MME40001 Engineering Management 2 Topic: Operations Management

Tutorial 12: Material Requirement Planning anf Just-in-Time Chapter- 14 & 16

Problem 1 SOLUTION:
(a) Product Structure

(b) Time Phased Product Structure

(c) Gross Material Requirements Plan:

Week Lead
Time
Item 1 2 3 4 5 6 7 8 9 10 (weeks)
Stepper
Gross req 50
2
Order release 50
A
Gross req 50
1
Order release 50
B
Gross req 150 2
Order release 150
C
Gross req 100 3
Order release 100
Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 1
 D
Gross req 200 50 1
Order release 200 50
E
Gross req 300 150 2
Order release 300 150
F
Gross req 450 100 2
Order release 450 100

(d) Net Material Requirement Plan

Week Lead
Time
Item 1 2 3 4 5 6 7 8 9 10 (weeks)

Gross req 50
STEPPER 2
On-Hand 20
Net req. 30
Required date 30
Order release 30
Gross req 30
A
On-Hand 10
Net req. 20 1

Required date 20
Order release 20
Gross req 90
B
On-Hand 30
Net req. 60 2

Required date 60
Order release 60
Gross req 60
On-Hand 10
C
Net req. 50 3

Required date 50
Order release 50
Gross req 100 20
D
On-Hand 15 0
Net req. 85 20 1

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 2
 Required date 85 20
Order release 85 20
Gross req 150 60
E
On-Hand 5 0
Net req. 145 60 2

Required date 145 60

Order release 145 60
Gross req 180 40
F
On-Hand 20 0
Net req. 160 40 2

Required date 160 40

Order release 160 40

Problem 2 SOLUTION:
a) Product Structure for TOL & HQ

b) Gross Requirement Plan

Week Lead
Time
Item 1 2 3 4 5 6 7 8 9 10 (weeks)
TOL Gross req 100 2
Order release 100
HQ Gross req 300 2
Order release 300

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 3
 A
cabinet Gross req 100+300 1
Frame +
Locks Order release 400
B Gross req
drawer 500 2
Assembly Order release 500
TOL
C
drawer
Gross req 1500 2
Assembly
HQ
Order release 1500
D
drawer Gross req 500+1500 2
Frame
assembly Order release 2000
E Gross req
sliding 500 2
Assembly Order release 500
TOL
F
Sliding
Gross req 1500 2
Assembly
HQ
Order release 1500
G
bearins Gross req 6000+4000 2
Order release 10000

c) Net Requirement Plan

Week Lead
Time
Item 1 2 3 4 5 6 7 8 9 10 (weeks)
Gross req 100
On-Hand 100 100
TOL Net req. 0 2
Required date 0
Order release 0
Gross req 300
On-Hand 0 0
HQ Net req. 300 2
Required date 300
Order release 300
Gross req 300
A On-Hand 0 0
Net req. 300 1
Required date 300
Order release 300
Gross req 0
B On-Hand 0 0
Net req. 0 2
Required date 0
Order release 0
Gross req 1500
C On-Hand 0 0
Net req. 1500 2

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 4
 Required date 1500
Order release 1500
Gross req 1500
On-Hand 0 0 2
D Net req. 1500
Required date 1500
Order release 1500
Gross req 0
E On-Hand 0 0
Net req. 0 2
Required date 0
Order release 0
Gross req 1500
F On-Hand 0 0
Net req. 1500 2
Required date 1500
Order release 1500
Gross req 6000
On-Hand 0 0 2
G Net req. 6000
Required date 6000
Order release 6000

Receipts:
300 cabinet frames and locks in week 8
1500 HQ drawer assemblies in week 8
1500 drawer frame assemblies in week 6
1500 HQ sliding assemblies in week 6
6000 bearings in week 4

Problem 3 SOLUTION:

a)

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 5
 b)

c)

c) Net Requirement Plan based on master schedule

Week Lead
Time
Item 1 2 3 4 5 6 7 8 9 10 11 12 13 (weeks)
Gross req 50 50 100
On-Hand 10 10 0 0
Alpha Net req. 40 50 100 1
Required 40 50 100
date
Order release 40 50 100
Gross req 40 50 100
On-Hand 20 20 0 0
B Net req. 20 50 100 2
Required 20 50 100
date
Order release 20 50 100
Gross req 40 40 100 250 100

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 6
 C On-Hand 0 0 0 0 0 0
Net req. 40 40 100 250 100 3
Required 40 40 100 250 100
date
Order release 40 40 100 250 100
Gross req 40 100 200
D On-Hand 100 100 60 0
Net req. 0 40 200 1
Required 0 40 200
date
Order release 0 40 200
Gross req 40 40 100 250 100
E On-Hand 10 10 0 0 0 0
Net req. 30 40 100 250 100 1
Required 30 40 100 250 100
date
Order release 30 40 100 250 100
Gross req 40 40 100 250 100
On-Hand 50 50 10 0 0 0 1
F Net req. 0 30 100 250 100
Required 0 30 100 250 100
date
Order release 0 30 100 250 100

Problem 4 SOLUTION:
(a)

(b)

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 7
(c)

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 8
Problem 5 SOLUTION:
Demand during lead time 125
Safety stock 62.5
Maximum inventory level 187.5
Number of kanbans needed:
187.5 (Maximum inventory level)
= 3.75 4
50 (Kanban size)

Problem 6 SOLUTION:
(a) First, we determine the kanban size. To do this, we determine the production order quantity (see
Chapter 12), which determines our kanban size.

2 DS 2(2,500)(30)
=Qp =
d 10
H 1 120 1
p 20
150,000
= = =
2,500 50
60

(b) Then we determine the number of kanbans:

Demand during lead time = 160 (= 16 Days x Daily usage of 10)
Safety stock = 80 (= 4 x daily production of 20)
Therefore maximum inventory should be = 240 subassemblies
Because the kanban size is 50 subassemblies, 5 kanbans are appropriate (240/50), rounded from 4.8.

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 9
Problem 7 SOLUTION:
2 DS
Q=
d
H 1
p

where D = annual demand, S = setup or order cost,

H = holding cost, d = daily demand rate, p = daily production rate. Solving for S (setup cost):
d
Q2 H 1 1502 10 1
150

p 1000
S =
2D 2 39,000
22,500 10 (1 0.15)
= $2.45
78,000

$2.45/setup 60 minutes/hour
Setup time =
$40 / hour
= 3.675 minutes/setup

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 10