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College of Industrial Technology and Engineering

Visayas State University – Isabel Campus


INAVS, Isabel, Leyte

MDC BOOKSHELF

In partial fulfillment
Of the requirement for the course
IEng 155: Production Planning and Control

Mark D. Colon
BSIE – IV

Artvin B. Bolledo
Instructor

TABLE OF CONTENTS
CHAPTER I: The Product
16

1.1Description of the Product


1

1.2The Drawing (CAD) 2

A. Pictorial Drawing (Isometric)


2

B. Orthographic Drawing
3

C. Exploded Drawing 4

1.3Parts of the Product


5

1.4Materials of the Product


6

A. Direct Materials 6

B. Indirect Materials 6

CHAPTER II: Materials Requirement Planning


7-11

2.1 Product Structure Tree


7
2.2 Materials Specification
8
2.2.1 Direct Materials
8
2.2.2 Indirect Materials
8
2.3 Parts List 8-9
2.4 Bill of Materials 9
2.4.1 Direct Materials
9-10
2.4.2 Indirect Materials
11

ii
CHAPTER III: MRP II (Material Resource Planning)
12
3.1 Time Planned Product Structure Tree
12
3.2 Net Requirement Plan 12
3.2.1 Lot for Lot Sizing
12-13
3.2.2 Economic Order Quantity Technique
13-15
3.2.3 Part Period Balancing (PPB)
15-16

CHAPTER IV: Unit Cost and Unit Price


17-21
4.1 Standard Method
17
4.1.1 Direct Material Cost 17-18
4.1.2 Indirect Material Cost
18
4.1.3 Total Cost (Standard Method)
18
4.2 Detailed Method
19
4.2.1 Direct Material Cost 19-20
4.2.2 Indirect Material Cost
20
4.2.3 Total Cost (Detailed Method)
20
4.3 Unit Cost 21

CHAPTER V: Variance
22-23

iii
 Discussion on the difference between standard and detailed
method.

 Discussion on the results of the net requirement plan.

iv
CHAPTER I

I. THE PRODUCT

Product refers to anything that can be offered to market for


attention, acquisition, use or consumption that might satisfy a want or need
and this could either be tangible or intangible. It includes physical objects,
services, persons, places, experiences, organization, information and ideas.
In this project, it would focus on the production of a tangible product.

The product that is to be produced is a bookshelf, furniture that is


basically made of wooden materials.

1.1 Description of the Product

It is a bookshelf which has five shelves and these are removable.


The spaces between the shelves also varies so that books or any other stuffs
will fit depends on their sizes. On the lower part of this bookshelf it has a
bigger space for some bigger objects, and then the space between the
shelves reduces as it goes upward. The shelves are removable and sliding so
that it is easier to assemble and disassemble. And it requires only a small
area in your houses for this bookshelf to be placed.

This bookshelf has many uses around the home. More than just books,
it display CDs and DVDs, collectibles, stuffed animals, and a dozen other
things we just cannot seem to live without. And also it can stand with some
heavy objects.

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1.2 The Drawing (CAD)

A. Pictorial Drawing (Isometric)

 Shows the general appearance of the object.

Figure 1: Isometric View of Bookshelf

2
B. Orthographic Drawing

 A means of representing a three-dimensional (3D) object in two


dimensions (2D). It is a form of parallel projection, where the view
direction is orthogonal to the projection plane.

Figure 2: Orthographic Drawing

3
C. Exploded Drawing

 Separates the individual parts of the object. The parts are placed in
their relative positions with lines showing the direction in which they
are joined.

1
4

1 2

6
Figure 3: Exploded Drawing

4
1.3 Parts of the Product

Part
s NAME DRAWING DIMENSION MATERIAL
No.

¾” x 9 ½” – 52”
With the chamfer Mahogany
1 Side of 2”x2”. wood

Mahogany
2 Shelf 1 ¾” x 9 ½” - 34 ¾”
wood

Mahogany
3 Shelf 2 ¾” x 9” - 34 ¾”
wood

Mahogany
4 Backboard ¾” x 7 ¾” - 34 ¼”
wood

Mahogany
5 Kickboard ¾” x 3 ½” - 34 ¼”
wood

Table 1.1 Parts of the product

5
1.4 Materials of the Product

A. Direct Materials

Table 1.2 Materials of the Product (Direct Materials)


Part
s Material Quantity
No.
1 Mahogany wood 2 pcs.
2 Mahogany wood 4 pcs.
3 Mahogany wood 1pc.
4 Mahogany wood 1pc.
5 Mahogany wood 1pc.

