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MRP Decision Support System Project Assignment

Production Planning at Greek Manufacturing Company
In this assignment you play the role of the production planner of the “Greek Manufacturing Company”, and develop a decision support system to help you in that role. All the required information is presented in the spreadsheet MRP-SIM.XLS. Please obtain this file. You manage two products, Alpha (α) and Beta (β), for which orders are placed on you in variable quantities throughout the week. These products are made up of components (Comma, Delta, Epsilon, Fi, and Gamma), some of which are produced within the company, and others are sourced from vendors. In carrying out the production, the parts are routed through processing machines (Kappa, Mu, Pi, Rho, and Sigma) within the company where processing time is spent. See the Bill of Materials and Routing in the spreadsheet. Lead-times and other information are also available on the spread-sheet. The production planning is done on a weekly basis. At the beginning of the week, inventories are checked and orders are released both within the company and to the vendors. Through the week the processing of the orders takes place. As customer orders arrive, they are filled from inventory on-hand. Orders may be filled partially if there is insufficient on-hand inventory for the whole order. Unfilled orders are placed on file and filled when the product is available. The cycle repeats week by week. This scenario is simulated by a simulator incorporated in the spreadsheet. Playing the game Open the spreadsheet with the application Microsoft Excel®. The main screen is shown in Figure 1, next page. The upper left corner shows the products currently being processed by the machines and their queues (quantities being produced). It also shows orders placed with the vendor. The lower part of the screen shows the current inventory position (graphically on the left side, and the numbers on the right side). Current pending customer orders are also shown. (It is important here to distinguish between three kinds of orders: customer orders, which are placed by the customer with you; shop orders, which are placed by you with the production staff, and vendor orders, which you place with the vendors, outside the company). The centre of the screen shows the current week and day. The simulation game begins on week 21 and continues until week 32. The middle part of the screen shows buttons that navigate you to different parts of the spreadsheet. To play the game, you first need to initialise the game. Use the button Initialise Game for this purpose. This causes a history of demand to be created up until week 20. You can view these by clicking the two buttons Forecast Alpha and Forecast Beta. As you play the game, new demands are also updated and may be viewed and analysed. You may initialise the game again any time; this will cause the game to restart.

the finishing of the work. The remaining on-hand inventory is updated and displayed as you enter your decisions. this does not apply to the purchased components. you may press the Simulate! button to let the production for the week begin. Next you need to decide on orders to place for next week. and the filling of the orders are animated on the screen. the arrival of orders.Figure 1. you can change your decisions using the same button. Obviously. Once you have made the decisions. and overtime to authorise for the next week. a penalty is charged per day. You can adjust the speed of animation by moving the scroll bar at the middle right of the screen. their priorities. You need to build the MRP tables first to use this button! You can always override the MRP table suggestions. The Use MRP button in the order form permits you to use MRP decision support. In placing the shop orders. These and other details of the model may be viewed by pressing the button View Model Details. This shows both your current . For every item in the order that is late (back-ordered). the inventory position. If the components needed for your order are not available in the inventory. it is important to take into consideration the product structure (the Bill of Materials). Profits are accumulated for every item in the order that is filled. At the end of the week your financial performance is shown at the top right of the screen. Once the decisions are entered. The queues of the machines. and vendor orders at this time. the order cannot be processed until all the components are available. communicate it to the simulator by clicking on the button Make/Alter Decisions. Main Screen of the Simulator You can view the current inventory. of which you can order as many as you like. There are also costs associated with holding inventory (both finished and work in process) and with overtime work. If you change your mind before the week is simulated. work in progress. and to let the time advance to the next week.

Past data may be used for forecasting. when broken into the components through MRP. . please play the game for a while until you have a good understanding of what is happening. should help you in deciding how many parts / products to order and when... The game is designed to enhance your understanding of: Bill of Materials Routing Order review and release Priority setting Production capacity Variability in production Work in process Queuing Inventory costs Customer service Forecasting Master production scheduling (MPS) Material requirements planning (MRP) Capacity requirements planning (CRP) After playing the game for a while you may wish to have some sort of computer support to make your decisions. . and this MPS. Assignment For the purpose of this assignment. until week 32. A CRP module can help you decide how much overtime to order. You can create this for yourself. Your specific assignment is to create a decision support system (DSS) using these concepts. simulating the system. which leads to a MPS.. You are now ready to make decisions for the next week and to repeat the cycle. Your objective is to maximise your cumulative profit at the end of the game. Please follow the following instructions exactly as given.. monitoring the result.and cumulative performance. This cycle consists of making the decisions. then making the decisions again .

To do this. Try different ROP’s and order sizes. This should create the forecast up to week 35. (Hint: You need to insert something like VLOOKUP (week. What is the highest profit you made while playing in an ad-hoc manner? ________________ Step 2. choosing your own order size. B. You need to link your forecasts to the MPS (in the worksheet MRP). Here are the steps to create the DSS. When you create the CRP model from the MRP model. The idea of a reorder point (ROP) is to set a minimum level of inventory at which you order inventories.) into . and the XRange is the number of weeks. but it does not dictate your decisions. you can decide how much overtime to use. Master Production Scheduling. Forecasting. Use the menu item Tools | Data Analysis | Regression. You can override it any time. Remember though. This should be fed into the master production schedule (MPS) of the MRP worksheet. column No. that the decision support system is there to help in decisionmaking. I suggest you use linear regression for forecasting. guessing the decisions. built by you. It suggests things for you to do. You need to forecast the demand for both Alpha and Beta. Forecast1. you need a forecasting model to forecast demand of products Alpha and Beta.Step 1. A. Enter your best reorder policy: Item Alpha Beta Comma Delta Epsilon Fi Gamma Reorder point Order size What is the highest profit you made while playing on a reorder point basis? ________________ Step 3. Use the output of this analysis to create your forecast. Play the game on a reorder point basis. The Y-Range is of course the demand. Familiarise yourself with the simulator. Next you need to explode this MPS into the MRP. which will then tell you what order to release each week. Use the VLOOKUP function provided in EXCEL to do this. Play the game in an ad-hoc manner. This function will look up from the forecast table (called Forecast1 and Forecast2 for Alpha and Beta respectively) appropriate Forecast (column D) and insert into the MPS table. The next step is playing the game with a DSS. The forecast formula is: Intercept + (X Variable 1) * (Number of weeks).

not necessarily from the finished product. with a lead-time of one week. Make sure you take into account the work requirements for order in progress (scheduled receipts). Capacity Requirements Planning. Make sure the gross requirements are always derived from the parent. The scheduled receipt row needs to be linked to the appropriate work-in-process information in the Main Screen. The current on hand needs to be linked obviously to the current inventory from the Main Screen. Material Requirements Planning. Remember though that this is always just a suggestion. Insert the appropriate formulas to gather this information from the appropriate places. The Use MRP button will get the order releases and the overtimes from the MRP worksheet. if more than the available 40 hours are needed. I suggest you use the lot for lot policy for all MRP explosions. Play the game using your MRP models to make the decisions. F.the MPS). C. The overtime should come from CRP. Decision Support System. Play! See if your DSS is any good. E. I suggest you use the full work requirements for these. Your DSS is now complete. The summary information at the bottom of the worksheet summarises the order releases for the current week. What is the highest profit you made while playing with your DSS? ________________ . Do your work in the worksheet MRP. you can change the decisions manually – particularly in view of the component availabilities and work-inprogress. Combine the requirements of work for each of the work centres. The MRP explosion should of course be based on the BOM. You can now use this DSS when using the button Make/Alter Decisions to make your decisions. D. The CRP should be based of course on the Routing information in the workbook.