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Resource Planning

Chapter 11

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What is Resource Planning?

Resource Planning

A process that takes sales and operations plans; processes information in the way of time standards, routings, and other information on how services or products are produced; and then plans the input requirements

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Materials Requirements Planning

Material Requirements Planning (MRP)

A computerized information developed specifically to help manufacturers manage dependent demand inventory and schedule replenishment orders

MRP Explosion

A process that converts the requirements of various final products into a material requirements plan that specifies the replenishment schedules of all the subassemblies, components, and raw materials needed to produce final products

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MRP Inputs

Inventory

transactions

Inventory

records

Bills of

materials

Engineering

and process

designs

Other

sources

of demand

Authorized

master production

schedule

Material

requirements

plan

MRP

explosion

Figure 11.1

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Material Requirements Planning

Dependent demand

The demand for an item that occurs because the quantity required varies with the production plans for other items held in the firm’s inventory

Parent

An product that is manufactured from one or more components

Component

An item that goes through one or more operations to be transformed into or become part of one or more parents

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Material Requirements Planning

| | | | | | | | | |

1 5 10

Day

2,000 –

1,500 –

1,000 –

500 –

0

Bicycles

(a) Parent inventory

Reorder point

Order

1,000 on

day 3

Order

1,000 on

day 8

(b) Component demand

2,000 –

1,500 –

1,000 –

500 –

0

Rims

| | | | | | | | | |

1 5 10

Day

Figure 11.2

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Master Production Scheduling

Master Production Schedule (MPS)

A part of the material requirements plan that details how many end items will be produced within specified periods of time

In a Master Production Schedule:

Sums of quantities must equal sales and operations plan.
Production quantities must be allocated efficiently over time.
Capacity limitations and bottlenecks may determine the timing and size of MPS quantities.

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Master Production Scheduling

	April				May
	1	2	3	4	5	6	7	8
Ladder-back chair
Kitchen chair
Desk chair
Aggregate production plans for chair family

150

120

200

670

Figure 11.3

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Master Production Scheduling

No

Material�requirements�planning

Yes

Authorized master�production�schedule

Are resources�available?

Prospective master�production�schedule

Authorized

production

plan

Figure 11.4

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Master Production Scheduling

Step 1: Calculate projected on-hand inventories

=

+

–

Projected on-hand�inventory at end�of this week

On-hand�inventory at �end of last week

MPS quantity�due at start�of this week

Projected�requirements�this week

where:

Projected requirements = Max(Forecast, Customer Orders Booked)

=

Inventory

+

55 chairs�currently�in stock

–

MPS quantity�(0 for week 1)

38 chairs already�promised for�delivery in week 1

= 17 chairs

Developing a Master Production Schedule

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Master Production Scheduling

Item: Ladder-back chair

Quantity on Hand:

Forecast

Customer orders (booked)

Projected on-hand inventory

MPS quantity

MPS start

April

1

2

55

30

38

27

17

–13

0

Explanation:

Forecast is less than booked orders in week 1; projected on-hand inventory balance �= 55 + 0 – 38 = 17.

Explanation:

Forecast exceeds booked orders in week 2; projected on-hand inventory balance = 17 + 0 – 30 = –13. The shortage signals a need to schedule an MPS quantity for completion in week 2.

Figure 11.6

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Master Production Scheduling

Step 2: Determine the timing and size of MPS quantities

The goal is to maintain a nonnegative projected on-hand inventory balance
As shortages in inventory are detected, MPS quantities should be scheduled to cover them

=

Inventory

17 chairs in�inventory at the�end of week 1

+

MPS quantity�of 150 chairs

–

Forecast of�30 chairs

= 137 chairs

Developing a Master Production Schedule

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Master Production Schedule (MPS)

Item: Ladder-back chair

Order Policy: 150 units

Lead Time: 1 week

1

2

3

4

5

6

7

8

April

Forecast

Customer�orders booked

Projected on-hand inventory

MPS quantity

MPS start

Quantity�on Hand:

30

38

30

27

30

24

30

8

0

35

0

35

0

35

55

May

17

137

107

77

42

7

122

87

0

150

0

150

0

150

0

150

0

Explanation:

On-hand inventory balance = 17 + 150 – 30 = 137. The MPS quantity is needed to avoid a shortage of 30 – 17 = 13 chairs in week 2.