B. Indirect Materials

1. Wood screw – 8 pcs. of wood screw with a length of 2 inches.


2. Wood varnish (natural color) - 2 bottles or 750 ml.

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CHAPTER II

II. MATERIALS REQUIREMENT PLANNING

This part of the study presents the type and quality of materials to be
used in manufacturing the product as well as the direction and quantity of
parts that make–up the product.

2.1 Product Structure Tree

This presents graphical representation of the various parts of the


product in relation to how the product is to be assembled. This is shown in
the figure below.

Figure 2.1 Product Structure Tree

BOOKSHELF

SIDES (2)

KICKBOARD SHELF 1 (4) SHELF 2 BACKBOAR


(1) (1) D (1)

WOOD SCREW WOOD SCREW


(4) (4)

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2.2 Materials Specification
The materials that will be used in the manufacture of the product are
presented below specifying the material of the parts, the dimension and
its type whether purchased or fabricated.

2.2.1 Direct Materials

Table 2.1
Direct Material, Specification
Parts no. Description Material Specification
1 Side Mahogany wood 1”x12”x108”
2 Shelf 1 Mahogany wood 1”x12”x108”

3 Shelf 2 Mahogany wood 1”x12”x108”

4 Backboard Mahogany wood 1”x16”x108”


5 Kickboard Mahogany wood 1”x12”x108”

2.2.2 Indirect Materials


 Use wood screw (#8 – 2 inches long) for the assembly of kickboard
and backboard to the sides.
 Use wood varnish with natural color (750 ml) for the varnishing of
the bookshelf.

2.3 Parts List


 Lists of parts of the furniture and its specific dimensions and the specific
quantity to be used for one unit and for 100 units’ production.

Table 2.2
Parts list

8
Qty of parts
Parts Qty of part
Description Dimension used per
no. per unit
day
1 Side .75”x9.5”x52"` 2 200
2 Shelf 1 .75”x9.5”x34.75” 4 400

3 Shelf 2 .75”x9”x34.75” 1 100


.
4 Backboard 75”x7.75”x34.25 1 100

5 Kickboard .75”x3.5”x34.25” 1 100

6 Wood screw #8 - 2” long 8 800

7 Wood varnish 750 ml. 750 ml. 75,0000 ml


NOTE: Production is 100 units per day.

The following formula should be use to get the quantity of parts used
per day.

Quantity of parts = quantity of parts x proposed output


used per day per unit per day

Quantity of parts = 2 x 100 = 200


used per day

2.4 Bill of Materials


 A listing of the components, the description, and the quantity of each
required to make one unit of a product.

2.4.1 Bill of Materials (Direct Materials)


 Is the term used to describe the "parts list" of components needed to
complete a saleable end-item for the direct materials.
Table 2.3
Direct – Bill of Materials

9
Dimension
Part Qty of Qty of
Dimension of of Waste
s parts per materials per
parts materials (in3)
no. material day
used
1”x12”x10
1 .75”x9.5”x52" 558 2 100
8”
.
1”x12”x10
2 75”x9.5”x34.75 553.22 3 134
8”

1”x12”x10
3 .75”x9”x34.75” 592.31 3 34
8”
.
75”x7.75”x34.2 1”x16”x10
4 512.53 6 17
5” 8”
.
75”x3.5”x34.25 1”x12”x10
5 492.84 9 12
” 8”

Note: all sample computation is applied to all parts in every table.

Sample Computation:

Quantity of parts = Dimension of materials used


per material Dimension of parts

Quantity of parts = .75”x9.5”x104" = 2


per material .75”x9.5”x52"

Quantity of materials = quantity of parts used per day


per day quantity of parts per materials

Quantity of materials = 200 = 100


per day 2

10
Blue,green,cyan and red indicates
wastes,with their corresponding
dimensions.
- .25”x9.5”x104”
- .25”x2”x2” / 2
- 1”x2.5”x104”
- 1”x12”x4”
Color brown indicates the used
part.
- .75”x9.5”x104” w/ chamfer of
Legends:
2’’x2’’

Figure 2.2 Presentation of Wastes and


Used Material

2.4.2 Bill of Materials (Indirect Materials)

 Is the term used to describe the "parts list" of components needed to


complete a saleable end-item for the indirect materials.

