Resource Planning Chapter 16 This presentation covers Chapter 16 - Resource Planning. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Demand Patterns | | | | | | | | | | 1 5 10 Day 2000 — 1500 — 1000 — | | | | | | | | | | 1 5 10 Day 2000 — 1500 — 1000 — 500 — Bicycles Rims 2000 — 1500 — 1000 — 500 — | | | | | | | | | | 1 5 10 Day Order 1000 on day 3 Order 1000 on day 8 The part (a) of the Figure shows a relatively stable demand pattern for the end item. This slide advances automatically. Reorder point Figure 16.1 (a) (b) To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Material Requirements Plan Output Other sources of demand Authorized master production schedule Inventory transactions records Material requirements plan MRP explosion Bills of materials Engineering and process designs Figure 16.2 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Bill of Materials A Ladder-back chair Seat cushion Seat-frame boards Front legs A Ladder-back chair Back legs Leg supports Back slats Figure 16.3 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Bill of Materials Figure 16.3 A Ladder-back chair C (1) Seat subassembly D (2) Front legs B (1) Ladder-back E (4) Leg supports I (1) Seat cushion H (1) frame G (4) Back slats F (2) legs J (4) Seat-frame boards Figure 16.3 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Master Production Schedule Ladder-back chair Kitchen chair Desk chair 1 2 April May 3 4 5 6 7 8 Aggregate production plan for chair family 200 670 150 120 Figure 16.4 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 1 2 3 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week 150 230 120 37 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Record Explanation: Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150 The inventory for each week is calculated from the gross requires, scheduled receipts, and on-hand inventory. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Record Explanation: Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150 = 117 units. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week This series of slides will complete the MRP record by adding in the basic equation for the calculation of projected on-hand inventory. This builds to Figure 16.6. This slide advances automatically. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Record = + – Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t Scheduled or planned receipts in week t = + – To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Inventory Record = + – Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week – 3 –153 –273 This slide adds in the remaining on-hand inventory figures prior to the determination of order quantities and timing. This slide advances automatically. Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t Scheduled or planned receipts in week t = + – To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: Without a new order in week 4, there will be a shortage of three units: 117 + 0 + 0 – 120 = – 3 units. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week –3 – 3 –153 – 273 When the on-hand inventory falls below zero it is necessary to plan an order. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Figure 16.6 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week This slide advances automatically. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: Adding the planned receipt brings the balance to 117 + 0 + 230 – 120 = 227 units. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 This slide advances automatically. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: Adding the planned receipt brings the balance to 117 + 0 + 230 – 120 = 227 units. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 The actual order replacement must be offset by the lead time. This slide advances automatically. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: The first planned order lasts until week 7, when projected inventory would drop to – 43. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 77 –43 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 77 This slide advances automatically. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 77 187 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Explanation: Figure 16.6 Explanation: The corresponding planned order release is for week 5. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 77 187 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Planned Orders Figure 16.6 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 77 187 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 1 2 3 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week 150 230 117 120 37 The next series of slides develops Figure 16.7 manually if the Instructor wishes to show the details of the process. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Gross requirements for weeks 4, 5, and 6 Inventory at end of week 3 Lot-Sizing Rules – POQ POQ lot size Gross requirements for weeks 4, 5, and 6 Inventory at end of week 3 = – Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week This is the basic equation for the POQ. 117 117 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week This slide advances automatically. 117 117 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ (120 + 0 + 150) Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week (120 + 0 + 150) 117 117 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ (120 + 0 + 150) – 117 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week (120 + 0 + 150) – 117 117 117 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ (120 + 0 + 150) – 117 = 153 units Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week (120 + 0 + 150) – 117 = 153 units This slide advances automatically. 