Week Quantity 1 2 3 4 Engine Assembly Master Sch 5 Gear box requirement Week Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release 1 0 17 2 0 5 17 3 0 4 0 5 0 0 0 0 3 4 0 Input shaft requiremen 5 0 47 47 From E12 for 2 Weeks Lead Time Week Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release 1 10 30 2 20 37 47 0 From F24 for 3 Weeks Lead Time Part 2 Gear Box Given Information Setup per order= Inventory Carrying Cost per unit per period $90.00 $2.00 Input Shaft Given Information Setup per order= Inventory Carrying Cost per unit per period $45.00 $1.00 Number of orders ( count cells with values for planned o Set-up Costs=# of Orders X Setup Costs (8*90) Inventory (2+2)*Inventory Carrying Cost Total Setup Costs=5 orders*45 Inventory=(30+32+32+2)*1 Total Total Cost Engine Assembly Master Schedule 6 7 8 9 10 11 12 Gear box requirements 6 7 0 0 8 0 9 0 10 0 11 0 0 0 0 0 12 0 Since Gear box 1 X Engine Assembly, use Ma From Problem 0 Cell B10, Beg Balance of 17- Gross Requirem Net Req=Gross Req-Projected Available Bala Same as row above 8 0 9 0 10 0 11 0 0 0 0 0 0 Input shaft requirements 6 7 0 0 0 0 unt cells with values for planned order release) ers X Setup Costs ntory Carrying Cost $0.00 $0.00 $0.00 12 Since Input Shaft is 2 X Gear Box, then each w From Problem 0 Cell B22, Beg Balance of 40- Gross requireme Net Req=Gross Req-Projected Available Bala Same as row above Planned Order Receipt from 3 weeks in futur box 1 X Engine Assembly, use Master Engine Assembly Qty Cell C10 Carryover ross Req-Projected Available Balance from prior week Shaft is 2 X Gear Box, then each week is 2 X Row 13 Week 5 and beyond 0 since no scheduled receipts ross Req-Projected Available Balance from prior week Week Quantity 1 Lead Time 2 2 3 4 Engine Assembly Master Sch 5 Gear box requirement Week Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release 1 0 17 2 0 5 22 3 0 4 0 5 0 0 0 0 From E12 for 2 Weeks Lead Time Week Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release 1 30 10 2 3 4 0 Input shaft requiremen 5 0 22 32 32 0 0 From F24 for 3 Weeks Lead Time Part 2 Gear Box Given Information Setup per order= Inventory Carrying Cost per unit per period $90.00 $2.00 Input Shaft Given Information Setup per order= Inventory Carrying Cost per unit per period $45.00 $1.00 Number of orders ( count cells with values for planned o Set-up Costs=# of Orders X Setup Costs 3*90) Inventory (88)*Inventory Carrying Cost Total Setup Costs=2 orders*45 Inventory=(74)*1 Total Total Cost Engine Assembly Master Schedule 6 7 8 9 10 11 12 Gear box requirements 6 7 0 0 8 0 9 0 10 0 11 0 0 0 0 0 12 0 Since Gear box 1 X Engine Assembly, use Ma From Problem 0 Cell B10, Beg Balance of 17- Gross Requirem Net Req=Gross Req-Projected Available Bala Planned order receipt=projected available ba Stagger Order Releases to reduce Costs 8 0 9 0 10 0 11 0 0 0 0 0 0 Input shaft requirements 6 7 0 0 0 0 12 Since Input Shaft is 2 X Gear Box, then each w From Problem 0 Cell B22, Beg Balance of 40- Gross requireme Net Req=Gross Req-Projected Available Bala Planned Order Receipt from 3 weeks in futur unt cells with values for planned order release) ers X Setup Costs tory Carrying Cost sum of projected available balance $0.00 $0.00 $0.00 box 1 X Engine Assembly, use Master Engine Assembly Qty Next cell, Gross Req-Scheduled Receipts ross Req-Projected Available Balance from prior week der receipt=projected available balance +net requirements Shaft is 2 X Gear Box, then each week is 2 X Row 13 Week 4 and beyond 0 since no scheduled receipts ross Req-Projected Available Balance from prior week Given the cost structure, evaluate the cost of the schedule from question 1. Assume inventory is val- ued at the end of each week. 3 Find a better schedule by reducing the number of orders and carrying some inventory. What are the savings with this new schedule? Engine assembly master schedule Week 1 2 3 4 5 6 7 8 9 10 11 12 Quantity Gear box requirements 1 2 3 4 5 6 7 8 9 10 11 12 Week Gross requirements Scheduled receipts Projected available balance Net requirements Planned order release Input shaft requirements 3 5 . 1 2 3 4 5 6 7 8 9 1 el 1 2 Week Gross requirements Scheduled receipts Projected available balance Net requirements Planned order release Analytics Exercise: An MRP Explosion- Brunswick Motors Recently, Phil Harris, the production control manager at shafts that are needed for the production of gear boxes in a Brunswick, read an article on time-phased requirements given week must be delivered to the Subassembly Department planning. He was curious about how this technique might stockroom before Monday morning of that week. work in scheduling Brunswick's engine assembly opera- In preparing the MRP example Phil planned to use the tions and decided to prepare an example to illustrate the worksheets shown on the next page and to make the fol- use of time-phased requirements planning. lowing assumptions: Phil's first step was to prepare a master schedule for one 1. Seventeen gear boxes are on hand at the beginning of of the engine types produced by Brunswick: the Model Week 1, and five gear boxes are currently on order to 1000 engine. This schedule indicates the number of units of be delivered at the start of Week 2. the Model 1000 engine to be assembled each week during 2. Forty input shafts are on hand at