Chapter 12 – MRP and ERP
12–11
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:
Item
Gross Requirements – On Hand =
Net Requirements
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.
Item
Gross Requirements – On Hand =
Net Requirements
L
(40 * 2) = 80 – 10 =
70
C
(40 * 1) = 40 – 15 =
25
K
(40 * 3) = 120 – 20 =
100
Step 3:
Item
Gross Requirements – On Hand =
Net Requirements
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
End Item
1 wk
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.
B(2) J(3) G(2) B(2) H(4) B(2)
L(2)
C
K(3)
2 wk
2 wk
2 wk
3 wk
3 wk
2 wk
2 wk
3 wk
3 wk
Chapter 12 – MRP and ERP
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:
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
Chapter 12 – MRP and ERP
B(2) LT = 2
Lot size: Multiples of 120
Beg.
Inv.
1
2
3
4
5
6
Gross requirements
160
Scheduled receipts
Projected on hand
60
60
60
60
60
20
20
Net requirements
100
Planned-order receipts
120
Planned-order releases
120
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 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled Receipts5
POH5 = [60 + 120 – 160] + 0 = 20.
J(3) & J(4) LT = 1
Lot size: Multiples of 30
Beg.
Inv.
1
2
3
4
5
6
Gross requirements
480
240
Scheduled receipts
30
30
30
Projected on hand
20
20
20
50
80
50
50
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.
Gross Requirements (week 4) = Planned-Order Releases of 80 E * 3 = 240.
POH5 = [80 + 180 – 240] + 30 = 50.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6.
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).
Chapter 12 – MRP and ERP
12–14
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
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.
Item E
Week 1
Week 2
Week 3
Ending Inventory
0 + 0 – 0 = 0
0 + 0 – 0 = 0
0 + 0 – 0 = 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
Chapter 12 – MRP and ERP
12–15
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
Schedule for:
E
Week
4
5
6
Quantity
70
E LT = 2
Lot size: Lot-for-Lot
Beg.
Inv.
4
5
6
Gross requirements
70
Scheduled receipts
Projected on hand
0
0
0
0
Net requirements
70
Planned-order receipts
70
Planned-order releases
70
B(2) LT = 2
Lot size: Multiples of 120
Beg.
Inv.
4
5
6
Gross requirements
140
Scheduled receipts
120
Projected on hand
60
180
40
40
Net requirements
Planned-order receipts
Planned-order releases
Chapter 12 – MRP and ERP
12–16
Education.
J(4) & J(3) LT = 1
Lot size: Multiples of 30
Beg.
Inv.
4
5
6
Gross requirements
210
Scheduled receipts
210
30
Projected on hand
50
260
80
80
Net requirements
Planned-order receipts
Planned-order releases
Receipts4.
POH4 = [50 + 0 – 0] + 210 = 260.
POH5 = [POH4 + Planned-Order Receipts4 – Gross Requirements4] + Scheduled
Receipts5.
POH5 = [260 + 0 – 210] + 30 = 80.
Chapter 12 – MRP and ERP
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)
12–18
Education.
B(4) LT = 2
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
Gross requirements
320
Scheduled receipts
Projected on hand
100
100
100
100
100
100
0
0
Net requirements
220
Planned-order receipts
220
Planned-order releases
220
Gross Requirements (week 5) = Planned-Order Releases of 80 Z * 4 = 320.
POH6 = [POH5 + Planned-Order Receipts5 – Gross Requirements5] + Scheduled Receipts6
POH6 = [100 + 220 – 320] + 0 = 0.
C(3) & C(2) LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
Gross requirements
440
270
Scheduled receipts
20
Projected on hand
30
30
30
30
20
0
0
0
Net requirements
410
250
Planned-order receipts
410
250
Planned-order releases
410
250
Notes:
POH5 = [20 + 250 – 270] + 0 = 0.
Chapter 12 – MRP and ERP
12–19
Education.
b. Given:
95 units of end item E are needed at the beginning of week 7. On hand balances: E = 5, B =
Prepare a material requirements plan for component D:
We will need to prepare material plans for E, B, C, and D.
Master
Schedule for:
E
Week
1
2
3
4
5
6
7
Quantity
95
E LT = 2
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
Gross requirements
95
Scheduled receipts
Projected on hand
5
5
5
5
5
5
5
5
Net requirements
90
Planned-order receipts
90
Planned-order releases
90
B(3) LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
Gross requirements
270
Scheduled receipts
Projected on hand
50
50
50
50
50
50
0
0
Net requirements
220
Planned-order receipts
220
Planned-order releases
220
Chapter 12 – MRP and ERP
12–20
Education.
C(2) LT = 2
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
Gross requirements
180
Scheduled receipts
30
Projected on hand
100
100
100
100
130
130
0
0
Net requirements
50
Planned-order receipts
50
Planned-order releases
50
Notes:
Gross Requirements (week 5) = Planned-Order Releases of 90 E * 2 = 180.
POH6 = [130 + 50 – 180] + 0 = 0
D(2) & D(2) LT = 1
Lot size: Multiples of 40
Beg.
Inv.
1
2
3
4
5
6
7
Gross requirements
100
440
Scheduled receipts
Projected on hand
80
80
80
80
20
20
20
20
Net requirements
20
420
Planned-order receipts
40
440
Planned-order releases
40
440
Notes:
Gross Requirements (week 3) = Planned-Order Releases of 50 C * 2 = 100.
Gross Requirements (week 4) = Planned-Order Releases of 220 B * 2 = 440.
Planned-Order Receipts (week 4) = 11 * 40 = 440 (multiples of 40 must be used).