Chapter 14

Chapter 12 - MRP and ERP
CHAPTER 12
MRP AND ERP
Solutions
1. a. Each E requires 2 F + 1 G + 1 H.
Each F requires 2 J + 4 D.
Each G requires 2 L + 2 J.
Each H requires 4 A + 2 D.
Total J required = (2 F * 2 J) + (1 G * 2 J) = 4 + 2 = 6.
Total D required = (2 F * 4 D) + (1 H * 2 D) = 8 + 2 = 10.
Total L required = 1 G * 2 L = 2.
Total A required = 1 H * 4 A = 4.
Total required of each:

F = 2, G = 1, H =1.
J = 6, D = 10, L = 2, A = 4.
b. Product structure tree (tree diagram) for stapler:
Stapler
Top Assembly Base Assembly
Cover Spring Slide Assembly Base Strike Pad Rubber Pad(2)
Slide Spring
12-1
Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
2. Given:
We have the following information:
End Item
B(2) C D(3)
E(2) F(3) G(2) E(2) H(4) E(2)
Item End B C D E F G H
LT (wk) 1 2 3 3 1 2 1 2
Amount 0 10 10 25 12 30 5 0
on hand
a. If 20 units of the end item are to be assembled, how many additional units of E are
needed?
Step 1:
Determine the gross requirements and the net requirements for the End Item:
Item Gross Requirements On Hand = Net Requirements

End Item 20 0 = 20
Step 2:
Determine the gross requirements and the net requirements for B, C, & D.
Multiply the net requirements for the end item by the usage quantities of B, C, & D to
determine the gross requirements for B, C, & D.

B (20 * 2) = 40 10 = 30
C (20 * 1) = 20 10 = 10
D (20 * 3) = 60 25 = 35
Step 3:
Determine the gross requirements and net requirements for E.
Multiply the net requirements for B, C, & D by the usage quantities of E to determine gross
requirements for E.

E [(30 B * 2) + (10 C * 2) + (35 D * 2)] = 150 12 = 138
12-2
Education.
b. Given:
An order for the end item is to be shipped at the start of week 11. Determine the latest week
that the order could be started.
To solve this, we need to determine the longest sequence through the product structure tree
moving from the end item down to the lowest items. The lead time for each item is indicated
in bold to the left of each item in the product structure tree shown below.
1 wk End Item
2 wk B(2) 3 wk C 3 wk D(3)
1 wk E(2) 2 wk F(3) 1 wk G(2) 1 wk E(2) 2 wk H(4) 1 wk E(2)

1 wk 1 wk 1 wk 1 wk 1 wk
Total LT = 4 wk 5 wk 5 wk 5 wk 6 wk 5 wk
The longest sequence is 6 weeks (End Item D H). 11 6 weeks = start of week 5.
3. Given:
We have the following information:
Item End L C K B J G H
LT (wk) 1 2 3 3 2 3 3 2
Amount 0 10 15 20 30 30 5 0
on hand
Item Direct Components

End L(2), C(1), K(3)
L B(2), J(3)
C G(2), B(2)
K H(4), B(2)
Using the information above, we can construct a product structure tree as shown below:
End Item
L(2) C K(3)
B(2) J(3) G(2) B(2) H(4) B(2)
12-3
Education.
a. If 40 units of the end item are to be assembled, how many additional units of B are needed?
Step 1:
Determine the gross requirements and the net requirements for the end item:

End Item 40 0 = 40
Step 2:
Determine the gross requirements and the net requirements for L, C, & K.
Multiply the net requirements for the end item by the usage quantities of L, C, & K to
determine the gross requirements for L, C, & K.

L (40 * 2) = 80 10 = 70
C (40 * 1) = 40 15 = 25
K (40 * 3) = 120 20 = 100
Step 3:
Determine the gross requirements and net requirements for B.
Multiply the net requirements for L, C, & K by the usage quantities of B to determine gross
requirements for B.

B [(70 L * 2) + (25 C * 2) + (100 K * 2)] = 390 30 = 360
b. Given:
An order for the end item is to be shipped at the start of week 8. Determine the latest week
that the order could be started.
To solve this, we need to determine the longest sequence through the product structure tree
moving from the end item down to the lowest items. The lead time for each item is indicated
in bold to the left of each item in the product structure tree shown below.
1 wk End Item
2 wk L(2) 3 wk C 3 wk K(3)
2 wk B(2) 3 wk J(3) 3 wk G(2) 2 wk B(2) 2 wk H(4) 2 wk B(2)
Total LT = 5 wk 6 wk 7 wk 6 wk 6 wk 6 wk
The longest sequence is 7 weeks (End Item C G). 8 7 weeks = start of week 1.
12-4
Education.
4. Given:
Eighty units of end item E are needed at the beginning of week 6. Three cases (30 units per case)
of J have been ordered, and one case is scheduled to arrive in week 3, one in week 4, and one in
week 5. Note: J must be ordered by the case, and B must be produced in multiples of 120 units.
There are 60 units of B and 20 units of J on hand. Lead times are 2 weeks each for E and B, and 1
week for J. The product structure tree is shown below:
E
B(2) J(3)
J(4) F(2)
a. Determine a material requirements plan for J. We will need to prepare material plans for E, B,
and J. All given information is highlighted in bold in the tables below.
POH is the projected on hand inventory at the beginning of each period.

All MRP problems below will use the following formula to determine POH:
POH (Current Period) = [POH + Planned-Order Receipts Gross Requirements (Prior
Period)] + Scheduled Receipts (Current Period) or using subscripts, we have the following:
POHt = [POHt-1 + Planned-Order Receiptst-1 Gross Requirementst-1] + Scheduled Receiptst
Net Requirements = Max[(Gross Requirements POH), 0].

Note: This ensures that we have net requirements only when the Gross Requirements > POH.
Master Week 1 2 3 4 5 6
Schedule for:
E Quantity 80
E LT = 2 Beg.
1 2 3 4 5 6
Lot size: Lot-for-Lot Inv.
Gross requirements 80
Scheduled receipts
Projected on hand 0 0 0 0 0 0 0
Net requirements 80
Planned-order receipts 80
Planned-order releases 80
12-5
Education.
B(2) LT = 2 Beg.
1 2 3 4 5 6
Lot size: Multiples of 120 Inv.
Scheduled receipts
Net requirements 100
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 80 E * 2 = 160.
POH4 = [POH3 + Planned-Order Receipts3 Gross Requirements3] + Scheduled Receipts4
POH4 = [60 + 0 0] + 0 = 60.
POH5 = [60 + 120 160] + 0 = 20.
J(3) & J(4) LT = 1 Beg.

