The Novelty Pencil Company described in the worked example in this chapter has asked you to calculate its ordering schedules for the first and second levels of its ‘Pointy Pencil’ product. Assuming a demand forecast of 500 boxes per week, order lead times of three weeks for all components, a one-week lead time for the company production process and virtually no stockholding charges, develop a schedule for the company.

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Worked example The Novelty Pencil Company is concerned that its computer-based ERP system is pre- venting production employees from understanding exactly what goes into its products. The technologies employed by the company include wood and graphite processing, injec- tion moulding and extrusion of plastics, and the fine engineering of metals. Modern automated assembly machines allow the low-cost, mass production of volume products such as ballpoint pens. In managing the production of its complex range of over 6,000 products, the company has been aided by the use of a well-tried ERP system. Whereas some items, such as standard pencils, have a bill of materials with only a few levels, some of the more involved products require a breakdown of up to seven as processes have become more complex. Individual operators see only a part of the total process. We can print out the bill of materials for each product. But it looks too technical and most people don't really look at it. What we need is a more graphical diagram of some sort that will illustrate exactly what each product is made of. That will allow people to understand how their part of the process contributes to the product as a whole. An example of a typical Novelty Pencil Company bill of materials is shown in Table 14.6. This illustrates the different levels of production involved in manufacturing a 'XXX- HB Pointy Pencil in Box of 10' (level 0). The top level on the bill (shown as .1) gives all the items involved in the final packaging, including the finished pencil itself-coded FPOINT. The next levels in the bill are all required in the production of pencils themselves, with level 2 being the materials required to label the pencils with the Pointy Pencil name and paint for dipping to give the Novelty 'rounded end' on the end of the pencil. At level 3 are the varnishes and paints required to coat the basic pencil, and finally level 4 details the raw materials - slats of wood, pencil lead slips and glue - which are used in the initial production of the pencil.