MME40001 Engineering Management 2 Topic: Operations Management

Tutorial 12: Material Requirement Planning anf Just-in-Time Chapter- 14 & 16

Problem 1: Heather Adams, production manager for a Colorado exercise equipment manufacturer, needs to
schedule an order for 50 UltimaSteppers, which are to be shipped in week 8. Subscripts indicate quantity
required for each parent. Assume lot-for-lot ordering. Below is information about the steppers:
Item Lead On-hand Components
time Inventory
Stepper 2 20 A(1), B(3), C(2)
A 1 10 D(1), F(2),
B 2 30 E(1), F(3),
C 3 10 D(2), E(3),
D 1 15
E 2 5
F 2 20

a) Develop a product structure for Heather.

b) Develop a time-phased product structure
c) Develop a gross material requirements plan
d) Develop a net material requirement plan
Problem 2: The Hunicut and Hallock Corporation makes two versions of the same basic file cabinet, the
TOL (Top-of-the-line) five drawer file cabinet and the HQ (High-quality) five drawer filing cabinet.
The TOL and HQ use the same cabinet frame and locking mechanism. The drawer assemblies are different
although both use the same drawer frame assembly. The drawer assemblies for the TOL cabinet use a sliding
assembly that requires four bearings per side whereas the HQ sliding assembly requires only two bearings
per side. (These bearings are identical for both cabinet types.) 100 TOL and 300 HQ file cabinets need to be
assembled in week #10. No current stock exists.
a) Develop a material structure tree for the TOL and the HQ file cabinets.
b) Develop a gross material requirements plan for the TOL and HQ cabinets
c) Develop a net material requirements plan for the TOL and HQ file cabinets assuming a current on-
hand finished goods inventory of 100 TOL cabinets. The lead times are given below.
Painting and final assembly of both HQ and TOL requires 2 weeks.
Both cabinet frames and lock assembly require 1 week for manufacturing.
Both drawer assemblies require 2 weeks for assembly.
Both sliding assemblies require 2 weeks for manufacturing.
Bearings require 2 week to arrive from the supplier.
Problem 3: The product structure (not using low-
Alpha
level coding) for an assembly product Alpha is
given. The quantities of each component needed for
each assembly are noted in parenthesis. B (1) C (1)
a) Determine the low-level coding
b) Determine the quantity of each component D (2) C (2) E (1) F (1)
necessary to produce 10 units of Alpha.

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 1
 c) Develop a time-phased product structure and material requirement plan (net MRP) for Alphas given
the following lead times, quantity on hand, and master production schedule.
Item Lead Quantity
Time on Hand
Alpha 1 10
B 2 20
C 3 0
D 1 100
E 1 10
F 1 50
Master Production Schedule for Alpha
Period 6 7 8 9 10 11 12 13
Gross requirements 50 50 100

Problem 4:
Period 1 2 3 4 5 6 7 8 9 10 11 12
Gross
30 40 30 70 20 10 80 50
Requirement
Holding cost = $2.50/unit/week; setup cost =$150; lead time = 1 week; beginning inventory = 40
(a) Develop a lot-for-lot solution and calculate total relevant costs for the data in the table.
(b) Develop an EOQ solution and calculate total relevant costs for the data in the preceding table.
Stockout costs equal $10.
(c) Develop a PPB solution and calculate the total relevant costs for the data in the preceding table.

Problem 5: A company wants to establish kanbans to feed a newly established work cell. The following
data have been provided.
Daily demand 250 units
Production lead time day
Safety stock day
Kanban size 50 units
a) How many kanbans are needed?

Problem 6: A Manufacturing Inc. is moving to kanbans to support its telephone switching-board assembly
lines.
Setup cost = $30; Annual holding cost = $120 per subassembly; Daily production = 20 subassemblies;
Annual usage = 2,500 (50 weeks x 5 days each x daily usage of 10 subassemblies); Lead time = 16 days;
and Safety stock = 4 days production of subassemblies.
(a) Determine the size of the kanbans for subassemblies.
(b) Determine the number of kanbans needed.

Problem 7: Given the following information about a product at Phyllis Simons firm, what is the
appropriate setup time?
Annual demand = 39,000 units; Daily demand = 150 units; Daily production = 1,000 units; Desired lot size
= 150 units; Holding cost per unit per year = $10; and Setup labor cost per hour = $40

Abstracted from Heizer, J., and Render, B,. Operations Management, 8e, 2006. Pearson. 2