1 2 3 4 5 6
Gross requirements 480 240
Scheduled receipts 30 30 30
Net requirements 460 160
Planned-order receipts 480 180
Planned-order releases 480 180
Notes:
Gross Requirements (week 2) = Planned-Order Releases of 120 B * 4 = 480.
POH3 = [POH2 + Planned-Order Receipts2 Gross Requirements2] + Scheduled Receipts3.
POH3 = [20 + 480 480] + 30 = 50.
POH4 = [50 + 0 0] + 30 = 80.
POH5 = [80 + 180 240] + 30 = 50.
POH6 = [50 + 0 0] + 0 = 50.
Planned-Order Receipts (week 2) = 16 * 30 = 480 (must order in cases of 30).
Planned-Order Receipts (week 4) = 6 * 30 = 180 (must order in cases of 30).
12-6
Education.
b. Suppose that in week 4 the quantity of E needed is changed from 80 to 70 units. The
planned-order releases through week 3 have all been executed. How many more Bs and
Js will be on hand in week 6? Note: We are now at the start of week 4.
Step 1:
Before we do the MRP processing, we list what changes have occurred:
1. All Planned-Order Releases in weeks 1 3 have been executed.
B had Planned-Order Releases in week 2 (120) corresponding to Planned-Order
Receipts (120) in week 4. Change the Planned-Order Receipts to Scheduled Receipts
in week 4.
J had Planned-Order Releases in week 1 (480) corresponding to Planned-Order
Receipts (480) in week 2. The Planned-Order Receipts would have been changed to
Scheduled Receipts and received in week 2 (this increases inventory).
J had Planned-Order Releases in week 3 (180) corresponding to Planned-Order
Receipts (180) in week 4. These will show up as Scheduled Receipts in week 4 and
will be added to the original amount of Scheduled Receipts (30) in week 4.
2. Scheduled Receipts for J in week 3 (30) would have been received (this increases
inventory).
3. Gross requirements for all items in weeks 1 3 would have been disbursed (these
transactions decrease inventory).
Step 2:
Determine the ending inventory for each item at the end of week 3. These will become
the beginning inventory balances in week 4.
Remember: Scheduled receipts increase inventory while gross requirements decrease
inventory.
Ending Inventory = Beginning Inventory + Scheduled Receipts Gross Requirements
Item E Week 1 Week 2 Week 3

Ending Inventory 0+00=0 0+00=0 0+00=0
Item B Week 1 Week 2 Week 3

Ending Inventory 60 + 0 0 = 60 60 + 0 0 = 60 60 + 0 0 = 60
Item J Week 1 Week 2 Week 3

Ending Inventory 20 + 0 0 = 20 20 + 480 480 = 20 20 + 30 0 = 50
12-7
Education.
Step 3:
Fill in all beginning inventory balances and scheduled receipts, and then change E to 70
units in week 6 of the master schedule. Our MRP tables are shown for weeks 4 6 only.
Master Week 4 5 6
Schedule for:
E Quantity 70
E LT = 2 Beg.
4 5 6
Scheduled receipts
Projected on hand 0 0 0 0
Net requirements 70
B(2) LT = 2 Beg.
4 5 6
Scheduled receipts 120
Net requirements
Planned-order receipts
Planned-order releases
Notes:
POH4 = [POH3 + Planned-Order Receipts3 Gross Requirements3] + Scheduled
Receipts4.
POH4 = [60 + 0 0] + 120 = 180.
Receipts5.
POH5 = [180 + 0 140] + 0 = 40.
12-8
Education.
J(4) & J(3) LT = 1 Beg.

4 5 6
Scheduled receipts 210 30
Net requirements
Notes:
Scheduled Receipts (week 4) = Original amount of 30 + 180 = 210.
Receipts4.
POH4 = [50 + 0 0] + 210 = 260.
Receipts5.
POH5 = [260 + 0 210] + 30 = 80.
Receipts6.
POH6 = [80 + 0 0] + 0 = 80.
Original on hand amounts (week 6): B = 20 & J = 50.
Revised on hand amounts (week 6): B = 40 & J = 80.
There will be an additional 20 units of B & 30 units of J on hand.
12-9
Education.
5. a. Given:
120 units of end item Z are needed at the beginning of week 7. On hand balances: Z = 40, A
70, B = 100, and C = 30 units. There is a scheduled receipt of 20 units of C in week 4. Lead
times are 2 weeks for Z and B, and 1 week for other items. Lot-for-lot ordering is used for all
items. The product structure tree is shown below:
Z
A(2) B(4)
C(3) D(2) E(2) C(2)
Prepare a material requirements plan for component C:

We will need to prepare material plans for Z, A, B, and C.
Master Week 1 2 3 4 5 6 7
Schedule for:
Z Quantity 120
Z LT = 2 Beg.
1 2 3 4 5 6 7
Scheduled receipts
Projected on hand 40 40 40 40 40 40 40 40
Net requirements 80
Notes:
POH7 = [40 + 0 0] + 0 = 40.
A(2) LT = 1 Beg.
1 2 3 4 5 6 7
Scheduled receipts
Net requirements 90
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 80 Z * 2 = 160.
12-10
Education.
B(4) LT = 2 Beg.
1 2 3 4 5 6 7
Scheduled receipts
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 80 Z * 4 = 320.
POH6 = [100 + 220 320] + 0 = 0.
C(3) & C(2) LT = 1 Beg.

1 2 3 4 5 6 7
Notes:
Gross Requirements (week 4) = Planned-Order Releases of 90 A * 3 = 270.
POH4 = [30 + 410 440] + 20 = 20.
POH5 = [20 + 250 270] + 0 = 0.
12-11
Education.
b. Given:
95 units of end item E are needed at the beginning of week 7. On hand balances: E = 5, B =
50, C = 100, and D = 80 units. There is a scheduled receipt of 30 units of C in week 4. Lead
times are 2 weeks for E and C, and 1 week for other items. Assume lot-for-lot ordering except
for D, where multiples of 40 must be used. The product structure tree is shown below:
E
B(3) C(2)
D(2) I(2) S(2) D(2)
Prepare a material requirements plan for component D:

We will need to prepare material plans for E, B, C, and D.
Schedule for:
E Quantity 95
E LT = 2 Beg.
1 2 3 4 5 6 7
Scheduled receipts
Net requirements 90
B(3) LT = 1 Beg.
1 2 3 4 5 6 7
Scheduled receipts
Notes:
POH6 = [50 + 220 270] + 0 = 0.
12-12
Education.
C(2) LT = 2 Beg.
1 2 3 4 5 6 7
Net requirements 50
Notes:
POH4 = [100 + 0 0] + 30 = 130.
POH5 = [130 + 0 0] + 0 = 130.
POH6 = [130 + 50 180] + 0 = 0
D(2) & D(2) LT = 1 Beg.