the start of Week 1, the last 12 weeks and is shown below. Next, Phil decided to and 22 are scheduled for delivery at the beginning of simplify his requirements planning example by considering Week 2. only two of the many components that are needed to com- plete the assembly of the Model 1000 engine. These two Questions components, the gear box and the input shaft, are shown 1 Initially, assume that Phil wants to minimize his in- in the product structure diagram below. Phil noted that the ventory requirements. Assume that each order will be gear box is assembled by the Subassembly Department and only for what is required for a single period. Using the subsequently is sent to the main engine assembly line. The following forms, calculate the net requirements and input shaft is one of several component parts manufactured planned order releases for the gear boxes and input by Brunswick that are needed to produce a gear box subas- shafts. Assume that lot sizing is done using lot-for-lot sembly. Thus, levels 0, 1, and 2 are included in the prod- (L4L). uct structure diagram to indicate the three manufacturing 2 Phil would like to consider the costs that his accoun- stages that are involved in producing an engine: the Engine tants are currently using for inventory carrying and Assembly Department, the Subassembly Department, and setup for the gear boxes and input shafts. These costs the Machine Shop are as follows: The manufacturing lead times required to produce the gear box and input shaft components are also indicated in the prod- PART COST uct structure diagram. Note that two weeks are required to pro- Gear Box Setup = $90/order duce a batch of gear boxes and that all the gear boxes must be Inventory carrying cost = $2/unit/week delivered to the assembly line parts stockroom before Monday Input Shaft Setup = $45/order morning of the week in which they are to be used. Likewise, it takes three weeks to produce a lot of input shafts, and all the Inventory carrying cost = $1/unit/week Model 1000 master schedule Week 1 Demand 15 2 3 5 7 4 5 6 7 8 9 10 15 20 10 10 11 12 8 2 16 Model 1000 product structure Engine assembly Crankcase Gear box Lead time = 2 weeks Used: 1 per engine Input shaft Lead time = 3 weeks Used: 2 per gear box Analytics Exercise: An MRP Explosion- Brunswick Motors Recently, Phil Harris, the production control manager at shafts that are needed for the production of gear boxes in a Brunswick, read an article on time-phased requirements given week must be delivered to the Subassembly Department planning. He was curious about how this technique might stockroom before Monday morning of that week. work in scheduling Brunswick's engine assembly opera- In preparing the MRP example Phil planned to use the tions and decided to prepare an example to illustrate the worksheets shown on the next page and to make the fol- use of time-phased requirements planning. lowing assumptions: Phil's first step was to prepare a master schedule for one 1. Seventeen gear boxes are on hand at the beginning of of the engine types produced by Brunswick: the Model Week 1, and five gear boxes are currently on order to 1000 engine. This schedule indicates the number of units of be delivered at the start of Week 2. the Model 1000 engine to be assembled each week during 2. Forty input shafts are on hand at the start of Week 1, the last 12 weeks and is shown below. Next, Phil decided to and 22 are scheduled for delivery at the beginning of simplify his requirements planning example by considering Week 2. only two of the many components that are needed to com- plete the assembly of the Model 1000 engine. These two Questions components, the gear box and the input shaft, are shown 1 Initially, assume that Phil wants to minimize his in- in the product structure diagram below. Phil noted that the ventory requirements. Assume that each order will be gear box is assembled by the Subassembly Department and only for what is required for a single period. Using the subsequently is sent to the main engine assembly line. The following forms, calculate the net requirements and input shaft is one of several component parts manufactured planned order releases for the gear boxes and input by Brunswick that are needed to produce a gear box subas- shafts. Assume that lot sizing is done using lot-for-lot sembly. Thus, levels 0, 1, and 2 are included in the prod- (L4L). uct structure diagram to indicate the three manufacturing 2 Phil would like to consider the costs that his accoun- stages that are involved in producing an engine: the Engine tants are currently using for inventory carrying and Assembly Department, the Subassembly Department, and setup for the gear boxes and input shafts. These costs the Machine Shop are as follows: The manufacturing lead times required to produce the gear box and input shaft components are also indicated in the prod- PART COST uct structure diagram. Note that two weeks are required to pro- Gear Box Setup = $90/order duce a batch of gear boxes and that all the gear boxes must be Inventory carrying cost = $2/unit/week delivered to the assembly line parts stockroom before Monday Input Shaft Setup = $45/order morning of the week in which they are to be used. Likewise, it takes three weeks to produce a lot of input shafts, and all the Inventory carrying cost = $1/unit/week