A producer of home appliances is planning the production of its only electric tea kettle, known as Product Z. One unit of Product Z is made of 2 units of subassembly Y and 4 units of subassembly X. One unit of Y, on the other hand, requires 3 units of A and 3 units of B. One unit of A is made of 1 unit of B and 2 units of C. One unit of subassembly X is made of 5 units of A and 4 units of C. Production lead time to assemble subassemblies X and Y to make Product Z is 2 weeks. Production lead times to make subassemblies X and Y are 2 weeks and 1 week, respectively. Production lead time for Part A is 1 week. Parts B and C are ordered from outside suppliers with order lead times of 2 and 3 weeks, respectively. The firm has pipeline inventory for these parts. Specifically, the firm will receive 200 Part A in week 2 and 400 Part A in week 5. 

The supplier is also scheduled to deliver 350 Part C in week 4. The master production schedule (MPS) shows a demand of 800, 1200, 1000, and 1500 units for Product Z in weeks 12, 13, 14, and 15, respectively. 

a. Draw a product structure diagram for the electric kettle. 

b. Develop a weekly production and ordering schedule to satisfy the demand for the kettle. Specifically, determine how many of each part or subassembly must be produced or ordered each week to satisfy MPS. Use lot-for-lot as your lot sizing policy. 

c. Part C is an expensive component that is ordered from a supplier in Asia. There is a large order setup and shipment cost of $1500 associated with placing and receiving an order of Part C. This cost is independent of the order size. Therefore, the firm wants to use another lot sizing policy (instead of lot-for-lot) to minimize the cost of ordering and holding inventory of Part C. If holding one unit of Part C in inventory for 1 week costs $1, when should the firm place order for Part C to satisfy MPS? How many Part C should be ordered each time?

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Part a Bi... View the full answer