1 2 3 4 5 6 7
Scheduled receipts
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 50 C * 2 = 100.
POH4 = [80 + 40 100] + 0 = 20.
POH5 = [20 + 440 440] + 0 = 20.
Planned-Order Receipts (week 3) = 1 * 40 = 40 (multiples of 40 must be used).
Planned-Order Receipts (week 4) = 11 * 40 = 440 (multiples of 40 must be used).
12-13
Education.
6. Given:
The company that makes a table wants to ship 100 units at the beginning of day 4, 150 units at the
beginning of day 5, and 200 units at the beginning of day 7. Receipts of 100 wood sections are
scheduled at the beginning of day 2. On hand balances: Braces = 60 and Legs = 120. Lead times
(in days) for all items are shown in the table below. The product structure tree is shown below
also:
Quantity Lead Time

1-200 1
201-550 2
551-999 3
Table
Wood Sections(2) Braces(3) Legs(4)
Prepare a material requirements plan using lot-for-lot ordering for all items:
Master Day 1 2 3 4 5 6 7
Schedule for:
Table Quantity 100 150 200
Table Beg.
1 2 3 4 5 6 7
Gross requirements 100 150 200
Scheduled receipts
Net requirements 100 150 200
Planned-order receipts 100 150 200
Planned-order releases 100 150 200
Notes:
POH5 = [0 + 100 100] + 0 = 0.
POH6 = [0 + 150 150] + 0 = 0.
Planned-Order Releases (days 3, 4, & 6) were back-scheduled 1 day from their Planned-Order
Receipts because all lead times = 1 day for quantities of 1-200.
12-14
Education.
Wood Sections(2) Beg. 1 2 3 4 5 6 7

Notes:
Gross Requirements (day 3) = Planned-Order Releases of 100 Tables * 2 = 200.
POH3 = [100 + 0 0] + 0 = 100.
POH4 = [100 + 100 200] + 0 = 0.
Planned-Order Releases (day 2) = 100 from Planned-Order Receipts of 100 in day 3 (lead time = 1
day for quantities of 1-200) + 300 from Planned-Order Receipts of 300 in day 4 (lead time = 2 days
for quantities of 201-550) = 400.
days for quantities of 201-550).
Braces(3) Beg.
1 2 3 4 5 6 7
Scheduled receipts
Notes:
POH4 = [60 + 240 300] + 0 = 0.
POH5 = [0 + 450 450] + 0 = 0.
12-15
Education.
Legs(4) Beg. 1 2 3 4 5 6 7
Scheduled receipts
Notes:
POH3 = [120 + 0 0] + 0 = 120.
POH4 = [120 + 280 400] + 0 = 0.
POH5 = [0 + 600 600] + 0 = 0.
days for quantities of 201-550) + 600 from Planned-Order Receipts of 600 in day 4 (lead time = 3
days for quantities of 551-999) = 880.
12-16
Education.
7. Given:
80 units of end item X are needed at the beginning of week 6, and another 30 units are needed at
the beginning of week 8. D can be ordered only in whole cases (50 units per case). One case of D
(50 units) is received automatically every other week, beginning in week 1. On hand balances: B
= 30 and D = 20 units. Lead times are a function of quantity as shown in the table below. The
product structure tree is shown below also:
Quantity Lead Time

1-100 1 wk
101-200 2 wk
201-300 3 wk
301+ 4 wk
B(2) D(3)
D(2) F(2)
Prepare a material requirements plan for component D using lot-for-lot ordering for all items
except D. We will need to prepare material plans for X, B, and D.
Master Week 1 2 3 4 5 6 7 8
Schedule for: X Quantity 80 30
X Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Projected on hand 0 0 0 0 0 0 0 0 0
Notes:
Planned-Order Releases (week 5 and week 7) have a lead time of 1 week (lead time = 1 week for
quantities of 1-100).
12-17
Education.
B(2) Beg. 1 2 3 4 5 6 7 8
Scheduled receipts
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 80 X * 2 = 160.
POH6 = [30 +130 160] + 0 = 0.
Planned-Order Releases (week 3) = 130 from Planned-Order Receipts of 130 in week 5 (lead time = 2
weeks for quantities of 101-200).
Planned-Order Releases (week 6) = 60 from Planned-Order Receipts of 60 in week 7 (lead time = 1
week for quantities of 1-100).
D(2) & D(3) Beg.

1 2 3 4 5 6 7 8
Gross requirements 260 240 120 90
Scheduled receipts 50 50 50 50
Net requirements 140 180 100 40
Planned-order receipts 150 200 100 50
Planned-order releases 150 200 100 50
Notes:
POH3 = [70 + 0 0] + 50 = 120.
POH4 = [120 + 150 260] + 0 = 10.
POH6 = [60 + 200 240] + 0 = 20.
POH7 = [20 + 100 120] + 50 = 50.
POH8 = [50 + 50 90] + 0 = 10.
12-18
Education.
8. Given:
Oh No! Inc. sells three models: A, B, and C. Lead times are 1 week for all items except C (2
weeks). On hand balances: B = 10, C = 10, and D = 25 units. Lot-sizing rules are lot-for-lot for all
items except D, which must be ordered in multiples of 100. There is a scheduled receipt of 100
units of D in week 1. The master schedule shows that 40 units of A are needed at the beginning of
week 4, 60 units of B at the beginning of week 5, and 30 units of C at the beginning of week 6.
The product structure tree for each item is shown below:
A B C
D E D(2) F D(4) G
Prepare a material requirements plan for component D and its parents. We will need to prepare
material plans for A, B, C, and D.
Schedule for: A Quantity 40
A LT = 1 Beg.
1 2 3 4 5 6
Scheduled receipts
Net requirements 40
Schedule for: B Quantity 60
B LT = 1 Beg.
1 2 3 4 5 6
Scheduled receipts
Net requirements 50
12-19
Education.
Schedule for: C Quantity 30
C LT = 2 Beg.
1 2 3 4 5 6
Scheduled receipts
Net requirements 20
D, D(2), & D(4) LT = 1 Beg.

1 2 3 4 5 6
Net requirements 95
Notes:
Gross Requirements (week 4) = (Planned-Order Releases of 50 B * 2) + (Planned-Order
Releases of 20 C * 4) = 100 + 80 = 180.
POH4 = [125 + 0 40] + 0 = 85.
POH5 = [85 + 100 180] + 0 = 5.
Planned-Order Receipts (week 5) = 1 * 100 = 100 (must order in multiples of 100).
12-20
Education.
9. Given:
50 chain saws are needed at the start of week 8. The inventory information (shown in bold) and
the product structure tree are listed below in the problem solution:
a. Product tree structure:

Saw
A(2) B C(4)
E(3) D D(2) F(3) E(2) D(2)
Assembly time chart: D

A
E
F
B
Saw
D
D
C
E
1 2 3 4 5 6 7 8
week
Start of week 2 Start of week 8
Master schedule:
Master Week 1 2 3 4 5 6 7 8
Schedule for:
Saw Quantity 50
b. Material requirements plan for E using lot-for-lot ordering for all items. We will need to
prepare material plans for Saw, A, C, and E.
Master Week 1 2 3 4 5 6 7 8
Schedule for:
Saw Quantity 50
Saw LT = 2 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Net requirements 35
12-21
Education.
A(2) LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Net requirements 60
Notes:
Gross Requirements (week 6) = Planned-Order Releases of 35 Saws * 2 = 70.
C(4) LT = 2 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Net requirements 75
Notes:
Gross Requirements (week 6) = Planned-Order Releases of 35 Saws * 4 = 140.
E(3) & E(2) LT = 1 Beg.

