sophisticated mathematical analysis and toward information systems management and
behavioral issues.
5. A replenishment philosophy is reflected by an order point or target inventory system which
replenishes the stock when it runs low. This approach is necessary since the company
cannot control customer demand.
On the other hand, a requirements philosophy is based on the procurement of inventory to
support the master production schedule. Stock is not automatically replenished when it
runs low, only when it is needed to meet future requirements. Since the company controls
6. It is difficult to apply the ABC principle to manufacturing component inventories, because
no component is of lesser importance than any other. For example, an expensive machine,
which is being assembled, might be delayed for shipment due to lack of a C item just as
for the lack of an A item. In this sense all components are critical for completion of the
manufacturing task.
7. Enough safety stock should be carried to cover uncertainties in demand and lead times and
still meet service level goals. Some safety stock of finished goods may be carried to act as
a buffer between the customer and the master production schedule. Safety stock of partly
assembled components may be carried so that finished products can be quickly assembled,
and safety stock of raw materials may be carried as a buffer between vendors and the
company.
8. The advantages of cycle counting over an annual physical inventory are:
– more accurate inventory records
– possibly less cost and effort
– no loss of production due to plant closure for inventory counting
– less expediting and stock chasing to locate lost parts
– more accurate storeroom locations of parts
9. A shop floor control system is needed for all manufacturing systems except those with a
very simple product line, those with a short production lead time or those with a repetitive
master schedule. In the case of a simple product line, e.g., a few products, the progress of
manufacturing can be easily determined. Likewise, if the manufacturing lead time is short,
there is not much work-in-process inventory on the shop floor and therefore little need for
a shop floor control system. When the schedule is repetitive, in JIT systems, shop floor
10. The best financial control system stems from control of the physical flow of materials,
people, and capacity in manufacturing. Financial control is the same as physical control
except in different units of measure—dollars instead of physical units. While it is possible
to establish financial control in aggregate dollar terms without physical control, the
resulting financial control is not fully effective.
11. The company president may be right. The company should use MRP only if the potential
benefits exceed the costs of installation and operation. In many cases, however, very small
companies can receive sufficient benefits relative to cost — due to the low cost of PC-based
MRP software.
12. The loop should be closed unless the company has excess capacity or capacity can be easily
adjusted. Otherwise, the master production schedule may be infeasible with respect to
capacity, and as a result order priorities will be wrong.
13. a. Hotel. MRP could be used to explode the requirements for rooms into labor and
materials needed. Each room generates requirements for maintenance, maid
service, food service, food, linens, etc.
b. Legal Office. The demand for various types of legal services could be exploded
into labor needed including lawyers’ time, secretarial time, research time, etc.
1.
Week
1 2 3 4 5
Gross Requirements 100 400 300
On-hand/Scheduled Receipts 80 50
Net requirements — 370 300
Planned Order Releases 370 300
2. a. Materials Plan:
NAME:
*****************
SECT:
*********
DATE:
18–Dec–02
CHAPTER 16, PROBLEM 2
MATERIALS PLAN
OLD HICKORY FURNITURE COMPANY
*****PART*****
1