Explanation:

The time needed to assemble 150 chairs is 1 week. The assembly department must start assembling chairs in week 1 to have them ready by week 2.

Figure 11.7

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Master Production Scheduling

Available-to-promise (ATP) inventory

The quantity of end items that marketing can promise to deliver on specific dates
It is the difference between the customer orders already booked and the quantity that operations is planning to produce

Freezing the MPS

Disallow changes to the near-term portion of the MPS

Reconciling the MPS with Sales and Operations Plans

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Master Production Schedule (MPS)

Item: Ladder-back chair

Order Policy: 150 units

Lead Time: 1 week

1

2

3

4

5

6

7

8

April

Forecast

Customer�orders booked

Projected on-hand inventory

MPS quantity

MPS start

Quantity�on Hand:

30

38

30

27

30

24

30

8

0

35

0

35

0

35

55

May

17

137

107

77

42

7

122

87

0

150

0

150

0

150

0

150

0

Available-to-promise (ATP)�inventory

17

91

150

Explanation:

The total of customer orders booked until the next MPS receipt is 38 units. The ATP = 55 (on-hand) + 0 (MPS quantity) – 38 = 17.

Explanation:

The total of customer orders booked until the next MPS receipt is 27 + 24 + 8 = 59 units. The ATP = 150 (MPS quantity) – 59 = 91 units..

Figure 11.8

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Application 11.1

Determine the MPS for Product A that has a 50-unit policy and 55 units on hand.

The demand forecast and booked orders are shown in the partially completed plan.

The lead time is one week.

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Application 11.1

Item: Product A	Order Policy: 50 units
							Lead Time: 1 week
Quantity on Hand 55	1	2	3	4	5	6	7	8	9	10
Forecast	20	10	40	10	0	0	30	20	40	20
Customer orders (booked)	30	20	5	8	0	2	0	0	0	0
Projected on-hand inventory
MPS quantity
MPS start
Available-to-promise (ATP) inventory

25	5

	50

15	5	5	3	23	3	13	43
50				50		50	50
			50		50	50

5

35

50

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MRP Explosion

Bill of Materials

A record of all the components of an item, the parent-component relationships, and the usage quantities derived from engineering and process designs

End items
Intermediate items
Subassemblies
Purchased items
Part commonality (sometimes called standardization of parts or modularity)

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MRP Explosion

Seat cushion

Seat-frame boards

Front legs

A

Ladder-back chair

Back legs

Leg supports

Back slats

Bill of Materials for a Ladder-Back Chair

Figure 11.10

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MRP Explosion

J (4)

Seat-frame boards

G (4)

Back slats

F (2)

Back legs

I (1)

Seat cushion

H (1)

Seat frame

C (1)

Seat

subassembly

D (2)

Front

legs

B (1)

Ladder-back

subassembly

E (4)

Leg

supports

A

Ladder-back

chair

Figure 11.10

Bill of Materials for a Ladder-Back Chair

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MRP Explosion

Inventory record

A record that shows an item’s lot-size policy, lead time, and various time-phased data.

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MRP Explosion

The time-phase information contained in the inventory record consists of:

Gross requirements
Scheduled receipts
Projected on-hand inventory

Planned receipts
Planned order releases

=

+

–

Projected on-hand�inventory balance�at end of week t

Inventory on�hand at end of�week t–1

Scheduled or planned receipts in week t

Gross�requirements�in week t

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MRP Explosion

The on-hand inventory calculations for each week in the following slide are as follows

Week 1: 37 + 230 – 150 = 117

Weeks 2 and 3: 117 + 0 – 0 = 117

Week 4: 117 + 0 – 120 = –3

Week 5: –3 + 0 – 0 = –3

Week 6: –3 + 0 – 150 = –153

Week 7: –153 + 0 – 120 = –273

Week 8: –273 + 0 – 0 = –273

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MRP Explosion

Item: C Description: Seat subassembly						Lot Size: 230 units Lead Time: 2 weeks
	Week
	1	2	3	4	5	6	7	8
Gross�requirements		0	0		0			0
Scheduled�receipts		0	0	0	0	0	0	0
Projected�on-hand�inventory		117	117	–3	–3	–153	–273	–273
Planned �receipts
Planned order releases

Explanation:

Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150 = 117 units.

37

120

150

117

230

Figure 11.11

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MRP Explosion

Item: C Description: Seat subassembly						Lot Size: 230 units Lead Time: 2 weeks
	Week
	1	2	3	4	5	6	7	8
Gross�requirements	150	0	0
Scheduled�receipts	230	0	0
Projected�on-hand�inventory	117	117	117
Planned �receipts
Planned order releases

37

Without a planned receipt in week 4, a shortage of 3 units will occur: 117 + 0 + 0 – 120 = –3 units. Adding the planned receipt brings the balance to 117 + 0 + 230 – 120 = 227 units.

The first planned receipt lasts until week 7, when projected inventory would drop to 77 + 0 + 0 – 120 = –43 units. Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187 units.

120

0

227

230

187

120

0

77

0	150
0	0
227

0
0
187

Figure 11.12

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Planning Factors

Planning lead time

An estimate of the time between placing an order and receiving the item in inventory.

Planning lead time consists of estimates for:

Setup time
Processing time
Materials handling time between operations
Waiting time

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Planning Factors

Lot-sizing rules

Fixed order quantity (FQO) rule maintains the same order quantity each time an order is issued

Could be determined by quantity discounts, truckload capacity, minimum purchases, or EOQ

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Planning Factors

Lot-sizing rules

Periodic order quantity (POQ) rule allows a different order quantity for each order issued but issues the order for predetermined time intervals

=

–

POQ lot size �to arrive in �week t

Total gross requirements�for P week, including�week t

Projected on-hand �inventory balance at �end of week t–1

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Planning Factors

=

–

(POQ lot size)

Gross requirements�for weeks �4, 5, and 6

Inventory at �end of week 3

Using P = 3:

(POQ lot size) = (120 + 0 + 150) – 117 = 153 units

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Planning Factors

Figure 11.13

Using POQ Rule

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Planning Factors

=

–

L4L lot size �to arrive in �week t

Gross requirements�for week t

Projected on-hand �inventory balance at �end of week t – 1

=

–

(L4L lot size)

Gross requirements�in week 4

Inventory balance �at end of week 3

(L4L lot size) = 120 – 117 = 3 units

Lot-sizing rules

Lot-for-lot (L4L) rule under which the lot size ordered covers the gross requirements of a single week

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Planning Factors

Figure 11.14

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Application 11.2

Item: H10-A Description: Chair seat assembly							Lot Size: FOQ = 80 units Lead Time: 4 weeks
	Week
	31	32	33	34	35	36	37	38	39	40
Gross�requirements		60				35		45		60
Scheduled�receipts		80
Projected�on-hand�inventory
Planned �receipts
Planned order releases

20

20	40	40	40	40	5	5

Item H10-A is a produced item (not purchased) with an order quantity of 80 units. Complete the rest of its MRP record using the fixed order quantity (FOQ) rule

80

40

80

60

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Application 11.3

Now complete the H10-A record using a POQ rule. The P should give an average lot size of 80 units.

Assume the average weekly requirements are 20 units.

P = = 4 weeks

80

20

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Application 11.3

Item: H10-A Description: Chair seat assembly							Lot Size: POQ = 4 Lead Time: 4 weeks
	Week
	31	32	33	34	35	36	37	38	39	40
Gross�requirements		60				35		45		60
Scheduled�receipts		80
Projected�on-hand�inventory
Planned �receipts
Planned order releases

20

20	40	40	40	40	5	5

100

60

0

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Application 11.4

Revise the H10-A record using the lot-for-lot (L4L) Rule. (Complete the highlighted section)

Item: H10-A Description: Chair seat assembly							Lot Size: L4L Lead Time: 4 weeks
	Week
	31	32	33	34	35	36	37	38	39	40
Gross�requirements		60				35		45		60
Scheduled�receipts		80
Projected�on-hand�inventory
Planned �receipts
Planned order releases