1 2 3 4 5 6 7 8
Scheduled receipts
Notes:
POH4 = [10 + 0 0] + 0 = 10.
POH5 = [10 + 140 150] + 0 = 0.
POH6 = [0 + 180 180] + 0 = 0.
12-22
Education.
10. Given:
40 units of an industrial robot are needed at the beginning of week 7. Subassembly G must be
ordered in multiples of 80 and all other components are ordered lot-for-lot. The inventory
information (shown in bold) and the product structure tree are listed below in the problem
solution. Prepare the material plan for G. We will need to prepare material plans for Robot, C, &
G.
Robot
B C(3)
E F G G(2) H
Schedule for:
Robot Quantity 40
Robot LT = 2 Beg.
1 2 3 4 5 6 7
Scheduled receipts
Net requirements 30
C(3) LT = 1 Beg.
1 2 3 4 5 6 7
Scheduled receipts
Net requirements 70
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 30 Robots * 3 = 90.
12-23
Education.
G & G(2) LT = 2 Beg.

1 2 3 4 5 6 7
Scheduled receipts
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 30 Robots * 1 = 30.
POH4 = [15 + 0 0] + 0 = 15.
POH5 = [15 + 160 140] + 0 = 35.
POH6 = [35 + 0 30] + 0 = 5.
11. a. Given:
Refer back to Solved Problem 3. On hand balances: N = 100 and E = 0. Scheduled receipts: I
= 40 and V = 10 at the beginning of week 3. 120 E are needed at the start of week 5. We have
the product structure tree shown below. Determine material requirements plans for E, I, N,
and V using lot-for-lot ordering as was used in Solved Problem 3:
E
M(3) I(2)
R(2) P N(4) V
Master Period 1 2 3 4 5 6 7 8
Schedule for:
E Quantity 120
E LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
12-24
Education.
I(2) LT = 1 Beg.
1 2 3 4 5 6 7 8
Notes:
POH4 = [40 + 0 0] + 0 = 40.
POH5 = [40 + 200 240] + 0 = 0.
N(4) LT = 2 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Planned order receipts 700
Planned order releases 700
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 200 I * 4 = 800.
POH4 = [100 + 700 800] + 0 = 0.
V LT = 2 Beg.
1 2 3 4 5 6 7 8
Notes:
POH3 = [0 + 0 0] + 10 = 10.
POH4 = [10 + 190 200] + 0 = 0.
12-25
Education.
b. Given:
Assume that on hand balances and scheduled receipts remain the same as in part a. On hand
balances: N = 100 and E = 0. Scheduled receipts: I = 40 and V = 10 at the beginning of week
3.
New information: 100 E are needed at the start of week 5 and 55 are needed at the start of
week 7. Determine the material requirements plans for E, I, N, and V using lot-for-lot
ordering for E and I, and multiples of these order sizes: N = 800 and V = 200.
E
M(3) I(2)
R(2) P N(4) V
Schedule for:
E Quantity 100 55
E LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
I(2) LT = 1 Beg. 1 2 3 4 5 6 7 8
Notes:
POH4 = [40 + 0 0] + 0 = 40.
POH5 = [40 + 160 200] + 0 = 0.
12-26
Education.
N(4) LT = 2 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Planned order receipts 800 800
Planned order releases 800 800
Notes:
POH4 = [100 + 800 640] + 0 = 260.
POH6 = [260 + 800 440] + 0 = 620.
V LT = 2 Beg.
1 2 3 4 5 6 7 8
Notes:
POH3 = [0 + 0 0] + 10 = 10.
POH4 = [10 + 200 160] + 0 = 50.
POH5 = [50 + 0 0] + 0 = 50.
POH6 = [50 + 200 110] + 0 = 140.
12-27
Education.
c. Case 1 Given:
Refer back to part b. 1 week has elapsed. It is now the start of week 2. 100 E are needed at
the start of week 9. Assume that all orders were released and received as planned.
Notes:
a. We will drop 1 week (week 1) from the material plans and add 1 week at the end of each
plan.
b. Any Planned-Order Releases from week 1 must now show up as Scheduled Receipts:
Item N: Change Planned-Order Receipts of 800 in week 3 to Scheduled Receipts in week 3.
Item V: Change Planned-Order Receipts of 200 in week 3 to Scheduled Receipts in week 3.
The revised amount of Scheduled Receipts (week 3) = original amount of 10 + 200 = 210.
c. Determine the on hand balances at the start of week 2:
Determine the ending inventory for each item at the end of week 1. These will become the
beginning inventory balances in week 2.
inventory.
Item E Week 1
Ending Inventory 0+00=0
Item I Week 1
Item N Week 1
Ending Inventory 100 + 0 0 = 100
Item V Week 1
M(3) I(2)
R(2) P N(4) V
12-28
Education.
c. continued
Schedule for:
E Quantity 100 55 100
E LT = 1 Beg.
2 3 4 5 6 7 8 9
Scheduled receipts
I(2) LT = 1 Beg.
2 3 4 5 6 7 8 9
Notes:
POH4 = [40 + 0 0] + 0 = 40.
POH5 = [40 + 160 200] + 0 = 0.
POH9 = [0 + 200 200] + 0 = 0.
12-29
Education.
N(4) LT = 2 Beg.
2 3 4 5 6 7 8 9
Notes:
POH3 = [100 + 0 0] + 800 = 900.
POH4 = [900 + 0 640] + 0 = 260.
POH6 = [260 + 800 440] + 0 = 620.
POH8 = [620 + 800 800] + 0 = 620.
V LT = 2 Beg.
2 3 4 5 6 7 8 9
Notes:
POH3 = [0 + 0 0] + 210 = 210.
POH4 = [210 + 0 160] + 0 = 50.
POH5 = [50 + 0 0] + 0 = 50.
POH6 = [50 + 200 110] + 0 = 140.
POH8 = [140 + 200 200] + 0 = 140.
12-30
Education.
Case 2 Given:
Refer back to the previous update. It is now the start of week 4. Assume that all orders were
released and received as planned in weeks 2 and 3.
Notes:
a. We will drop 2 weeks (weeks 2 & 3) from the material plans and add 2 weeks at the end of
each plan.
b. Any Planned-Order Releases from weeks 2 & 3 must now show up as Scheduled Receipts:
Item I: Change Planned-Order Receipts of 160 in week 4 to Scheduled Receipts in week 4.
Item N: Change Planned-Order Receipts of 800 in week 5 to Scheduled Receipts in week 5.
Item V: Change Planned-Order Receipts of 200 in week 5 to Scheduled Receipts in week 5.
c. Determine the on hand balances at the start of week 4:
Determine the ending inventory for each item at the end of week 3. These will become the
beginning inventory balances in week 4.
inventory.
Item E Week 2 Week 3