2
3
5
6
———-
——————–
——-
——-
——-
——-
——-
CHAIR
GROSS REQUIREMENTS:
0
0
0
600
300
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
100
100
100
100
0
NET REQUIREMENTS
0
0
0
500
300
PLAN. ORDER RELEASES
0
0
0
300
0
———-
——————–
——-
——-
——-
——-
——-
LEG
GROSS REQUIREMENTS:
0
0
0
300
0
ASSEMBLY
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
50
50
50
0
0
NET REQUIREMENTS
0
0
0
300
0
PLAN. ORDER RELEASES
0
450
300
0
0
———-
——————–
——-
——-
——-
——-
——-
BACK
GROSS REQUIREMENTS:
0
0
0
300
0
ASSEMBLY
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
25
25
25
0
0
NET REQUIREMENTS
0
0
0
300
0
PLAN. ORDER RELEASES
0
0
475
0
0
———-
——————–
——-
——-
——-
——-
——-
SEAT
GROSS REQUIREMENTS:
0
0
0
300
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
40
40
40
0
0
NET REQUIREMENTS
0
0
0
300
0
PLAN. ORDER RELEASES
460
300
0
0
0
———-
——————–
——-
——-
——-
——-
——-
RAILS
GROSS REQUIREMENTS:
0
1800
1200
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
100
100
0
0
0
NET REQUIREMENTS
0
1700
1200
0
0
PLAN. ORDER RELEASES
1700
1200
0
0
0
———-
——————–
——-
——-
——-
——-
——-
LEGS
GROSS REQUIREMENTS:
0
1800
1200
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
150
150
0
0
0
NET REQUIREMENTS
0
1650
1200
0
0
PLAN. ORDER RELEASES
1650
1200
0
0
0
———-
——————–
——-
——-
——-
——-
——-
*****PART*
****
1
2
3
5
6
TOP
GROSS REQUIREMENTS:
0
0
475
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
30
30
30
0
0
NET REQUIREMENTS
0
0
445
0
0
PLAN. ORDER RELEASES
445
300
0
0
0
———-
——————–
——-
——-
——-
——-
——-
SPINDLE
GROSS REQUIREMENTS:
0
0
1900
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
80
80
80
0
0
NET REQUIREMENTS
0
0
1820
0
0
PLAN. ORDER RELEASES
1820
1200
0
0
0
———-
——————–
——-
——-
——-
——-
——-
CAPACITY PLAN FOR ASSEMBLY
1
2
3
5
6
———-
——————–
——-
——-
——-
——-
——-
CHAIR ASSEMBLY HOURS
0
0
0
600
0
LEG ASSEMBLY HOURS
0
450
300
0
0
BACK ASSEMBLY HOURS
0
0
475
0
0
———-
——————–
——-
——-
——-
——-
——-
TOTAL ASSEMBLY HOURS
0
450
775
600
0
b. Seats, rails, legs, tops, and spindles should be ordered immediately.
c. The 1000 hour capacity limit in assembly will cause problems in week 4, since the
assembly time required to meet the plan is 1300 hours. Possible solutions include
150 hours are required in week 2, 575 in week 3, and 800 each in weeks 4 and 5.
This plan would solve the problem in week 4 in assembly.
3. a. Product Structure
A
┌───────────┴───────────┐
B C
┌─────┴──────┐ ┌─────┴─────┐
D(2) E D F
4. a.
NAME :
*****************
SECT :
**************
DATE :
18–Dec–02
CHAPTER 16, PROBLEM 4
MATERIALS PLAN FOR PRODUCT A
PART
1
2
3
5
6
——
——————–
———-
——-
——-
——-
——-
A
GROSS REQUIREMENTS
0
0
0
200
250
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
75
75
75
75
0
NET REQUIREMENTS
0
0
0
125
250
PLAN. ORDER RELEASES
0
0
0
250
0
——
——————–
———-
——-
——-
——-
——-
B
GROSS REQUIREMENTS
0
0
200
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
150
150
150
0
0
NET REQUIREMENTS
0
0
50
0
0
PLAN. ORDER RELEASES
50
500
0
0
0
——
——————–
———-
——-
——-
——-
——-
C
GROSS REQUIREMENTS
0
0
0
500
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
50
50
50
0
0
NET REQUIREMENTS
0
0
0
500
0
PLAN. ORDER RELEASES
0
0
200
0
0
——
——————–
———-
——-
——-
——-
——-
D
GROSS REQUIREMENTS
0
0
400
250
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
100
100
100
0
0
NET REQUIREMENTS
0
0
300
250
0
PLAN. ORDER RELEASES
300
1125
250
0
0
——
——————–
———-
——-
——-
——-
——-
5. a. He would need to know the following:
– Are the parts available, either from inventory or from the supplier,
within the lead time required?
– Can the present work be expedited or the master production schedule
changed to allow for the additional work?
6. a. Scissors 1 2 3 4 5
Gross Requirements 200 500
On Hand/Scheduled Receipts 100
Net Requirements 100 500
Planned Order Release 100 500
sophisticated mathematical analysis and toward information systems management and
behavioral issues.
