A n a l y t i c s E x e r c i s e : A n M R P B r u n s w i c k M o t o r s

Recently, Phil Harris, the production control manager at Brunswick, read an article on time-phased requirements planning. He was curious about how this technique might work in scheduling Brunswicks engine assembly operations and decided to prepare an example to illustrate the use of time-phased requirements planning. Phils first step was to prepare a master schedule for one of the engine types produced by Brunswick: the Model 1000 engine. This schedule indicates the number of units of the Model 1000 engine to be assembled each week during the last 12 weeks and is shown below. Next, Phil decided to simplify his requirements planning example by considering only two of the many components that are needed to complete the assembly of the Model 1000 engine. These two components, the gearbox, and the input shaft are shown in the product structure diagram below. Phil noted that the gearbox is assembled by the Subassembly Department and subsequently is sent to the main engine assembly line. The input shaft is one of several component parts manufactured by Brunswick that is needed to produce a gearbox subassembly. Thus, levels 0, 1, and 2 are included in the product structure diagram to indicate the three manufacturing stages that are involved in producing an engine: the Engine Assembly Department, the Subassembly Department, and the Machine Shop.

The manufacturing lead times required to produce the gearbox and input shaft components are also indicated in the product structure diagram. Note that two weeks are required to produce a batch of gearboxes and that all the gearboxes must be delivered to the assembly line parts stockroom before Monday morning of the week in which they are to be used. Likewise, it takes three weeks to produce a lot of input shafts, and all the shafts that are needed for the production of gearboxes in a given week must be delivered to the Subassembly Department stockroom before Monday morning of that week.

In preparing the MRP example Phil planned to use the worksheets shown on the next page and to make the following assumptions:

1. Seventeen gearboxes are on hand at the beginning of Week 1, and five gearboxes are currently on order to be delivered at the start of Week 2.

2. Forty input shafts are on hand at the start of Week 1, and 22 are scheduled for delivery at the beginning of Week 2.

Questions

1.) Initially, assume that Phil wants to minimize his inventory requirements. Assume that each order will be only for what is required for a single period. Using the following forms, calculate the net requirements and planned order releases for the gearboxes and input shafts. Assume that lot sizing is done using lot-for-lot (L4L).

2.) Phil would like to consider the costs that his accountants are currently using for inventory carrying and setup for the gearboxes and input shafts. These costs are as follows:

Gear Box- Setup = $90/order --- Inventory carrying cost = $2/unit/week

Input Shaft- Setup = $45/order and Inventory carrying cost = $1/unit/week

Given the cost structure, evaluate the cost of the schedule from question 1. Assume inventory is valued at the end of each week.

Week	1	2	3	4	5	6	7	8	9	10	11	12
Demand	15	5	7	10	0	15	20	10	0	8	2	16

3.) Find a better schedule by reducing the number of orders and carrying some inventory. What are the savings with this new schedule?

Engine Assembly Master Schedule

Week	1	2	3	4	5	6	7	8	9	10	11	12
Quantity	15	5	7	10	0	15	20	10	0	8	2	16

Gearbox Requirements

Week	1	2	3	4	5	6	7	8	9	10	11	12
Gross Requirements	15	5	7	10	0	15	20	10	0	8	2	16
Schedule Receipts
Projected Available Balance
Net Requirements
Planned Order Release

Input Shaft Requirements

Week	1	2	3	4	5	6	7	8	9	10	11	12
Gross Requirements
Schedule Receipts
Projected Available Balance
Net Requirements
Planned Order Release