Ending Inventory 0+00=0 0+00=0
Item I Week 2 Week 3

Ending Inventory 0+00=0 0 + 40 0 = 40
Item N Week 2 Week 3

Ending Inventory 100 + 0 0 = 100 100 + 800 640 = 260
Item V Week 2 Week 3

Ending Inventory 0+00=0 0 + 210 160 = 50
M(3) I(2)
R(2) P N(4) V
12-31
Education.
Master Period 4 5 6 7 8 9 10 11
Schedule for:
E Quantity 100 55 100
E LT = 1 Beg.
4 5 6 7 8 9 10 11
Scheduled receipts
I(2) LT = 1 Beg.
4 5 6 7 8 9 10 11
Notes:
POH5 = [200 + 0 200] + 0 = 0.
12-32
Education.
N(4) LT = 2 Beg.
4 5 6 7 8 9 10 11
Notes:
POH6 = [1060 + 0 440] + 0 = 620.
V LT = 2 Beg.
4 5 6 7 8 9 10 11
Net requirements 60
Notes:
POH5 = [50 + 0 0] + 200 = 250.
POH6 = [250 + 0 110] + 0 = 140.
12-33
Education.
12. Given:
200 carts must be ready at the beginning of week 8. The product structure tree, assembly time
chart, and inventory information are shown in the solutions below:
a. Product structure tree:
Golf
Cart
Top Base
Supports(4) Cover Motor Body Seats(2)
Frame Controls Wheels(4)
Assembly Time Chart

Supports
Top
b.
Cover
Cart
Motor
Frame
Controls Body Base
Wheels
Seats
2 3 4 5 6 7
week
Start of week 2 Start of week 8
12-34
Education.
c. Develop a material requirements plan that will provide 200 golf carts by week 8 assuming
lot-for-lot ordering.
Master Week 1 2 3 4 5 6 7 8
Schedule for:
Golf Cart Quantity 200
Golf Cart LT = 1 Beg.

1 2 3 4 5 6 7 8
Scheduled receipts
Top LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 7) = Planned-Order Releases of 200 Golf Carts * 1 = 200.
Supports(4) LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 6) = Planned-Order Releases of 160 Tops * 4 = 640.
12-35
Education.
12. c. (continued)
Cover LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 6) = Planned-Order Releases of 160 Tops * 1 = 160.
Base LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 7) = Planned-Order Releases of 200 Golf Carts * 1 = 200.
Motor LT = 2 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Net requirements
Notes: Gross Requirements (week 6) = Planned-Order Releases of 180 Bases * 1 = 180.
12-36
Education.
12. c. (Continued)
Body LT = 3 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Seats(2) LT = 2 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Frame LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Net requirements 95
Notes: Gross Requirements (week 3) = Planned-Order Releases of 130 Body * 1 = 130.
12-37
Education.
12. c. (Continued)
Controls LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Wheel Assemblies(4) LT = 1 Beg.

1 2 3 4 5 6 7 8
Scheduled receipts
12-38
Education.
13. Given:
Refer back to Problem 12. The revised plan calls for 100 golf carts to be available at the start of
week 6, 100 at the start of week 8, and 100 at the start of week 9.
a. Develop a master schedule for this revised plan.
Master Week 1 2 3 4 5 6 7 8 9
Schedule for:
Golf Carts Quantity 100 100 100
b. Determine the timing and quantities for orders for tops and bases.

1 2 3 4 5 6 7 8 9
Scheduled receipts
Projected on hand 0 0 0 0 0 0 0 0 0 0
Top LT = 1 Beg.
Lot size: Lot-for-Lot Inv. 1 2 3 4 5 6 7 8 9
Gross requirements Inv. 100 100 100

Scheduled receipts
Base LT = 1 Beg.
Lot size: Lot-for-Lot 1 2 3 4 5 6 7 8 9
Inv.
Scheduled receipts
12-39
Education.
c. The firms capacity limits the assembly of bases to 50 units per week. Revise the plan, but
still meet delivery dates. Note: We should try to minimize inventory also.
The key will be to move Planned-Order Receipts and Planned-Order Releases earlier in the
plan.
Consider the plan for Bases in b above:
Planned Order-Receipts (week 8) = 100
Given the capacity limit of 50 per week, we could divide the Planned-Order Receipts as
follows:
Week 8 (100): Week 7 (50) & Week 8 (50)
Week 7 (100): Week 5 (50) & Week 6 (50)
Week 5 (80): Week 3 (30) & Week 4 (50)
Note: Because some of these Planned-Order Receipts need to be planned earlier than they
should be, the planner will have to lock in the timing and quantity of these Planned-Order
Receipts by designating them as Firm Planned Orders so that the MRP system does not re-
schedule them automatically.
Master Week 1 2 3 4 5 6 7 8 9
Schedule for:
Golf Carts Quantity 100 100 100

1 2 3 4 5 6 7 8 9
Scheduled receipts
Base LT = 1 Beg.
Lot size: Lot-for-Lot 1 2 3 4 5 6 7 8 9
Inv.
Scheduled receipts
Net requirements
Planned-order receipts 30 50 50 50 50 50
Planned-order releases 30 50 50 50 50 50
12-40
Education.
14. Given:
a. Draw a product structure tree (tree diagram) for the scissors. Lead times are 1 day for each
component and final scissor assembly, but 2 days for the plastic grips. 600 scissors are
needed on Day 6. On hand inventory: Straight blades = 200, bent blades = 350, and top blade
assembly = 40.
Scissors
Bottom Blade Assembly Screw Top Blade Assembly
Straight Blade Straight Plastic Grip Bent Blade Bent Plastic Grip
b. Material plans:
Master Beg.
Week 1 2 3 4 5 6 7 8
Schedule for: Inv.
Scissors Quantity 600
Scissors LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Bottom Blade Assembly Beg.

LT = 1 Inv. 1 2 3 4 5 6 7 8
Lot size: Lot-for-Lot
Scheduled receipts
Notes: Gross Requirements (week 5) = Planned-Order Releases of 600 Scissors * 1 = 600.
12-41
Education.
Top Blade Assembly Beg.

LT = 1 Inv. 1 2 3 4 5 6 7 8
Scheduled receipts
Screw LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Straight Blade LT = 1 Beg.

1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 4) = Planned-Order Releases of 600 Bottom Blade Assembly * 1 =
600.
12-42
Education.
Straight Plastic Grip Beg.

LT = 2 Inv. 1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 4) = Planned-Order Releases of 600 Bottom Blade Assembly * 1 =
600.
Bent Blade LT = 1 Beg.

1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 4) = Planned-Order Releases of 560 Top Blade Assembly * 1 = 560.
Bent Plastic Grip LT = 2 Beg.

