Calculation Short Answer Question (based on IMM Text Chapter 3 Case Study) worth 10 points

The Acme Water Pump Company has a problem. The pumps are fairly expensive to make and store, so the company tends to keep the inventory low. At the same time, it is important to respond to demand quickly, since a customer who wants a water pump is very likely to get one from a competitor if Acme doesnt have one available immediately. Acmes current pump production policy is to produce 100 per week, which is the average demand. Even this is a problem, as the Production Manager has pointed out, since the equipment is also used for other products and a lot size of 300 would be much more efficient. He said he is currently set up for water pump production and states he has the capacity available to complete 300 pumps next week and then every week they are needed thereafter.

The President of Acme has said that she wants to consider using a formal MPS with ATP logic to try and meet demand more effectively without a large impact on inventory. Acme has decided to use a demand time fence of three weeks and has also found out that its current finished goods inventory is 25 water pumps.

Based on the desire to use a lot size of 300 units as requested by the Production Manager with the first batch available for completion in week #1:

a) develop a master schedule and resulting ATP using the information on the next page

Week	1	2	3	4	5	6	7	8	9	10	11	12
Forecast	90	120	110	80	85	95	100	110	90	90	100	110
Customer Orders	105	97	93	72	98	72	53	21	17	6	2	5
Projected Inventory
M P S Receipt
A T P

b) A customer has just requested a major order of 45 pumps for delivery in week #5. What would you tell the customer about having such an order? Why? What, if anything, would such an order do to the operation?