1. Chair Seat Legs (2) Cross bar Side Rails (2) Cross bar Back Supports (3) Leg Assembly Back Assembly Level 0 1 2 3 Product Structure Tree

2. Chair Seat Legs (2) Cross bar Side Rails (2) Cross bar Back Supports (3) Leg Assembly Back Assembly Level 0 1 2 3 100 Product Explosion (assume there is no inventory)

3. Chair Seat Legs (2) Cross bar Side Rails (2) Cross bar Back Supports (3) Leg Assembly Back Assembly Level 0 1 2 3 100 Product Explosion (assume there is no inventory)

4. Chair Seat Legs (2) Cross bar Side Rails (2) Cross bar Back Supports (3) Leg Assembly Back Assembly Level 0 1 2 3 100 200 100 300 Product Explosion (assume there is no inventory)

5. The MPS is converted into the gross requirements for each component for each time period (time bucket) in the planning horizon using the bill of materials. MRP Logic 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125

6. The scheduled receipts are orders that have been placed and are on the way. It is assumed that receipts arrive and are available at the beginning of a time period. 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79

7. The initial inventory is added to period 1’s scheduled receipts and placed in period 1 of the Available inventory line. In this case, assume that the initial inventory is 16. Add period 1’s scheduled receipt (7) and initial inventory (16) to obtain the projected on hand amount for period 1 (23). 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23

8. Subtract the projected on hand amount for period 1 (23) from period 1’s gross requirement (10) to find the net requirement (-13). 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13

9. If the net requirement is negative or zero, that amount (13) is added to the period 2’s scheduled receipt (9) to find the period 2’s projected on hand amount (22). 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22

10. Subtract the projected on hand amount for period 2 (22) from period 2’s gross requirement (15) to find the net requirement (-7). 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22 -7

11. If the net requirement is negative or zero, that amount (7) is added to the period 3’s scheduled receipt (0) to find the period 3’s projected on hand amount (7). 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22 -7 7

12. Subtract the projected on hand amount for period 3 (7) from period 3’s gross requirement (20) to find the net requirement (13). If the net requirement is positive, an order receipt must be planned to cover that amount. 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22 -7 7 13

13. If lot-for-lot lot sizing is being used, the planned order receipt is equal to period 3’s net requirement. 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22 -7 7 13

14. The planned order receipt is then offset (moved forward in time) to allow for the lead time. This is the planned order release. 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22 -7 7 13

15. Repeat the steps for period 4. 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22 -7 7 13 12

16. Repeat the steps for period 5 12345 Gross requirements Scheduled receipts Available inventory Net requirements Planned-order receipts Planned-order releases Item 101520125 79 23 -13 22 -7 7 13 12 5 5 5