20	40	40	40	40	5	5

20

40

0

60

0

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Planning Factors

Comparing lot-sizing rules

FOQ:

= 181 units

227 + 227 + 77 + 187 + 187

5

POQ:

= 60 units

150 + 150 + 0 + 0 + 0

5

L4L:

= 0 units

0 + 0 + 0 + 0 + 0

5

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Planning Factors

Lot sizes affect inventory, setup, and ordering costs

The FOQ rule generates a high level of average inventory because it creates inventory remnants.
The POQ rule reduces the amount of average on-hand inventory because it does a better job of matching order quantity to requirements.
The L4L rule minimizes inventory investment, but it also maximizes the number of orders placed.

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Planning Factors

Safety stock for dependent demand items with lumpy demand (gross requirements) is helpful only when future gross requirements, the timing or size of scheduled receipts, and the amount of scrap that will be produced are uncertain.

Used for end items and purchased items to protect against fluctuating customer orders and unreliable suppliers of components but avoid using it as much as possible for intermediate items.

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Planning Factors

Safety Stock

Figure 11.15

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Outputs from MRP

Manufacturing resources plan

Performance reports

Material requirements plan

Action notices

Releasing new orders
Adjusting due dates

Priority reports

Dispatch lists
Supplier schedules

Capacity reports

Capacity requirements planning
Finite capacity scheduling
Input-output control

Cost and price data

MRP explosion

Routings and time standards

Figure 11.16

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Outputs from MRP

Material Requirements

An item’s gross requirements are derived from three sources:

The MPS for immediate parents that are end items
The planned order releases for immediate parents below the MPS level
Any other requirements not originating in the MPS, such as the demand for replacement parts

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Outputs from MRP

J(4)

Seat-frame�boards

C(1)

Seat�subassembly

H(1)

Seat�frame

I(1)

Seat�cushion

BOM for the Seat Subassembly

Figure 11.17

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Outputs from MRP

Item: Seat subassembly

Lot size: 230 units

Lead

time: 2 weeks

Gross requirements

150

1

230

117

2

3

120

4

5

150

6

120

7

8

Scheduled receipts

Projected on-hand inventory

Planned receipts

Planned order releases

37

Week

117

0

227

77

187

230

Figure 11.18

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Outputs from MRP

Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross requirements

1

0

2

3

4

5

6

7

8

Scheduled receipts

Projected on-hand inventory

Planned receipts

Planned order releases

40

Week

0

300

0

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross requirements

1

0

2

3

4

5

6

7

8

Scheduled receipts

Projected on-hand inventory

Planned receipts

Planned order releases

0

Week

0

Item: Seat subassembly

Lot size: 230 units

Lead

time: 2 weeks

Gross requirements

150

1

2

3

120

4

5

150

6

120

7

8

Planned receipts

Planned order releases

Week

0

230

Usage quantity: 1

0

230

0

230

0

230

0

230

0

Figure 11.18

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Outputs from MRP

Item: Seat subassembly

Lot size: 230 units

Lead

time: 2 weeks

Gross requirements

150

1

2

3

120

4

5

150

6

120

7

8

Planned receipts

Planned order releases

Week

0

230

Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross requirements

1

0

2

3

4

5

6

7

8

Scheduled receipts

Projected on-hand inventory

Planned receipts

Planned order releases

40

Week

0

300

0

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross requirements

1

0

2

3

4

5

6

7

8

Scheduled receipts

Projected on-hand inventory

Planned receipts

Planned order releases

0

Week

0

230

0

230

0

230

0

230

0

40

110

180

300

0

230

Figure 11.18

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Outputs from MRP

Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross requirements

1

2

3

4

5

6

7

8

Planned receipts

Planned order releases

Week

300

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross requirements

1

2

3

4

5

6

7

8

Planned receipts

Planned order releases

Week

230

0

230

0

230

0

Gross requirements

1

0

2

3

4

5

6

7

8

Scheduled receipts

Planned receipts

Planned order releases

200

Week

0

Projected on-hand inventory

Item: Seat-frame boards

Lot size: 1500 units

Lead

time: 1 week

Usage quantity: 4

1200

200

500

1500

Figure 11.18

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Application 11.5

A firm makes a product (Item A) from three components (intermediate Items B and D, and purchased item C).