1 2 3 4 5 6 7 8
Scheduled receipts
Notes: Gross Requirements (week 4) = Planned-Order Releases of 560 Top Blade Assembly * 1 = 560.
12-43
Education.
15. Given:
A company has the following demand for its products, labor and machine standards, and available
capacities:
Week number 1 2 3 4
Material (tons) 40 80 60 70
Labor Machine
Production standard 4 3
(hours per ton)
Weekly production 300 200
capacity (hours)
a. Determine capacity utilization for labor and machine for each of the four weeks:
Capacity Requirements (Load) =
Units * Standard Labor and/or Machine Requirements per Unit
Labor and Machine Capacity Requirements (Load)

Week number 1 2 3 4
Material (tons) 40 80 60 70
Labor standard 4 4 4 4
Labor
requirements 40 * 4 = 160 80 * 4 = 320 60 * 4 = 240 70 * 4 = 280
(load)
Machine standard 3 3 3 3
Machine
requirements 40 * 3 = 120 80 * 3 = 240 60 * 3 = 180 70 * 3 = 210
(load)
Capacity Utilization (round % to two decimals)

Week number 1 2 3 4
Labor 160 320 240 280
requirements
Labor capacity 300 300 300 300
Labor 160/300 * 100 = 320/300 * 100 = 240/300 * 100 = 280/300 * 100 =
utilization 53.33% 106.67% 80.00% 93.33%
Machine 120 240 180 210
requirements
Machine capacity 200 200 200 200
Machine 120/200 * 100 = 240/200 * 100 = 180/200 * 100 = 210/200 * 100 =
utilization 60.00% 120.00% 90.00% 105.00%
b. Capacity utilization exceeds 100% for both labor and machine in week 2, and for machine in
week 4.
Production could be shifted to earlier or later weeks in which capacity is underutilized.
Shifting to an earlier week would result in added carrying costs; shifting to later weeks would
mean backorder costs.
Another option could be to work overtime. Labor cost would increase due to overtime
premium, a probable decrease in productivity, and a possible increase in accidents.
12-44
Education.
16. Given:
A company produces 2 products that go through a 3-day sequence of fabrication, assembly, and
packaging. Each step requires 1 day for a lot to be processed and moved to the next department.
Processing requirements for the departments (hours per unit) are:
FABRICATION ASSEMBLY PACKAGING

Product Labor Machine Labor Machine Labor Machine
A 2 1 1.5 1 1 .5
B 1 1 1 1 1.5 .5
Department capacities are all 700 hours of labor and 500 hours of machine time, except Friday,
when capacities are 200 hours for both labor and machine time. The following production
schedule is for next week:
Product Mon Tue Wed Thu Fri

A 200 400 100 300 100
B 300 200 200 200 200
a. Determine the labor and machine capacity requirements for each product and the total load at
each department for each day.
For example, the 200 units of Product A & 300 units of Product B will be processed at
Fabrication on Monday, Assembly on Tuesday, and Packaging on Wednesday.
Monday Fabrication Labor Load = (200 A * 2 = 400) + (300 B * 1 = 300) = 700.

Monday Fabrication Machine Load = (200 A * 1 = 200) + (300 B * 1 = 300) = 500.
Tuesday Assembly Labor Load = (200 A * 1.5 = 300) + (300 B * 1 = 300) = 600.
Tuesday Assembly Machine Load = (200 A * 1 = 200) + (300 B * 1 = 300) = 500.
Wednesday Packaging Labor Load = (200 A * 1 = 200) + (300 B * 1.5 = 450) = 650.
Wednesday Packaging Machine Load = (200 A * .5 = 100) + (300 B * .5 = 150) = 250.
12-45
Education.
Fabrication Assembly Packaging

Day Product Labor Machine Labor Machine Labor Machine
Mon A 400 200

B 300 300
Load 700 500
Capacity 700 500
Tue A 800 400 300 200

B 200 200 300 300
Load 1000 600 600 500
Capacity 700 500 700 500
Wed A 200 100 600 400 200 100

B 200 200 200 200 450 150
Load 400 300 800 600 650 250
Capacity 700 500 700 500 700 500
Thu A 600 300 150 100 400 200

B 200 200 200 200 300 100
Load 800 500 350 300 700 300
Capacity 700 500 700 500 700 500
Fri A 200 100 450 300 100 50

B 200 200 200 200 300 100
Load 400 300 650 500 400 150
Capacity 200 200 200 200 200 200
b. Evaluate the loading for the first 3 days of the week:
Monday:
Fabrication: Load = capacity for both labor and machine.
Tuesday:
Fabrication: Labor load is over capacity by 300 hours. Machine load is over capacity by 100
hours.
Assembly: Labor load is under capacity by 100 hours. Machine load = capacity.
Wednesday:
Fabrication: Labor load is under capacity by 300 hours. Machine load is under capacity by
200 hours.
Assembly: Labor load is over capacity by 100 hours. Machine load is over capacity by 100
hours.
Packaging: Labor load is under capacity by 50 hours. Machine load is under capacity by 250
hours.
The schedule does not appear to be feasible. Fabrication is overloaded for labor and machine
on Tuesday and underloaded for labor and machine on Wednesday. In addition, Assembly is
overloaded for labor and machine on Wednesday.
One solution could be to shift some of the 400 A & 200 B scheduled in Fabrication on
Tuesday to Wednesday. For example, we could shift 150 A in Fabrication from Tuesday to
12-46
Education.
Wednesday. We now would schedule 250 A on Tuesday (400-150) and 250 A on Wednesday
(100+150). The new load values are highlighted in bold in the table below:
Fabrication Assembly Packaging

Day Product Labor Machine Labor Machine Labor Machine
Mon A 400 200

B 300 300
Load 700 500
Capacity 700 500
Tue A 500 250 300 200

B 200 200 300 300
Load 700 450 600 500
Capacity 700 500 700 500
Wed A 500 250 375 250 200 100

B 200 200 200 200 450 150
Load 700 450 575 450 650 250
Capacity 700 500 700 500 700 500
Thu A 600 300 375 250 250 125

B 200 200 200 200 300 100
Load 800 500 575 450 550 225
Capacity 700 500 700 500 700 500
Fri A 200 100 450 300 250 125

B 200 200 200 200 300 100
Load 400 300 650 500 550 225
Capacity 200 200 200 200 200 200
12-47
Education.
17. Given:
The MRP departments computer died just as it spit out the following information: Planned-Order
Releases for Item J27 = 640 units in week 2. We have the following product structure tree and
inventory information shown below:
565
X43 Y36(2) N78
J27(4) X43
Part Number On Hand Lot Size Lead Time

565 0 Lot-for-lot 1 week
X43 60 Multiples 1 week
of 120
N78 0 Lot-for-lot 2 weeks
Y36 200 Lot-for-lot 1 week
J27 0 Lot-for-lot 2 weeks
Step 1:
Look at which items are linked together by the Planned-Order Releases for J27: J27, Y36, and
565.
Step 2:
Work from the bottom to the top of the product structure tree. Start with J27 to determine its
Planned-Order Receipts, Net Requirements, and Gross Requirements.
a. We know that J27 has a Planned-Order Release = 640 in week 2.

The lead time for J27 = 2 weeks. This means that the Planned-Order Receipts = 640 in week
4 (2 weeks later).
The lot size for J27 = lot-for-lot. This means that the Net Requirements = Planned-Order
Receipts in week 4 = 640.
The on hand balance for J27 = 0. This means that the Gross Requirements in week 4 = Net
Requirements + On Hand = 640 + 0 = 640.
b. If the Gross Requirements for J27 = 640 in week 4, then the Planned-Order Releases for Y36
= 160 (640 / 4) in week 4.
The lead time for Y36 = 1 week. This means that the Planned-Order Receipts = 160 in week
5 (1 week later).
The lot size for Y36 is lot-for-lot. This means that the Net Requirements = Planned-Order
The on hand balance for Y36 = 200. This means that the Gross Requirements in week 5 = Net
12-48
Education.
c. If the Gross Requirements for Y36 = 360 in week 5, the Planned-Order Releases for 565 =
180 (360 / 2) in week 5.
The lead time for 565 = 1 week. This means that the Planned-Order Receipts = 180 in week 6
(1 week later).
The lot size for 565 is lot-for-lot. This means that the Net Requirements = Planned-Order
The on hand balance for 565 = 0. This means that the Gross Requirements in week 6 = Net
Conclusion: There should be a quantity of 180 listed in week 6 of the master schedule for
Item 565.
Below are the MRP tables verifying the proof discussed above:
Master Week 1 2 3 4 5 6 7 8
Schedule for:
565 Quantity 180
565 LT = 1 Beg.
Lot size: Lot-for-Lot Inv. 1 2 3 4 5 6 7 8

Scheduled receipts
Y36(2) LT = 1 Beg.
Lot size: Lot-for-Lot 1 2 3 4 5 6 7 8
Inv.
Scheduled receipts
J27(4) LT = 2 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
12-49
Education.
18. Given:
Develop a material requirements plan for component H. Use lot-for-lot ordering for all items.
Lead times for the end item and each component (except B) = 1 week. The lead time for B = 3
weeks. On hand balances: B = 15 & E = 130. Scheduled Receipts for H = 50 in week 2. 60 units
of A are needed at the start of week 8. We have the following product structure tree:
B(2) C
D(2) E(2) D(2) E(4)
H(3) K H(3) K
We will need material plans for A, B, C, E, & H.
Master Week 1 2 3 4 5 6 7 8
Schedule Quantity
60
for: A
A LT = 1
Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Net requirements 60
12-50
Education.
B(2) LT = 3
Beg.
1 2 3 4 5 6 7 8

Scheduled receipts
C LT = 1
Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Net requirements 60
E(2) & E(4) LT = 1

Beg.
1 2 3 4 5 6 7 8

Scheduled receipts
Notes:
12-51
Education.
H(3) LT = 1
Beg.
1 2 3 4 5 6 7 8

Notes:
Case: Promotional Novelties

Given:
Promotional Novelties has received an order for 20,000 toy Tractor-Trailers to be ready at the beginning
of week 8. The company can complete final assembly of the Tractor-Trailers at a rate of 10,000 a week.
Tractors and Trailers are purchased and have a lead time = 3 weeks. The company has sufficient supply of
Brackets on hand. Assembly time = 1 week for Tractors, Trailers, and Wheel Assembly. However, the
Wheel Department can assemble a maximum of 100,000 Wheels a week. The manager plans to use the
Wheel Department to full capacity, starting in week 2 of the schedule, and order additional Wheels from a
supplier as needed. Wheels are ordered in sets (multiples) of 6,400, and the lead time from the supplier =
2 to 3 weeks. All items use lot-for-lot ordering except for the purchased Wheels (lot size = multiples of
6,400).
Comments on the product structure tree shown in the text:

The Wheel Assembly of the Tractor differs from the Wheel Assembly of the Trailer.
The Body of the Tractor differs from the Body of the Trailer.
The Tractor and the Trailer use the same Wheel.
We will develop material plans for Tractor-Trailer, Tractor, Trailer, Tractor Wheel Assembly, Trailer
Wheel Assembly, & Wheels.
If the order of 20,000 tractor-trailers is due at the start of week 8 and final assembly is limited to 10,000
per week, then we must list 10,000 in week 7 and 10,000 in week 8 of the master schedule.
12-52
Education.
Master Week 1 2 3 4 5 6 7 8
Schedule Quantity 10,000 10,000
Tractor-Trailer
LT = 1 Beg.
1 2 3 4 5 6 7 8
Inv.
Gross requirements 10,000 10,000
Scheduled receipts
Net requirements 10,000 10,000
Planned-order receipts 10,000 10,000
Planned-order releases 10,000 10,000
Tractor LT = 1
Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
Trailer LT = 1
Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
12-53
Education.
Tractor Wheel
Assembly LT = 1 Beg.
Inv. 1 2 3 4 5 6 7 8
Scheduled receipts
Trailer Wheel
Assembly LT = 1 Beg.
1 2 3 4 5 6 7 8
Inv.
Scheduled receipts
12-54
Education.
Wheels (6) & (12)

LT = 1 Beg.
1 2 3 4 5 6 7 8
Inv.
Scheduled receipts
Projected on hand 0 0 0 0 100,000 20,000 4,000 4,000 4,000
Planned-order receipts 100,000

100,000 100,000
64,000*
Planned-order releases 100,000

100,000 100,000
64,000*
Notes:
Gross Requirements (week 4) = Planned-Order Releases of (10,000 Tractor Wheel Assembly * 6) +
(10,000 Trailer Wheel Assembly * 12) = 60,000 + 120,000 = 180,000.
Gross Requirements (week 5) = Planned-Order Releases of (10,000 Tractor Wheel Assembly * 6) +
(10,000 Trailer Wheel Assembly * 12) = 60,000 + 120,000 = 180,000.
The Planned-Order Receipts in weeks 3, 4, & 5 would be entered as Firm Planned Orders locked in by the
MRP planner so that the MRP system does not re-schedule these amounts automatically.
Planned-Order Releases (week 2) = [Planned-Order Receipts (week 3) of 100,000] + [Planned-Order
Receipts (week 5) of 64,000] = 100,000 + 64,000 = 164,000.
1. The company will need a total of 360,000 Wheels. It will be able to produce only 300,000 during
weeks 2, 3, & 4. The company will need to order at least 60,000 Wheels as indicated with the * in
week 2. The company actually would have to purchase 10 sets of 6,400 Wheels per set = 64,000.
2. The company will need the Wheels in week 5. If lead time will be 2-3 weeks, then assume that it
will be 3 weeks, and order the Wheels from the supplier in week 2.
12-55
Education.
Case: DMD Enterprises

