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Chapter 12 - MRP and ERP
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
(hours per ton)
4
3
Weekly production
capacity (hours)
300
200
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
(load)
40 * 4 = 160
80 * 4 = 320
60 * 4 = 240
70 * 4 = 280
Machine standard
3
3
3
3
Machine
requirements
(load)
40 * 3 = 120
80 * 3 = 240
60 * 3 = 180
70 * 3 = 210
Capacity Utilization (round % to two decimals)
Week number
1
2
3
4
Labor
requirements
160
320
240
280
Labor capacity
300
300
300
300
Labor
utilization
160/300 * 100 =
53.33%
320/300 * 100 =
106.67%
240/300 * 100 =
80.00%
280/300 * 100 =
93.33%
Machine
requirements
120
240
180
210
Machine capacity
200
200
200
200
Machine
utilization
120/200 * 100 =
60.00%
240/200 * 100 =
120.00%
180/200 * 100 =
90.00%
210/200 * 100 =
105.00%
b. Capacity utilization exceeds 100% for both labor and machine in week 2, and for machine in
week 4.
12-52
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
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.
Chapter 12 - MRP and ERP
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
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.
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
Chapter 12 - MRP and ERP
12-54
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
Chapter 12 - MRP and ERP
c. If the Gross Requirements for Y36 = 360 in week 5, the Planned-Order Releases for 565 =
180 (360 / 2) in week 5.
Requirements + On Hand = 180 + 0 = 180.
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
Schedule for:
565
Week
1
2
3
4
5
6
7
8
Quantity
180
565 LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
8
Gross requirements
180
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
0
Net requirements
180
Planned-order receipts
180
Planned-order releases
180
Chapter 12 - MRP and ERP
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:
A
B(2)
C
Chapter 12 - MRP and ERP
B(2) LT = 3
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
8
Gross requirements
120
Scheduled receipts
Projected on hand
15
15
15
15
15
15
15
15
0
Net requirements
105
Planned-order receipts
105
Planned-order releases
105
C LT = 1
Lot size: Lot-for-Lot
Beg.
Inv.
1
2
3
4
5
6
7
8
Gross requirements
60
Scheduled receipts
Projected on hand
0
0
0
0
0
0
0
0
0
Net requirements
60
Planned-order receipts
60
Planned-order releases
60