The latest MPS for product A calls for completion of a 250-unit order in week 8, and its lead time is 2 weeks.

The master schedule and bill of material for Product A are on the following slides:

Item: End Item A	Lead Time: 2 wks
	Week
	1	2	3	4	5	6	7	8
MPS quantity								250
MPS start						250

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Application 11.5

Develop a material requirements plan for items B, C, and D, given the following inventory data.

C(2)

B(1)

C(1)

D(2)

A

Data Category	Item
Data Category	B	C	D
Lot-sizing rule	POQ (P = 5)	FOQ = 1000	L4L
Lead time	2 weeks	1 week	3 weeks
Scheduled receipts	None	1000 (week 1)	None
Beginning inventory	0	800	0

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Application 11.5

An item’s gross requirements cannot be derived until all of its immediate parents are processed.

Thus we must begin with Item D. Its only immediate parent is item A, and its planned “production plan” is shown by the MPS start row.

Item: D Lot Size: L4L Description: Lead Time: 3 weeks
	Week
	1	2	3	4	5	6	7	8
Gross requirements
Scheduled receipts
Projected on-hand inventory 0
Planned receipts
Planned order releases

0

500

0

500

0

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Application 11.5

We can do item B next, because the planned “production quantities” for its two immediate parents (A and D) are known.

Item C cannot be done yet, because one of its parents is item B, and its PORs are still unknown.

Item: B Lot Size: POQ = 5 Description: Lead Time: 2 weeks
	Week
	1	2	3	4	5	6	7	8
Gross requirements
Scheduled receipts
Projected on-hand inventory 0
Planned receipts
Planned order releases

500

250

0

250

750

250

750

250

0

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Application 11.5

Finally we can do Item C, because we now know the planned “production quantities” of both of its immediate parents (A and B).

Item: C Lot Size: 1000 Description: Lead Time: 1 week
	Week
	1	2	3	4	5	6	7	8
Gross requirements
Scheduled receipts	1000
Projected on-hand inventory 800
Planned receipts
Planned order releases

1500

250

300

50

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Outputs from MRP

Action notices

A computer-generated memo alerting planners about releasing new orders and adjusting the due dates of scheduled receipts.

Resource Requirement Reports

Theory of constraints principles
Capacity requirements planning (CRP)

Performance Reports

Manufacturing resource planning (MRP II)

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MRP and the Environment

Consumer and government concern about the deterioration of the natural environment has driven manufacturers to reengineer their processes to become more environmentally friendly.

Companies can modify their MRP systems to help track these waste and plans for their disposal.

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MRP, Core Processes, and Supply Chain Linkages

The MRP system interacts with the four core processes of an organization

Supplier relationship process
New service/product development process
Order fulfillment process
Customer relationship process

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MRP, Core Processes, and Supply Chain Linkages

External Suppliers

External Customers

Supplier

Relationship

Process

MPS

Order

Fulfillment

Process

MRP

Customer

Relationship

Process

New Service/Product Development Process

Bill of Materials

Supplier

Orders

Customer

Orders

Order

Promises

And

Due Dates

Supplier Schedules

(Planned Order Releases)

Figure 11.19

Adjustments to due dates of scheduled releases

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Enterprise Resource Planning

Enterprise process

A companywide process that cuts across functional areas, business units, geographic regions, product lines, suppliers, and customers

Enterprise resource planning (ERP) systems

Large, integrated information systems that support many enterprise processes and data storage needs

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Enterprise Resource Planning

Back-Office Processes Front-Office Processes

Human

Resources

Benefits
Payroll

Data Analysis

Product costing
Job costs

Sales and Marketing

Sales orders
Pricing system

Customer Service

Field service
Quality

Supply-Chain

Management

Forecasting
Purchasing
Distribution

Accounting and Finance

Accounts payable �and receivable
General ledgers
Asset management

Manufacturing

Material requirements planning
Scheduling

ERP System

Figure 11.20

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Resource Planning for �Service Providers

Dependent demand for services

Restaurants
Airlines
Hospitals
Hotels

Bill of Resources (BOR)

A record of a service firm’s parent-component relationships and all of the materials, equipment time, staff, and other resources associated with them, including usage quantities.