Given:
Marty wants to assemble 15 Arrows and 10 Darts each week to have them ready at the start of weeks 4
through 8. The product structure trees are given in the text along with inventory information on lead
times, on hand amounts, and lot sizing rules. Scheduled Receipts: Arrows = 20 in week 1 & W = 18 in
week 1. Darts = 20 in week 2 & F = 15 in week 2. Develop the material plans for all items.
Master Week 1 2 3 4 5 6 7 8
Schedule for:
Arrows Quantity 15 15 15 15 15
Master Week 1 2 3 4 5 6 7 8
Schedule for:
Darts Quantity 10 10 10 10 10
Arrows LT = 2 Beg.
Inv. 1 2 3 4 5 6 7 8
Gross requirements 15 15 15 15 15
Darts LT = 2 Beg.
1 2 3 4 5 6 7 8
Gross requirements 10 10 10 10 10
X LT = 1 Beg.
1 2 3 4 5 6 7 8
Scheduled receipts
12-56
Education.
Case: DMD Enterprises (continued)

M LT = 1 Beg.
1 2 3 4 5 6 7 8
Lot size: Lot-for-lot Inv.
Scheduled receipts
K(2) LT = 1 Beg.
Inv. 1 2 3 4 5 6 7 8
Lot size: Lot-for-lot
Scheduled receipts
Gross Requirements (week 4) = Planned-Order Releases of 8 Darts * 2 = 16.
F&F LT = 1 Beg.
1 2 3 4 5 6 7 8
Notes:
Gross Requirements (week 4) = Planned-Order Releases of (8 Darts * 1) + (25 X * 1) = 8 + 25 = 33.
12-57
Education.
W & W(2) LT* = 2 or 3 Beg.

1 2 3 4 5 6 7 8
Notes:
Gross Requirements (week 3) = Planned-Order Releases of (5 Arrows *1) + (13 K * 2) = 5 + 26 =
31.
Gross Requirements (week 4) = Planned-Order Releases of (15 Arrows * 1) + (20 K * 2) = 15 + 40
= 55.
Gross Requirements (week 5) = Planned-Order Releases of (15 Arrows * 1) + (20 K * 2) = 15 + 40
= 55.
Gross Requirements (week 6) = Planned-Order Releases of 15 Arrows * 1 = 15.
*Lead time = 2 weeks for orders < 36 & 3 weeks for orders 36.
Planned-Order Releases (week 1) = [Planned-Order Receipts (week 3) = 12] + [Planned-Order
Receipts (week 4) = 60] = 72.
Q LT = 1 Beg.
Inv. 1 2 3 4 5 6 7 8
Lot size: Multiples of 30
Scheduled receipts
Gross Requirements (week 3) = Planned-Order Releases of 13 K * 1 = 13.
12-58
Education.
Operations Tour: Stickley Furniture

1. Batch processing is used with typical lot sizes of 25 to 60 pieces of different types of furniture,
such as tables, chairs, desks, dressers, etc. Repetitive processing is used at sawing, drilling,
finishing, etc. Job shop processing is used for expensive one-of-a-kind special orders that may be
received.
2. Each job is accompanied by a set of bar codes that identifies the job and the operation. As each
operation is completed, the operator removes a bar code sticker and delivers it to the scheduling
office, where it is scanned into a computer, thereby enabling production control to keep track of
progress on a job, and to know its location in the shop.
3. The information needed to plan, schedule, and process the order for 40 mission oak dining room
sets includes:
a. Number of finished units presently in inventory
b. Type of wood
c. Type of furniture
d. Style of furniture
e. Number of finished products needed
f. List of component parts for each finished product
g. Operations required for each component part
h. Inventory for each component part
i. Sequence of operations for each component
j. Sequence of operations for each finished product
k. Orders already in progress or scheduled to precede this order
l. Unutilized equipment and labor
m. Processing times for each component and total processing time for the finished product
4. One benefit would be the stability and improved morale brought about by maintaining a constant
size workforce. A problem could be the buildup of inventories during certain quarters of the year.
5. Because there is a dependent demand situation for all of the components that go into the finished
products, the installation of an MRP system might be of great help to this company in meeting its
delivery dates and in keeping inventory costs down.
12-59
Education.

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Chapter 12 - MRP and ERP

Total required of each:

b. Product structure tree (tree diagram) for stapler:

Top Assembly Base Assembly

Cover Spring Slide Assembly Base Strike Pad Rubber Pad(2)

E(2) F(3) G(2) E(2) H(4) E(2)

Item Gross Requirements On Hand = Net Requirements

Item Gross Requirements On Hand = Net Requirements

Item Gross Requirements On Hand = Net Requirements

1 wk E(2) 2 wk F(3) 1 wk G(2) 1 wk E(2) 2 wk H(4) 1 wk E(2)

Item Direct Components

B(2) J(3) G(2) B(2) H(4) B(2)

Item Gross Requirements On Hand = Net Requirements

Item Gross Requirements On Hand = Net Requirements

Item Gross Requirements On Hand = Net Requirements

2 wk B(2) 3 wk J(3) 3 wk G(2) 2 wk B(2) 2 wk H(4) 2 wk B(2)

POH is the projected on hand inventory at the beginning of each period.

POHt = [POHt-1 + Planned-Order Receiptst-1 Gross Requirementst-1] + Scheduled Receiptst

Net Requirements = Max[(Gross Requirements POH), 0].

J(3) & J(4) LT = 1 Beg.

Item E Week 1 Week 2 Week 3

Item B Week 1 Week 2 Week 3

Item J Week 1 Week 2 Week 3

J(4) & J(3) LT = 1 Beg.

C(3) D(2) E(2) C(2)

Prepare a material requirements plan for component C:

C(3) & C(2) LT = 1 Beg.

D(2) I(2) S(2) D(2)

Prepare a material requirements plan for component D:

D(2) & D(2) LT = 1 Beg.

Quantity Lead Time

Wood Sections(2) Braces(3) Legs(4)

Wood Sections(2) Beg. 1 2 3 4 5 6 7

Quantity Lead Time

D(2) & D(3) Beg.

D, D(2), & D(4) LT = 1 Beg.

a. Product tree structure:

E(3) D D(2) F(3) E(2) D(2)

Assembly time chart: D

Start of week 2 Start of week 8

E(3) & E(2) LT = 1 Beg.

G & G(2) LT = 2 Beg.

c. Determine the on hand balances at the start of week 2:

c. Determine the on hand balances at the start of week 4:

Item E Week 2 Week 3

Item I Week 2 Week 3

Item N Week 2 Week 3

Item V Week 2 Week 3

a. Product structure tree:

Supports(4) Cover Motor Body Seats(2)

Frame Controls Wheels(4)

Assembly Time Chart

Start of week 2 Start of week 8

Golf Cart LT = 1 Beg.

Wheel Assemblies(4) LT = 1 Beg.

a. Develop a master schedule for this revised plan.

Golf Cart LT = 1 Beg.

Gross requirements Inv. 100 100 100

Golf Cart LT = 1 Beg.

Bottom Blade Assembly Screw Top Blade Assembly

Bottom Blade Assembly Beg.

Top Blade Assembly Beg.

Straight Blade LT = 1 Beg.

Straight Plastic Grip Beg.