Chapter 3 The MRP Crusade 147

Problems
1..Suppose an assembly requires five components from five different vendors. To guarantee
starting the assembly on time with 90 percent confidence, what must the service level be for
each of the five components? (Assume the same service level for each component.)
2. End item A has a planned lead time of two weeks. There are currently 120 units on hand and
no scheduled receipts. Compute the planned order releases using lot-for-Iot and the MPS
shown here:

Week 1 2 3 4 5 6 7 8 9 10

Demand 41 44 84 42 84 86 7 18 49 30

3. Using the information in Problem 2, compute the planned order releases using part-period
balancing where the ratio of setup cost to the holding cost is 200.
4. (Challenge) With the information in Problem 2, compute the planned order releases using
Wagner-Whitin, where the ratio of setup cost to holding cost is 200. How much lower is the
cost of the plan than in the previous case?
5. Rework Problem 2 with 50 units of safety stock. What is different from Problem 2?
6. Rework Problem 2 with a planned lead time of two periods and a safety lead time of one
period. What is different from Problem 2?
7. Suppose demand for a power steering gear assembly is given by

Gear 1 2 3 4 5 6 7 8 9 10

Demand 45 65 35 40 o o 33 o 32 25

Currently there are 150 parts on hand. Production is planned using the fixed order period
method and two periods. The lead time is three periods. Determine the planned order release
schedule.
8. Consider the previous problem, but assume that a scheduled receipt for 50 parts is scheduled
to arrive in period five.
a. What changes, if any, need to be made to the scheduled receipt?
b. Using the same lot-sizing rule and lead time, compute theplanned order release schedule.
9. Demand for a power steering gear assembly is given by

Gear 1 2 3 4 5 6 7 8 9 10

Demand 14 12 12 13 5 90 20 20 20 20

Currently there are 50 parts on hand. The lot-sizing rule is, again, fixed order period using
two periods. Lead time is four periods.
a. Determine the planned order release schedule for the gear.
b. Suppose each gear assembly requires two pinions. Currently there are 175 pinions on
hand, the lot-sizing rule is lot-for-Iot, and the lead time is one period. Determine the gross
requirements and then the planned order release schedule for pinions.
148 Part I The Lessons of History

c. Suppose management decreases the demand forecast for the first period to 12. What
happens to the planned order release schedule for gears? What happens to the planned
order release schedule for pinions?
10. Consider an end item composed of a single component. Demand for the end item is 20 in
week one, four in week two, two in week three, and zero until week eight when there is a
demand of 50. Currently there are 25 units on hand and no scheduled receipts. For the
component there are 10 units on hand and no scheduled receipts.
Planned order releases for all items are computed using the Wagner-Whitin algorithm
with a setup cost of $248 and a carrying cost of $1 per week. The planned lead time for the
end item is one week, and for the component it is three weeks.
a. Compute the planned order releases for the end item and the component. Are there any
problems?
b. The forecast for demand in week eight has been changed to 49. Recompute the planned
order releases for the end item and the component. Are there any problems?
c. Suppose the first two weeks' planned order releases from part a had been converted to firm
planned orders. Do the computation again after changing the demand in week 8 to 49.
Are there any problems? Comment on nervousness and the use of firm planned orders.
11. Generate the MRP output for items A, 200, 300, and 400 using the following information.
(Note: End item A is the same as in Problem 3.)

• Bills of material:
A: Two 200 and one 400
200: Raw material
300: - Raw material
400: One 200 and one 300

• Master production schedule:

Week 1 2 3 4 5 6 7 8 9 10

Demand (A) 41 44 84 42 84 86 7 18 49 30

• Item Master and Inventory Data:

Lead Lot Sizing

Amount Amount Time Rule
Item on Hand on Order Due (Weeks) (SetuplHold)

A 120 0 2 PPB (200)

200 300 200 3 2 Lot-for-lot

100 5

300 140 100 4 2 Lot-for-lot

100 7

400 200 0 3 Lot-for-lot

12. Consider a circuit-board plant that makes three kinds of boards: Trinity, Pecos, and Brazos.
The bills of material are shown here:
Chapter 3 The MRP Crusade 149

Trinity: 1 subcomposite 111 and 1 subcomposite 112

Pecos: 1 subcomposite 211 and 1 subcomposite 212
.. Brazos: 1 subcomposite 311 and 1 subcomposite 312
Subcomposite 111: Core 1
Subcomposite 112: Core 2
Subcomposite 211: Core 1
Subcomposite 212: Core 1
Subcomposite 311: Core 1
Subcomposite 312: Core 2
All cores: raw material
Recently, the Lamination and the Core Circuitize operations have been bottlenecks. The unit
hours (i.e., time for a single board on the bottleneck tools) in these areas are given below.
These times are in hours and include inefficiencies such as operator unavailability,
downtime, setups, and so forth.

Board Trinity Pecos Brazos

Lam 0.020 0.022 0.020

Core Cir 0.000 0.000 0.000

Board 8111 8112 8211 8212 8311 8312

Lam 0.015 0.013 0.015 0.013 0.015 0.015
Core Cir 0.025 0.023 0.028 0.023 0.027 0.028

Board Core 1 Core 2

Lam 0.008 0.008

Core Cir 0.000 0.000

The anticipated demand for the next six weeks is as follows:

Week 1 2 3 4 5 6

Trinity 7,474 2,984 5,276 5,516 3,818 3,048

Pecos 6,489 5,596 7,712 7,781 3,837 4,395
Brazos 3,898 3,966 3,858 6,132 5,975 6,051

Total 17,861 12,546 16,846 19,429 13,630 13,494

a. Construct bills of capacity for Trinity, Pecos, and Brazos at Lamination and Core
Circuitize.
b. Use these bills to determine the load for each of the next six weeks at both Lamination
and Core Circuitize. The process centers operate five days per week for three shifts per
day (24 hours per day). Breaks and lunches are included in the unit hour data. There are
six Lamination presses and eight expose machines (the bottleneck) in Core Circuitize.
Which weeks are over- or underloaded? What should be done?
150 Part I The Lessons ofHistory

13. The Wills and Duncan parts must pass through process center 22. Wills is released to
process center 22 while Duncan must first pass through process center 21 before going to
process center 22. The planned lead time for going through process center 22 is three days,
while the time to go through process center 21 is two days. There are 16 hours of capacity at
process center 22 per day. Each Wills takes 0.04 hour while a Duncan takes 0.025 hour at
process center 22. Currently there are 300 Wills units that have been in process center 22 for
one day and 200 units that have been there for two days. Releases to the process center (i.e.,
Wills to 22 and Duncan to 21) are shown below. There are also 225 of the Duncan parts that
have been in the process center for one day and 200 that have been there for two days. There
are also 250 units in process center 21 that have been there for one day and 200 units that
have been there for two days. The releases are as follows:

Day Today 1 2 3 4 5

Wills 250 300 350 300 300 300

Duncan 250 150 150 150 150 150

a. Determine how many Wills parts will leave process center 22 on each day.
b. Determine how many Duncan parts will leave process center 22 on each day.
c. Compute the load profile for process center 22.