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Bill of Resources

Consider a regional hospital that among many other procedures performs aneurysm treatments. The BOR (Figure 11.21) for treatment has 7 levels.

The hospital is interested in understanding how much of each critical resource of nurses, beds and lab tests will be needed if the projected patient departures from the aneurysm treatment process over the next 15 days are as shown in Table 11.1

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Bill of Resources

Level 1

Discharge

Level 2

Intermediate care

Level 3

Postoperative care

(Step down)

Level 4

Postoperative care

(Intensive)

Level 7

Preoperative care

(Testing)

Level 5

Surgery

Nurse

(6 hr)

MD

(1 hr)

Therapy

(1 hr)

Bed

(24 hr)

Lab

(3 tests)

Kitchen

(1 meal)

Pharmacy

(10

medicines)

Level 6

Preoperative care

(Angiogram)

Level 6

Preoperative care

(Angiogram

Figure 11.21

Cumulative lead time, or the patient stay time at the hospital, across all seven levels for the entire duration of the aneurysm treatment is 10 days.

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Bill of Resources

Day of the Month	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
Aneurysm Patient	1	2	1	3	2	3	0	1	2	1	2	2	2	2	2

Table 11.1

The first 10 days of the projected departures represent actual patients who have started the process while the last 5 days are forecasts based on historical records.

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Bill of Resources

Resources Required for Each Aneurysm Patient	Nurse Hours Required Per Day Per Patient	Beds Required Per Day Per Patient	Lab Tests Required Per Day Per Patient
Level 1	0	0	0
Level 2	6	0	0
Level 3	16	1	4
Level 4	12	1	6
Level 5	22	1	2
Level 6	6	1	3
Level 7	1	0	0

Use the information above to calculate the daily resource requirements for treating aneurysm patients (similar to the gross requirements in a MRP record). Begin by calculating the number of patients that will be at each level (or stage) of treatment each day.

Table 11.2

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Bill of Resources

Figure 11.22

As shown below, the aneurysm patient departures become the Master Schedule for Level 1 and these departures drive the need for resources at each level of the process.

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Bill of Resources

Once we know how many patients will need each level of treatment on each day, we can multiply this demand by the amount of each resource required to treat them.

Example:

Total Number of Lab Tests Projected for Day 5

= [0(2) + 0(3) + 4(3) + 6(3) + 2(2) + 3(2) + 0(2)]

= 40

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Bill of Resources

Day of the Month	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
Nursing Hours Required	179	198	170	170	160	170	190	184	150	132	108	76	44	12	0
Beds required	12	12	11	11	10	12	13	11	10	8	6	4	2	0	0
Lab Tests Required	50	45	46	44	40	50	54	48	48	36	24	16	8	0	0

Table 11.3

The above table shows how much of each critical resource is required in total to treat aneurysm patients for the 15-day master schedule.

This table shows the resources needed from Day 1 to Day 15 for the current schedule.

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Solved Problem 1

Refer to the bill of materials for product A shown below.

If there is no existing inventory and no scheduled receipts, how many units of items G, E, and D must be purchased to produce 5 units of end item A?

LT = 2

LT = 3

B (3)

C (1)

G (1)

LT = 3

D (1)

LT = 6

LT = 1

F (1)

LT = 1

A

Figure 11.23

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Solved Problem 1

Five units of item G, 30 units of item E, and 20 units of item D must be purchased to make 5 units of A.
The usage quantities indicate that 2 units of E are needed to make 1 unit of B and that 3 units of B are needed to make 1 unit of A; therefore, 5 units of A require 30 units of E (2 × 3 × 5 = 30).
One unit of D is consumed to make 1 unit of B, and 3 units of B per unit of A result in 15 units of D (1 × 3 × 5 = 15)
One unit of D in each unit of C and 1 unit of C per unit of A result in another 5 units of D (1 × 1 × 5 = 5).
The total requirements to make 5 units of A are 20 units of D(15 + 5).
The calculation of requirements for G is simply 1 × 1 × 1 × 5 = 5 units.