5. A replenishment philosophy is reflected by an order point or target inventory system which
replenishes the stock when it runs low. This approach is necessary since the company
cannot control customer demand.
On the other hand, a requirements philosophy is based on the procurement of inventory to
support the master production schedule. Stock is not automatically replenished when it
runs low, only when it is needed to meet future requirements. Since the company controls
6. It is difficult to apply the ABC principle to manufacturing component inventories, because
no component is of lesser importance than any other. For example, an expensive machine,
which is being assembled, might be delayed for shipment due to lack of a C item just as
for the lack of an A item. In this sense all components are critical for completion of the
manufacturing task.
7. Enough safety stock should be carried to cover uncertainties in demand and lead times and
still meet service level goals. Some safety stock of finished goods may be carried to act as
a buffer between the customer and the master production schedule. Safety stock of partly
assembled components may be carried so that finished products can be quickly assembled,
and safety stock of raw materials may be carried as a buffer between vendors and the
company.
8. The advantages of cycle counting over an annual physical inventory are:
– more accurate inventory records
– possibly less cost and effort
– no loss of production due to plant closure for inventory counting
– less expediting and stock chasing to locate lost parts
– more accurate storeroom locations of parts
9. A shop floor control system is needed for all manufacturing systems except those with a
very simple product line, those with a short production lead time or those with a repetitive
master schedule. In the case of a simple product line, e.g., a few products, the progress of
manufacturing can be easily determined. Likewise, if the manufacturing lead time is short,
there is not much work-in-process inventory on the shop floor and therefore little need for
a shop floor control system. When the schedule is repetitive, in JIT systems, shop floor
10. The best financial control system stems from control of the physical flow of materials,
people, and capacity in manufacturing. Financial control is the same as physical control
except in different units of measure—dollars instead of physical units. While it is possible
to establish financial control in aggregate dollar terms without physical control, the
resulting financial control is not fully effective.
11. The company president may be right. The company should use MRP only if the potential
benefits exceed the costs of installation and operation. In many cases, however, very small
companies can receive sufficient benefits relative to cost — due to the low cost of PC-based
MRP software.
12. The loop should be closed unless the company has excess capacity or capacity can be easily
adjusted. Otherwise, the master production schedule may be infeasible with respect to
capacity, and as a result order priorities will be wrong.
13. a. Hotel. MRP could be used to explode the requirements for rooms into labor and
materials needed. Each room generates requirements for maintenance, maid
service, food service, food, linens, etc.
b. Legal Office. The demand for various types of legal services could be exploded
into labor needed including lawyers’ time, secretarial time, research time, etc.
1.
Week
1 2 3 4 5
Gross Requirements 100 400 300
On-hand/Scheduled Receipts 80 50
Net requirements — 370 300
Planned Order Releases 370 300
2. a. Materials Plan:
NAME:
*****************
SECT:
*********
DATE:
18–Dec–02
CHAPTER 16, PROBLEM 2
MATERIALS PLAN
OLD HICKORY FURNITURE COMPANY
*****PART*****
1
