Ausing a fixed lot size of 200. The beginning inventory for A is 180; the forecast and committed customer orders
for A are provided in this table.

Week	1	2	3	4	5	6	7	8
Forecast	80	70	50	70	80	65	90	100
Customer orders (committed)	85	20	30	20
Projected on-hand inventory
MPS Receipt
MPS Start
Available-to-promise inventory (uncommitted)

Table 1: MPS table for end product A in Question 1

b. Construct the product structure tree (i.e., the BOM chart) for A.

c. Use your master production schedule in Table 1 to develop a material requirement plan (MRP) for the subassembly L using the lot-for-lot policy.

Week	1	2	3	4	5	6	7	8
MPS Start for A

L	Lead time: 1 week; On hand 130; Scheduled Receipt in week 1: 300
Gross Requirement
Scheduled Receipts
Projected On Hand
Net Requirement
PO Receipts
PO Releases

Thanks very much

Answer 1

Determine MPS quantity:

MPS quantity is ordered when projected on-hand inventory before placing MPS falls below 0 units (negative).

Available = Previous available inventory + MPS – Maximum (Forecast, Order)

For week 1, POH = 180 + 0 – 85 = 95

For week 2, POH = 95 + 0 – 70 = 25

For week 3, POH = 25 + 0 – 50 = -250, Place MPS = 200 units in week 3

For week 3, projected on-hand after MPS = 25 + 200 – 50 = 175 units

		1	2	3	4	5	6	7	8
Forecast		80	70	50	70	80	65	90	100
Customer orders		85	20	30	20	0	0	0	0
gross req.		Max(80,85) = 85	70	50	70	80	65	90	100
Projected on-hand inventory	180	180-85 = 95	25	175	105	25	160	70	170
MPS Receipt				200			200		200
MPS Start			200			200		200
ATP		75		150			200		200

ATP is the quantity that is available after satisfying the customer requirement.

For week 1, ATP = Previous week inventory + MPS of the week – Sum of Customer Orders till the week MPS is scheduled

ATP for week 1 = 180 + 0 – 85 = 75

For the rest of weeks in which MPS is scheduled, the ATP is calculated as follows:

ATP = MPS of the week – Sum of Customer Orders till the week MPS is scheduled

Bill of Materials:

MRP schedule of component L:

Net requirement = GR of week – projected on-hand of previous week – Scheduled Receipts of week

Projected on-hand = Projected on-hand of previous week + SR of week – GR of week + Planned order receipt (PORc) of week

Planned order receipt = Net requirement for Lot-to-lot size

Planned order releases (PORs) = Planned order receipts (PORc) time -phased by item lead time

Updated MRP schedule for U, Y and Z is as follows:

Requirement of L: 2 units for item A

Week	1	2	3	4	5	6	7	8
MPS Start for A		200			200		200
L	Lead time: 1 week; On hand 130;
	Scheduled Receipt in week 1: 300
Gross Requirement	0	2*200 = 400	0	0	400	0	400	0
Scheduled Receipts	300
Projected On Hand	430	30	30	30	0	0	0	0
Net Requirement					370	0	400	0
PO Receipts					370		400
PO Releases				370		400