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Solved Problem 2

The order policy is to produce end item A in lots of 50 units.
Complete the projected on-hand inventory and MPS quantity rows.
Complete the MPS start row by offsetting the MPS quantities for the final assembly lead time.
Compute the available-to-promise inventory for item A.

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Solved Problem 2

Assess the following customer requests for new orders.
Assume that these orders arrive consecutively and their affect on ATP is cumulative.
Which of these orders can be satisfied without altering the MPS Start quantities?

Customer A requests 30 units in week 1
Customer B requests 30 units in week 4
Customer C requests 10 units in week 3
Customer D requests 50 units in week 5

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Solved Problem 2

Item: A							Order Policy: 50 units Lead Time: 1 week
	Week
	1	2	3	4	5	6	7	8	9	10
Forecast	20	10	40	10	0	0	30	20	40	20
Customer orders (booked)	30	20	5	8	0	2	0	0	0	0
Projected�on-hand�inventory	25
MPS quantity	50
MPS start
Available-to-promise (ATP) inventory

Quantity on Hand 5

Figure 11.24

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Solved Problem 2

The projected on-hand inventory for the second week is

=

+

–

Projected on-hand�inventory at end�of week 2

On-hand�inventory in�week 1

MPS quantity�due in week 2

Requirements�in week 2

= 25 + 0 – 20 = 5 units

where requirements are the larger of the forecast or actual customer orders booked for shipment during this period. No MPS quantity is required.

Without an MPS quantity in the third period, a shortage of item A will occur: 5 + 0 – 40 = –35.

Therefore, an MPS quantity equal to the lot size of 50 must be scheduled for completion in the third period. Then the projected on-hand inventory for the third week will be 5 + 50 – 40 = 15.

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Solved Problem 2

The MPS start row is completed by simply shifting a copy of the MPS quantity row to the left by one column to account for the 1-week final assembly lead time. Also shown are the available-to-promise quantities. In week 1, the ATP is

=

+

–

Available-to-�promise in�week 1

On-hand�quantity in�week 1

MPS quantity�in week 1

Orders booked up�to week 3 when the�next MPS arrives

= 5 + 50 – (30 + 20) = 5 units

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Solved Problem 2

The ATP for the MPS quantity in week 3 is

=

–

Available-to-�promise in�week 3

MPS quantity�in week 3

Orders booked up�to week 7 when the�next MPS arrives

= 50 – (5 + 8 + 0 + 2) = 35 units

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Solved Problem 2

Figure 11.25

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Solved Problem 3

The MPS start quantities for product A calls for the assembly department to begin final assembly according to the following schedule:

100 units in week 2; 200 units in week 4
120 units in week 6; 180 units in week 7
60 units in week 8.
Develop a material requirements plan for the next 8 weeks for items B, C, and D.

A

B (1)

C (2)

D (1)

LT = 2

LT = 1

LT = 2

LT = 3

Figure 11.26

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Solved Problem 3

INVENTORY RECORD DATA
		Item
Data Category	B	C	D
Lot-sizing rule	POQ (P =3)	L4L	FOQ = 500 units
Lead time	1 week	2 weeks	3 weeks
Scheduled receipts	None	200 (week 1)	None
Beginning (on-hand) inventory	20	0	425

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Solved Problem 3

Item: B							Lot Size: POQ (P = 3) Lead Time: 1 week
	Week
	1	2	3	4	5	6	7	8	9	10
Gross requirements		100		200		120	180	60
Scheduled receipts
Projected�on-hand�inventory	20	200	200	0	0	240	60	0	0	0
Planned receipts		280				360
Planned order releases	280				360