Table 2.4
Indirect- Bill of materials
Parts no. Dimension Qty of parts per Qty of materials
material per day
6 #8- 2” long 8 pcs 800 pcs
7 750 ml 750 ml 75,000 ml

Sample Computation:
Quantity of materials = quantity of parts x proposed output
per day per materials per day
Quantity of materials = 8 x 100 = 800
per day

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CHAPTER III

III. MRP II (Material Resource Planning)


 A system that allows with MRP in place inventory data to be
augmented by other source variables; in this case MRP becomes
material resource planning.

3.1 Time Planned Product Structure Tree


Lead time – it is the time upon ordering until delivery.

Assumptions:
Part/ Item Lead time (Days)
Bookshelf 1
Sides 2
Shelf 1 3
Shelf 2 2
Kickboard 1
Backboard 1

1 2 3 4 5 6 7

Figure 3.1 Time Planned Product


Structure Tree

3.2 Net Requirement Plan

3.2.1 Lot for Lot Sizing

 Lot sizing technique that generates exactly what is require to meet the
plan.

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Assumptions:
Demand = 100 units per week
Set-up cost = 2% of the total cost in standard method.
= .02 x Php 1,049.40 = Php 20.99 /order
Holding cost = 1% of the total cost in standard method
per week = .01 x Php 1,049.40 = Php 10.49
Holding cost = Php 10.49 = Php 1.50
per day 7 days/ week
Stock- out cost = Php 12.0
Table 3.1
Lot for Lot sizing for the Bookshelf
Item ID
On hand

Low Level code


Lot size

time

Safety stock

Allocated
Lead

PERIOD ( DAYS)

1 2 3 4 5 6 7

Gross Requirements 25 30 10 15 20

Scheduled Receipt

Projected On Hand

Net Requirements 25 30 10 15 20
Planned Order
25 30 10 15 20
Receipts
Planned Order
25 30 10 15 20
Released

Cost Computation:
Total set-up cost = no. of orders x set-up cost
= 5 orders x Php 20.99/ order
= Php 104.95
Total holding cost = total inventory x holding cost per day
= 0 x Php 1.50 per unit/ per day
= Php 0.00

13
Total cost = total set up cost + total holding cost
= Php 104.95 + Php 0.00
= Php 104.95

3.2.2 Economic Order Quantity Technique


 Is preferable when relatively constant independent demand exists.
Assumptions:
Annual demand= 100 units/week x 48 week/year
= 4,800 units /year
Set-up cost = Php 20.99 per order

Holding cost per unit/year= Php 10.49 /unit/year x 48 week/year


= Php 503.52
Q= 2DS
√ H

Q= 2(4,800)(20.99)
√ 503.52

Q = 20 units

Table 3.2
EOQ for the Bookshelf
Item ID
On hand

Low Level code


Lot size

time

Safety stock

Allocated
Lead

PERIOD ( DAYS)

1 2 3 4 5 6 7

Gross Requirements 25 30 10 15 20

Scheduled Receipt

Projected On Hand 10 15

Net Requirements 25 30 10 5 5
Planned Order
20 20 20 20 20
Receipts
Planned Order
20 20 20 20 20
Released

14
Note: There is a stock out of 5 units at day 2 and 10 units at day 4, for the
total of 15 units stock out.
Cost Computation:
Total set-up cost = no. of orders x set-up cost
= 5 orders x Php 20.99/ order
= Php 104.95

Total holding cost = total inventory x holding cost per day


= 25 units x Php 1.50 per unit/ per day
= Php 37.5

Total stock-out cost = total no. of stock-out x stock out cost


= 15 units x Php 12.00
= Php 180.00

Total cost = total set-up cost + total holding cost + total stock-out cost
= Php 104.95 + Php 37.5 + Php 180.00
= Php 322.5

3.2.3 Part Period Balancing (PPB)


 An inventory ordering technique that balances set-up and holding costs
by changing the lot size to reflect requirements of the next lot size in
the future.

