To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Resource Planning Chapter 16

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Demand Patterns |||||||||| 1510 Day Day — — — —0Bicycles Figure 16.1 (a)(b) Reorder point Order 1000 on day 3 Order 1000 on day 8 RimsRims — — — —0 |||||||||| 1510 Day Day 2000 — 1500 — 1000 — 500 — 0 Rims |||||||||| 1510 Day

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bills of materials Engineering and process designs Material Requirements Plan Output Figure 16.2 Inventory transactions Inventory records Other sources of demand Authorized master production schedule Material requirements plan MRPexplosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Materials Figure 16.3 Seat cushion Seat-frame boards Front legs A Ladder-back chair Back legs Leg supports Back slats

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Materials J (4) Seat-frame boards I (1) Seat cushion H (1) Seat frame G (4) Back slats F (2) Back legs C (1) Seat subassembly D (2) Front legs B (1) Ladder-back subassembly E (4) Leg supports ALadder-backchair Figure 16.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Master Production Schedule Ladder-back chair Kitchen chair Desk chair 12 AprilMay Aggregate production plan for chair family Figure

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is – 150

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is – 150 = 117 units. Figure 16.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t Scheduled or planned receipts in week t =+–

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week – 3 –153–273–273 Figure 16.5 Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t Scheduled or planned receipts in week t =+–

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week –3 – 3 –153 – 273 Planned Orders Figure 16.6 Explanation: Without a new order in week 4, there will be a shortage of three units: – 120 = – 3 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6 Explanation: Adding the planned receipt brings the balance to – 120 = 227 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6 Explanation: Adding the planned receipt brings the balance to – 120 = 227 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6 Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6 Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week –43 Planned Orders Figure 16.6 Explanation: The first planned order lasts until week 7, when projected inventory would drop to – 43.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6 Explanation: 230 Adding the second planned receipt brings the balance to – 120 = 187.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6 Explanation: 230 Adding the second planned receipt brings the balance to – 120 =

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 16.6 Explanation: The corresponding planned order release is for week 5.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Planned Orders Figure 16.6 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week POQ lot size Gross requirements for weeks 4, 5, and 6 Inventory at end of week 3 = –

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( )

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units 153

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units 153

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 0 = 120 units

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Figure 16.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week L4L lot size Gross requirements in week 4 Inventory balance at end of week 3 = –

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Figure 16.8

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rule Comparison  The FOQ rule generates high average inventory because it creates remnants.  The POQ rule reduces average on-hand inventory because it does a better job of matching order quantity to requirements.  The L4L rule minimizes inventory investment but maximizes the number of orders placed.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Safety Stock Figure 16.9

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. MRP Outputs Figure Material requirements plan Action notices   Releasing new orders   Adjusting due dates Priority reports   Dispatch lists   Supplier schedules Capacity reports   Capacity requirements planning   Finite capacity scheduling   Input-output control Manufacturing resources plan Performance reports Cost and price data Routings and time standards MRP explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Materials Figure J (4) Seat-frame boards H (1) Seat frame I (1) Seat cushion C (1) Seat subassembly

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. MRP Explosion Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Figure Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week MRP Explosion Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Usage quantity: 1 MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Usage quantity: 1 MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week Gross requirements Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week Gross requirements Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Usage quantity: 4 Figure MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week Gross requirements Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Capacity Requirements Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure 16.13

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Capacity Requirements Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure 16.13

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Capacity Requirements Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure 16.13

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Capacity Requirements Explanation: Projected capacity requirements exceed weekly hours of capacity. Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure 16.13

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation Planned Actual Cumulative deviation Inputs Outputs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation– 15– 10– Planned Actual Cumulative deviation– 5–- 10– 20– 32 Inputs Outputs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation– 15– 10– Planned Actual Cumulative deviation– 5– 10– 20– 32 Inputs Outputs Explanation: Cumulative deviations between – 25 hours and + 25 hours are allowed.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation– 15– 10– Planned Actual Cumulative deviation– 5– 10– 20– 32 Inputs Outputs Explanation: Cumulative deviation exceeds lower tolerance limit, indicating actual hours of output have fallen too far below planned hours of output and some action is required. Explanation: Cumulative deviations between – 25 hours and + 25 hours are allowed.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. MRP II Figure Manufacturing resource plan Cost and financial data Purchasing reports Financial/ accounting reports Sales and marketing reports Human resource reports Manufacturing reports Inventory records Inventory transactions Bills of materials Routings Time standards MRPexplosion Master production schedule Customer ordersForecasts Material requirements plan

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Resources Figure (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Preoperative care (Testing) Level 5 Surgery Level 6 Preoperative care (Angiogram)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Resources Level 6 Preoperative care (Angiogram) Figure (b) (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Preoperative care (Testing) Level 5 Surgery Level 6 Preoperative care (Angiogram)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Resources Level 6 Preoperative care (Angiogram) Figure (b) (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Preoperative care (Testing) Level 5 Surgery Level 6 Preoperative care (Angiogram)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Resources Figure (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Preoperative care (Testing) Level 5 Surgery Level 6 Preoperative care (Angiogram) Nurse (6 hr) MD (1 hr) Therapy (1 hr) Bed (24 hr) Lab (3 tests) Kitchen (1 meal) Pharmacy (10 medicines) (b) Level 6 Preoperative care (Angiogram)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Distribution Requirements Planning Retail stores Distribution centers Plants Figure 16.17

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 1 Figure LT = 2 LT = 3 A B (3) C (1) LT = 1 G (1) LT = 3 LT = 6 LT = 3 LT = 1 D (1) E (2)F (1)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Figure A B (1)C (2) D (1) LT = 2 LT = 1 LT = 2 LT = 3 TABLE 16.1INVENTORY RECORD DATA ITEM DATA CATEGORYBCD Lot-sizing rulePOQ (P=3)L4LFOQ = 500 units Lead time1 week2 weeks3 weeks Scheduled receiptsNone200 (week 1)None Beginning (on-hand) inventory

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Item: B Lot size: POQ (P = 3) Description:Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 20 Week Figure

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Item: C Lot size: L4L Description:Lead time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Figure 16.20

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Figure Item: D Lot size: FOQ = 500 units Description:Lead time: 3 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 425 Week