20

Figure 11.27

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Solved Problem 3

Item: C							Lot Size: L4L Lead Time: 2 weeks
	Week
	1	2	3	4	5	6	7	8	9	10
Gross requirements		200		400		240	360	120
Scheduled receipts	200
Projected�on-hand�inventory	200	0	0	0	0	0	0	0	0	0
Planned receipts				400		240	360	120
Planned order releases		400		240	360	120

0

Figure 11.27

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Solved Problem 3

Item: D							Lot Size: FOQ = 500 units Lead Time: 1 week
	Week
	1	2	3	4	5	6	7	8	9	10
Gross requirements		400		240	360	120
Scheduled receipts
Projected�on-hand�inventory	425	25	25	285	425	305	305	305	305	305
Planned receipts				500	500
Planned order releases	500	500

425

Figure 11.27

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Solved Problem 4

The Pet Training Academy offers a 5-day training program for troubled dogs. As seen below, the training process requires 5 days, beginning with the dog’s arrival at 8 A.M. on day one, and departure after a shampoo and trim, at 5 P.M. on day five.

Pet Training Academy Process	Lead Time in Days
Level 1: Departure Day	1
Level 2: 3^rd Day	1
Level 3: 2^nd Day	2
Level 4: Arrival Day	1
Total	5

Table 11.5

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Solved Problem 4

To adequately train a dog, the Academy requires Training Coaches, Dog Groomers, a Dog Dietician, Care Assistants, and Boarding Kennels where the dogs rest.
The time required by each employee and resource classifications by process level is given below:

Pet Training Academy Process Resources Required	Training Coach (Hours)	Dog Dietician ( Hours)	Care Assistant (Hours)	Boarding Kennel (Hours)
Level 1: Departure Day	2	1	1	12
Level 2: 3^rd Day	3	1	2	24
Level 3: 2^nd Day	3	1	2	24
Level 4: Arrival Day	2	1	1	12

Table 11.6

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Solved Problem 4

The master schedule for the trained dogs is shown below, noting that departures for trained dogs are actual departures for days 1-5 and forecasted departures for days 6-12.

Day of the month	1	2	3	4	5	6	7	8	9	10	11	12
Master Schedule of Trained Dogs	5	2	2	8	3	0	1	8	4	3	6	0

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Solved Problem 4

Use the above information to calculate the daily resource requirements in hours for employees in each category, and the hours of boarding room needed to train the dogs.
Assuming that each boarding kennel is available for 24 hours in a day, how many kennels will be required each day?
Assuming that each employee is able to work only eight hours per day, how many people in each employee category will be required each day?

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Solved Problem 4

Figure 11.28

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Solved Problem 4

The previous table shows the number of dogs at each level during their stay at the Pet Training Academy.

The top row of each level shows the number of dogs who will advance to the next level at the end of the day.

The daily resource requirements for each resource required to train the departing dogs are shown in the following slide.

Total number of CA hours Projected for Day 2

[1(2) + 2(2) + 2(11) +1(0)] = 28 hours

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Solved Problem 4

Day of the Month	1	2	3	4	5	6	7	8	9	10	11	12
Training Coach Hours required	52	43	39	44	41	45	59	55	35	24	12	0
Dog Dietician hours required	20	15	14	20	16	16	22	21	13	9	6	0
Care Assistant hours required	32	28	25	24	25	29	37	34	22	15	6	0
Boarding kennels hours required	384	336	300	288	300	348	444	408	264	180	72	0
Number of Boarding Kennels required	16	14	13	12	13	15	19	17	11	8	3	0

Table 11.7

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Solved Problem 4

The number of boarding kennels required per day (note all fractional kennels are rounded to the next higher integer) are obtained by dividing the total number of hours needed for boarding kennels by 24, and are shown in the last row of the previous slide.

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Solved Problem 4

The number of people required per day in each employee category are obtained by dividing the resource requirements by working hours in each day. They are shown below. Note that all fractional employees are rounded to the next higher integer.

Number of Employee Required per Day	1	2	3	4	5	6	7	8	9	10	11	12
Training Coaches	7	6	5	6	6	6	8	7	5	3	2	0
Dog Dieticians	3	2	2	3	2	2	3	3	2	2	1	0
Care Assistants	4	4	4	3	4	4	5	5	3	2	1	0

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