Assumptions:
Set-up cost= Php 20.99
Holding cost= Php 1.50 per unit/day

Table 3.3
Gross requirements for PPB

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Periods Total Holding
Set-up cost Total cost
combine lot Parts period cost
(Php) (Php)
d size (Php)
2 25 25x0=0
2,3 25 25x0+0x1=0
25x0+0x1+30x2=
2,3,4 55 20.99 90 110.99
60
5 10 10x0=0
5,6 25 15x1=15 20.99 22.5 43.49
7 20 20x0=0 20.99 0 20.99
Total 175.47

Table 3.4
PPB for Bookshelf
Item ID
Lot size

On hand

Safety stock

Allocated

Low Level code


time
Lead

PERIOD ( DAYS)

1 2 3 4 5 6 7

Gross Requirements 25 30 10 15 20

Scheduled Receipt

Projected On Hand 30 30 15

Net Requirements 25 0 0 10 0 20
Planned Order
55 0 0 25 0 20
Receipts
Planned Order
55 0 0 25 0 20
Released

Cost Computation:
To prove that it is equal to the total cost in table 3.3
Total set-up cost = no. of orders x set-up cost
= 3 orders x Php 20.99 per order
= Php 62.97
Total holding cost = total inventory x holding cost per day

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= 75 units x Php 1.50
= Php 112.50
Total cost = total set-up cost + total holding cost
= Php 62.97 + Php 112.50
= Php 175.47

CHAPTER IV

IV Unit Cost and Unit Price


Cost of the unit that includes the direct materials and indirect materials
needed for every production of a certain product in a defined quantity of
production.

4.1 Standard Method


Describes a definitive procedure which produces a test result. It may involve
making a careful personal observation or conducting a highly technical
measurement.

4.1.1 Direct Material Cost


 Cost of direct materials for every production of one unit.
Table 4.1
Direct Material Cost (Standard Method)

Parts Material Cost of Qty of Qty of Cost of Qty of Cost


s materi parts materia materia part of part
al per day ls per ls per per per
(Php) day day unit unit

17
(Php) (Php)
Mahogan
Side 315 200 100 31,500 2 315
y wood
Mahoga
Shelf 1 315 400 134 42,210 4 422.1
ny wood
Mahoga
Shelf 2 315 100 34 10,710 1 107.1
ny wood
Backboa Mahoga
420 100 17 7,140 1 71.4
rd ny wood
Kickboar Mahoga
315 100 12 3,780 1 37.8
d ny wood
Total 95,340 953.40

Sample Computation:

Cost of materials = Cost of material x Quantity of materials


per day per day

Cost of materials = 315 x 200 = Php 31,500.00

Cost of part = Cost of materials per day x Quantity of part


per unit Quantity of parts per day per unit

Cost of part = 31,500 x 2 = Php 315.00


per unit 200

4.1.2 Indirect Material Cost


 Cost of indirect materials for every production of one unit.
Table 4.2
Indirect Material Cost (Standard Method)
Qty of Cost of Cost of
Cost of Qty of
materials materials material
material materials
Materials used per per day per unit
(Php) per day
unit (Php) (Php)
Wood screw 2 800 8 1,600 16
Wood P 40/ 375
75,000 ml 750 ml 8,000 80
varnish ml
Total 9,600 96

Sample Computation:

18
Cost of materials = Cost of material x Quantity of materials
per day per day

Cost of materials = 2 x 800 = Php 1,600.00


per day

Cost of part= Cost of material x Quantity of materials


per unit used per unit

Cost of part = 2 x 8 = Php 16.00

4.1.3 Total Cost (Standard Method)

Total cost = Total unit material cost + Total unit material cost
of direct materials of indirect material
Total cost = Php 953.40 + Php 96.00
Total cost = Php 1049.40
4.2 Detailed Method
 Describes a specific and detailed procedure of obtaining a desired
quantitative result which produces a test results.
4.2.1 Direct Material Cost (Detailed Method)
 Cost of direct materials for every production of unit, it is called detailed
because it includes the cost of waste.
Table 4.3
Direct Material Cost (Detailed Method)
Cost
Qty Cost
Cost of of
of Qty of Qty of of Cost of
Dimension of materi waste/
Parts part/ materi part/u part/u waste/d
part al materi
mate al/day nit nit ay (Php)
(Php) al
rial (Php)
(Php)
13,488.3
Side .75”x9.5”x52"` 2 100 2 315 315 555
0
.
75”x9.5”x34.75 315 18,018.0
Shelf 1 3 134 4 420 553.22
” 7

