Assignment 1: 25%

Q1 (10%). For the following data, calculate the number of workers required for level production and
the resulting month-end inventories. Each worker can produce 9 units per day, and the desired
ending inventory is 800 units. Calculating the ending inventory and explain why is it not possible to
meet the ending inventory target? Any suggestion you can recommend to achieve the ending
inventory number?

ANSWER:

Total
Opening inventory 1,000 17,700
  production    
Ending inventory 800   Daily level production 151.28  
Month 1 2 3 4 5 6 Total
Working days 20 24 12 22 20 19 117
Forecast demand 2,800 3,000 2,700 3,300 2,900 3,200 17,900
Planned production 3,060 3,672 1,836 3,366 3,060 2,907 17,901
Planned 1,00
1,260 1,932 1,068 1,134 1,294 1,001
inventory 0  

It is a technique in which an organization maintains the average production level by continuing to

deliver quality that is comparable to the average demand.

In the present instance,

Total Production = Total Forecast+ Ending inventory – Opening Inventory   = 17,900 + 800 – 1,000
= 17,700units

Further, Average daily production = total production/total working days = 17,700/117 = 151.43units

Because each person can generate 9 units per day, the company will need to recruit 151/9 = 16.8
people to produce 151 units each day on average.

In Month 1 = Average daily production x Number of working days   = 151units x 20   = 3,020

In Month 2 = 151 units x 24     = 3624 units   In Month 3 = 151units x 12    = 1812units

In Month 4 = 151 units x 22    = 3322units, In Month 5= 151units x 20 = 3020 units, In Month

6 = 151units x 19    = 2869units
 The Ending Inventory =The Opening inventory + The Production – The Demand

Month 1= 1,000+3,2002800    = 1220 units, Month 2 = 1220+36243000    = 1844units

Month 3 = 1844+18122700    = 956units, Month 4 = 956+33223300    = 978 units

Month 5= 978+3020 – 2900    = 1098units, Month 6 = 1098 + 2869 – 3200    = 767 units

The number of employees required each day in the above-mentioned scenario is 9, but I discovered
that the number of workers necessary is 17, and the real daily productivity is -153.

Q2 (15%). You are hired as a planner for a furniture manufacture, please see below table, and
complete the following MRP record. The lead time is four weeks, and the lot size is 200. What will
happen if the gross requirements in week 3 are increased to 210 units? As a planner, what are your
main responsibilities, in this case what actions can you take?

ANSWER:

Balance of Available Project= Project for previous week + Scheduled receipts+ planned receipts- Gross
Requirements.

Net Requirements= Gross Requirement- Scheduled receipt- project on hand inventory of previous week.
Here, if the calculation is equal to zero, then the net requirement becomes Zero.

Initial MRP
  Week 0 1 2 3 4 5
Gross Requirement   50 125 100 60 40
 Schedule receipts   0 200 0 200 0
 Project available 100 50 125 25 165 125
 Net requirement   0 0 0 0 0
 Planned order
receipt   0 0 0 0 0
 Planned order
received   0 0 0 0 0

If the gross requirement is increased in 3 weeks to 210

Revised MRP

 Week 0 1 2 3 4 5
Gross Requirement   50 125 210 60 40
 Schedule receipts   0 200 0 200 0
 Project available 100 50 125 415 555 510
 Net requirement   0 0 85 0 0
 Planned order
receipt   0 0 500 0 0
 Planned order
received   0 0 0 0 0
If the gross demand is increased to 210 in three weeks, the 85-unit order will not be completed in week
three.

In the aforementioned situation, there is a demand of 200 units of the item for the third week in the 2nd
week scenario. The firm in this scenario cannot fulfil the needed volume since the lead times are only 4
weeks. A specific amount of safety stock should be maintained by the planner.

It advocated and ordered a 500-unit purchase when gross demand for week 3 grew to 210. In order to
satisfy the minimum criterion. As a result, because to the four-week lead period, it is not practicable. We
need to place the order by the end of the fourth week, which we won't be able to do in week three.