2
3
5
6
———-
——————–
——-
——-
——-
——-
——-
CHAIR
GROSS REQUIREMENTS:
0
0
0
600
300
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
100
100
100
100
0
NET REQUIREMENTS
0
0
0
500
300
PLAN. ORDER RELEASES
0
0
0
300
0
———-
——————–
——-
——-
——-
——-
——-
LEG
GROSS REQUIREMENTS:
0
0
0
300
0
ASSEMBLY
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
50
50
50
0
0
NET REQUIREMENTS
0
0
0
300
0
PLAN. ORDER RELEASES
0
450
300
0
0
———-
——————–
——-
——-
——-
——-
——-
BACK
GROSS REQUIREMENTS:
0
0
0
300
0
ASSEMBLY
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
25
25
25
0
0
NET REQUIREMENTS
0
0
0
300
0
PLAN. ORDER RELEASES
0
0
475
0
0
———-
——————–
——-
——-
——-
——-
——-
SEAT
GROSS REQUIREMENTS:
0
0
0
300
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
40
40
40
0
0
NET REQUIREMENTS
0
0
0
300
0
PLAN. ORDER RELEASES
460
300
0
0
0
———-
——————–
——-
——-
——-
——-
——-
RAILS
GROSS REQUIREMENTS:
0
1800
1200
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
100
100
0
0
0
NET REQUIREMENTS
0
1700
1200
0
0
PLAN. ORDER RELEASES
1700
1200
0
0
0
———-
——————–
——-
——-
——-
——-
——-
LEGS
GROSS REQUIREMENTS:
0
1800
1200
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
150
150
0
0
0
NET REQUIREMENTS
0
1650
1200
0
0
PLAN. ORDER RELEASES
1650
1200
0
0
0
———-
——————–
——-
——-
——-
——-
——-
*****PART*
****
1
2
3
5
6
TOP
GROSS REQUIREMENTS:
0
0
475
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
30
30
30
0
0
NET REQUIREMENTS
0
0
445
0
0
PLAN. ORDER RELEASES
445
300
0
0
0
———-
——————–
——-
——-
——-
——-
——-
SPINDLE
GROSS REQUIREMENTS:
0
0
1900
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
80
80
80
0
0
NET REQUIREMENTS
0
0
1820
0
0
PLAN. ORDER RELEASES
1820
1200
0
0
0
———-
——————–
——-
——-
——-
——-
——-
CAPACITY PLAN FOR ASSEMBLY
1
2
3
5
6
———-
——————–
——-
——-
——-
——-
——-
CHAIR ASSEMBLY HOURS
0
0
0
600
0
LEG ASSEMBLY HOURS
0
450
300
0
0
BACK ASSEMBLY HOURS
0
0
475
0
0
———-
——————–
——-
——-
——-
——-
——-
TOTAL ASSEMBLY HOURS
0
450
775
600
0
b. Seats, rails, legs, tops, and spindles should be ordered immediately.
c. The 1000 hour capacity limit in assembly will cause problems in week 4, since the
assembly time required to meet the plan is 1300 hours. Possible solutions include
150 hours are required in week 2, 575 in week 3, and 800 each in weeks 4 and 5.
This plan would solve the problem in week 4 in assembly.
3. a. Product Structure
A
┌───────────┴───────────┐
B C
┌─────┴──────┐ ┌─────┴─────┐
D(2) E D F
4. a.
NAME :
*****************
SECT :
**************
DATE :
18–Dec–02
CHAPTER 16, PROBLEM 4
MATERIALS PLAN FOR PRODUCT A
PART
1
2
3
5
6
——
——————–
———-
——-
——-
——-
——-
A
GROSS REQUIREMENTS
0
0
0
200
250
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
75
75
75
75
0
NET REQUIREMENTS
0
0
0
125
250
PLAN. ORDER RELEASES
0
0
0
250
0
——
——————–
———-
——-
——-
——-
——-
B
GROSS REQUIREMENTS
0
0
200
0
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
150
150
150
0
0
NET REQUIREMENTS
0
0
50
0
0
PLAN. ORDER RELEASES
50
500
0
0
0
——
——————–
———-
——-
——-
——-
——-
C
GROSS REQUIREMENTS
0
0
0
500
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
50
50
50
0
0
NET REQUIREMENTS
0
0
0
500
0
PLAN. ORDER RELEASES
0
0
200
0
0
——
——————–
———-
——-
——-
——-
——-
D
GROSS REQUIREMENTS
0
0
400
250
0
SCHEDULED RECEIPTS
0
0
0
0
0
PROJECTED ON HAND
100
100
100
0
0
NET REQUIREMENTS
0
0
300
250
0
PLAN. ORDER RELEASES
300
1125
250
0
0
——
——————–
———-
——-
——-
——-
——-
5. a. He would need to know the following:
– Are the parts available, either from inventory or from the supplier,
within the lead time required?
– Can the present work be expedited or the master production schedule
changed to allow for the additional work?
6. a. Scissors 1 2 3 4 5
Gross Requirements 200 500
On Hand/Scheduled Receipts 100
Net Requirements 100 500
Planned Order Release 100 500