Shelf 2 .75”x9”x34.75” 3 34 1 315 105 592.31 4,894.78


Backboar . 6 17 1 420 70 512.53 2,117.75
d 75”x7.75”x34.2

19
5”

.
Kickboar 75”x3.5”x34.25 315
9 12 1 35 492.84 1,437.45
d ”

39,956.3
Total 945
5

Sample Computation:
 Cost of part = Cost of material x Quantity of part per unit
Per unit Quantity of part per material
Cost of part = 315 x 2 = Php 315.00
Per unit 2

 Cost of waste
Total quantity of = Quantity of waste x Quantity of material
3 3
waste (in ) per material (in ) per day

Total quantity of waste (in3) = 558 x 100 = 55,800 in3


Total quantity of = total quantity of waste (in3)
Material (waste) dimension of material (in3)

Total quantity of = 55,800 in3 = 43.97 in3


Material (waste) 1”x12”x108”

Cost of waste = Total quantity of x Cost of material


Per part Material (waste)

Cost of waste = 43.97 in3 x Php 315 = Php 13,850.55


Per part

Cost of waste = Total cost of waste per day


Per unit Proposed output per day
Cost of waste = Php 40,318.60 = Php 403.19

20
Per unit 100
4.2.2 Indirect Material Cost (Detailed Method)
Table 4.4
Indirect Material Cost (Detailed Method)
Cost of Cost
Qty of Qty of Cost of of
Cost of material
material material material waste
Material material s per
s per s used per unit (Php)
s (Php) day
day per unit (Php)
(Php)
Wood 0
2 800 8 1,600 16
screw
Wood P 40/ 375 0
75,000 ml 750 ml 8,000 80
varnish ml
Total 9,600 96 0

Note: Same computation as of standard method because there is no waste.

4.2.3 Total Cost (Detailed Method)

Unit Material Cost = Cost of part per unit + Cost of indirect material
per unit
+ Cost of waste per unit

Unit Material Cost = Php 1,945.00 + Php 403.19

Unit Material Cost = Php 1,444.19

4.3 Unit Cost


The cost incurred by the company to produce, store and sell one
unit of a particular product. Unit costs include unit material cost, unit
labor cost and unit overhead cost involved in the production.
 Unit Cost (standard method)
= unit material cost +unit labor cost +unit overhead cost
= Php 1,049.4 + 0 + 0
= Php 1,049.4

 Unit Cost (detailed method)


= unit material cost +unit labor cost +unit overhead cost
= Php 1,444.9 + 0 + 0
= Php 1,444.9

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CHAPTER V

V. Variance
Computation for the variance:
Variance = detailed method cost ̶ standard method cost x 100
detailed method

Variance = Php 1,444.9 − Php 1,049.4 x 100 % = 27.37 %


Php 1,444.9

 Discussion on the difference between standard and detailed


method.

The only difference of the standard and detailed method is the


cost of waste. Because in the standard method the cost of waste is

22
not added into the total cost while in the detailed method the cost of
waste is included. It’s the reason why the total cost in the detailed
method is greater than of the standard method. The larger the
amount of waste the greater it’s cost and it can be seen during the
computation of the variance. Larger variance indicates that there is
also a large amount of waste. The variance shows the difference
between the two methods.

 Discussion on the results of the net requirements plan.

Lot for lot is a lot sizing technique that generates exactly what is
required to meet the plan. This means that the quantity of units that
is going to be ordered is just the same of how many units are
required. In this case there is no stock-out and inventories which
indicates that there is also no stock-out cost and holding cost to be
added in the computation of the total cost. So the only cost to be
computed is the set-up cost and since there are only 5 orders, we
generate a cost of only Php 104.95.
In the EOQ technique, it generates a larger cost than of the lot
for lot, because in the EOQ there is an additional cost for the stock out
and also for the inventories. So all in all it has a total cost of Php
322.45. EOQ will only be preferable if there is a relatively independent
demand.
During the use of the PPB technique, it also generates a lesser
cost but it is greater than the cost in the lot for lot technique. Even
though it has only a few number of orders but it has a large amount of
holding cost, which makes the total cost larger up to Php 175.47.
So from the following results we can make a conclusion that for
this case, the best lot sizing technique to be used is the lot for lot,
because the cost to be incurred has been minimized, only up to Php
104.95.

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