Analytics Exercise 9-2

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 Brunswick's engine assembly operations and decided to prepare an example to illustrate the use of time phased requirements planning.

Phil's 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 on the next page. 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 gear box and the input shaft, are shown in the product structure diagram shown below. Phil noted that the gear box 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 are needed to produce a gear box 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 gear box and input shaft components are also indicated in the bill-of-material diagram. Note that two weeks are required to produce a batch of gear boxes and that all the gear boxes 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 gear boxes 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 below and to make the following assumptions:

1 twenty five gear boxes are on hand at the beginning of Week 1, and seven gear boxes are currently on order to be delivered at the start of Week 2.

2 Fifty input shafts are on hand at the start of Week 1, and 26 are scheduled for delivery at the beginning of Week 2.

Model 1000 master schedule Week 12346 7 9 10 11 12 Demand 18 51210 20 25 13 64 13 Model 1000 bill-of-material Engine assembly Gear box Lead time- 2 weeks Used: 1 per engine Crankcase Input shaft Lead time- 3 weeks Used: 2 per gear box Used: 2 per gear box a. Initially, assume that Phil releases for the gear boxes and input shafts. Assume that lot sizing is done using lot-for-lot wants to minimize his inventory requirements. Assume that each order will be only for what is required for a single period. Calculate the net requirements and Gear Box Requirements Gross Requirements 18 12 10 20 25 25 O Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release o 0 10 0 10 0 20 0 20 0 20 0 13 0 25 0 25 5 0 5 0 10 0 25 0 input Shaft Requirements 50 0 26 0 20 0 26 0 52 10 0 40 0 Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release 40 0 52 0 26 26 0 50 50 0 50 0 12 0 26 0 o O 20 the costs that his accountants are currently using for inventory carrying and setup for the gear boxes and input shafts. These costs are as follows Gear BoxSetup $100/forder Inventory carrying cost $2/unitweek irements. Assume that each order wil be only for what is required for a single period. Calculate the net requirements and planned onder ing is done using lot-for-ot. 12 10 20 25 20 0 20 o 13 0 250 : 130 00 25 O 13 0 13 0 10 0 20 0 25 0 40 0 50 0 26 0 26 0 20 O 26 0 52 0 26 26 0 12 12 26 o 26 26 O 50 0 12 0 26 0 26 0 mently using for inventory carrying and setup for the gear boxes and input shafts. These oosts are as tollow 28 Phil would like to b. Given the cost structure, evaluate the cost of the schedule from (a). Assume inventory is valued at the end of each week Total Cost