117 117 153 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ (120 + 0 + 150) – 117 = 153 units Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week (120 + 0 + 150) – 117 = 153 units The first POQ is 153 units. 117 117 153 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ (120 + 0 + 150) – 117 = 153 units Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week (120 + 0 + 150) – 117 = 153 units 117 117 150 153 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ (120 + 0 + 150) – 117 = 153 units Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week (120 + 0 + 150) – 117 = 153 units 117 117 150 153 153 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ (120 + 0) – 0 = 120 units Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week (120 + 0) – 0 = 120 units With only two weeks remaining in the planning period we use those for the POQ. This slide advances automatically. 117 117 150 150 153 120 153 120 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 150 150 153 120 153 120 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – POQ Figure 16.7 This slide shows the actual screen shot of the Solver output for the POQ example. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 1 2 3 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week 150 230 117 120 37 The next series of slides develops Figure 16.8 manually if the Instructor wishes to show the details of the process. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Gross requirements in week 4 Inventory balance at end of week 3 Lot-Sizing Rules – L4L L4L lot size Gross requirements in week 4 Inventory balance at end of week 3 = – Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L = 120 – 117 = 3 L4L lot size Item: C = 120 – 117 = 3 L4L lot size Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L = 120 – 117 = 3 L4L lot size Item: C = 120 – 117 = 3 L4L lot size Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 3 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L = 120 – 117 = 3 L4L lot size Item: C = 120 – 117 = 3 L4L lot size Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Order quantities will exactly match requirements. 3 3 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 3 3 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 3 150 3 150 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week This slide advances automatically. 3 150 120 3 150 120 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 3 150 120 3 150 120 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rules – L4L Figure 16.8 This is the Solver output for Example 16.8. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Lot-Sizing Rule Comparison The FOQ rule generates high average inventory because it creates remnants. The POQ rule reduces average on-hand inventory because it does a better job of matching order quantity to requirements. The L4L rule minimizes inventory investment but maximizes the number of orders placed. This slide presents the lot sizing rule comparison information from the Chapter. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Safety Stock Figure 16.9 This is the Solver output showing the impact of safety stock on the example. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Routings and time standards MRP Outputs MRP explosion Material requirements plan Action notices Releasing new orders Adjusting due dates Priority reports Dispatch lists Supplier schedules Capacity reports Capacity requirements planning Finite capacity scheduling Input-output control Routings and time standards Manufacturing resources plan Performance reports Cost and price data Figure 16.10 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Bill of Materials C (1) Seat subassembly H (1) Seat frame I (1) Seat cushion J (4) Seat-frame boards Figure 16.11 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Figure 16.12 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 1 230 117 2 3 120 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 227 77 187 The series starts with the MRP record for the end item. Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 1 2 3 120 4 5 6 7 8 Planned receipts Planned order releases Week 230 This is reduced to allow room for subsequent records. The middle of the record has been cut to allow space. This slide advances automatically. Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 1 2 3 120 4 5 6 7 8 Planned receipts Planned order releases Week 230 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 2 3 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week 300 Item: Seat cushion Lot size: L4L These are the two records for level one items. Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Usage quantity: 1 Figure 16.12 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 1 2 3 120 4 5 6 7 8 Planned receipts Planned order releases Week 230 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 2 3 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week 230 300 Item: Seat cushion Lot size: L4L Usage quantity: 1 The gross requirements of the level one items are derived from the planned order releases of the level zero item. Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Usage quantity: 1 Figure 16.12 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 1 2 3 120 4 5 6 7 8 Planned receipts Planned order releases Week 230 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 2 3 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week 230 300 Item: Seat cushion Lot size: L4L Usage quantity: 1 Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 1 2 3 120 4 5 6 7 8 Planned receipts Planned order releases Week 230 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 40 2 3 4 5 6 7 8 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week 110 230 300 180 Item: Seat cushion Lot size: L4L The records are completed in the normal fashion. Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 2 3 4 5 6 7 8 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L 230 Once again, these are reduced and shortened for clarity. This slide advances automatically. Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 2 3 4 5 6 7 8 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L 230 Gross requirements 1 2 3 4 5 6 7 8 Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week The processing of a level two item follows as before. Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Usage quantity: 4 Figure 16.12 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 2 3 4 5 6 7 8 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L 230 Usage quantity: 4 Gross requirements 1 2 3 1200 4 5 6 7 8 Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP Explosion Figure 16.12 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 2 3 4 5 6 7 8 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L 230 Gross requirements 1 200 2 3 1200 4 5 6 7 8 Scheduled receipts Planned receipts Planned order releases Week 500 1500 Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure 16.12 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Workstation: Rough Mill Week: 32 Figure 16.14 Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 –- 10 – 20 – 32 Inputs Outputs To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Explanation: Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 – 10 – 20 – 32 Inputs Outputs Explanation: Cumulative deviations between – 25 hours and + 25 hours are allowed. Figure 16.14 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Explanation: Figure 16.14 Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 – 10 – 20 – 32 Inputs Outputs Explanation: Cumulative deviation exceeds lower tolerance limit, indicating actual hours of output have fallen too far below planned hours of output and some action is required. Cumulative deviations between – 25 hours and + 25 hours are allowed. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 –- 10 – 20 – 32 Inputs Outputs Backlog 25 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 –- 10 – 20 – 32 Inputs Outputs Backlog 25 5 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 –- 10 – 20 – 32 Inputs Outputs Backlog 25 5 0 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 –- 10 – 20 – 32 Inputs Outputs Backlog 25 5 0 18 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Input-Output Report Workstation: Rough Mill Week: 32 Tolerance:  25 hours Week Ending 28 29 30 31 32 Planned 160 155 170 160 165 Actual 145 160 168 177 Cumulative deviation – 15 – 10 – 12 + 5 Planned 170 170 160 160 160 Actual 165 165 150 148 Cumulative deviation – 5 –- 10 – 20 – 32 Inputs Outputs Backlog 25 5 0 18 47 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

MRP II Figure 16.15 Inventory records Inventory transactions Bills of materials Routings Time standards MRP explosion Master production schedule Customer orders Forecasts Material requirements plan Manufacturing resource plan Cost and financial data The complete system includes the various reports for different areas of the organization. Purchasing reports Financial/ accounting reports Sales and marketing reports Human resource reports Manufacturing reports To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Solved Problem 1 LT = 2 LT = 3 A B (3) C (1) LT = 1 G (1) LT = 6 D (1) F (1) This slide supports Solved Problem 1 at the end of the Chapter. Figure 16.18 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Solved Problem 2 A B (1) C (2) D (1) LT = 2 LT = 1 LT = 3 Figure 16.19 TABLE 16.1 INVENTORY RECORD DATA ITEM DATA CATEGORY B C D Lot-sizing rule POQ (P=3) L4L FOQ = 500 units Lead time 1 week 2 weeks 3 weeks Scheduled receipts None 200 (week 1) None Beginning (on-hand) 20 0 425 inventory This series of slides support Solved Problem 2 at the end of the Chapter. To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Solved Problem 2 Figure 16.20 Item: B Lot size: POQ (P = 3) Description: Lead time: 1 week Week 1 2 3 4 5 6 7 8 9 10 Gross requirements 100 200 120 180 60 Scheduled receipts Projected on-hand inventory These next three slides show the completed MRP records from Figure 16.21. We start with Item B which follows from the product structure tree in Figure 16.20. The text has a slightly different sequence due to page layout constraints. 20 20 200 200 240 60 Planned receipts 280 360 Planned order releases 280 360 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Solved Problem 2 Figure 16.20 Item: C Lot size: L4L Description: Lead time: 2 weeks Week 1 2 3 4 5 6 7 8 9 10 Gross requirements 200 400 240 360 120 Scheduled receipts 200 Projected on-hand inventory 200 Planned receipts 400 240 360 120 Planned order releases 400 240 360 120 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.

Solved Problem 2 Figure 16.20 Item: D Lot size: FOQ = 500 units Description: Lead time: 3 weeks Week 1 2 3 4 5 6 7 8 9 10 Gross requirements 400 240 360 120 Scheduled receipts Projected on-hand inventory 425 425 25 25 285 425 305 305 305 360 305 Planned receipts 500 500 Planned order releases 500 500 To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved.