Operations Management: MRP and MPS for Product K and its Components

This case study examines the MRP and MPS for Product K and its components A, B, C, and D. Here's a breakdown of the problem and the solutions generated:

Problem Statement:

Product K is produced according to the following Bill of Materials (BOM):

• 2 units of A are required per unit of K.
• 5 units of B are required per unit of K.
• 1 unit of B is required per unit of A.
• 3 units of C are required per unit of A.
• 2 units of D are required per unit of A.

Demand for Product K is as follows:

• Week 4: 100 units
• Week 5: 200 units
• Week 8: 100 units

Product K has a lead time of one week and no inventory on hand. A Lot for Lot ordering policy is used.

The components A, B, C, and D have the following characteristics:

• Component A:
  • Lead time: 1 week
  • Inventory: 100 units
  • Minimum order quantity: 250 units
  • Ordering policy: Lot for Lot
  • Safety stock: 50 units
• Component B:
  • Lead time: 1 week
  • Inventory: 120 units
  • Minimum order quantity: 600 units
  • Ordering policy: Lot size by 300 units
  • Safety stock: 0 units
• Component C:
  • Lead time: 1 week
  • Inventory: 50 units
  • Minimum order quantity: 800 units
  • Ordering policy: Lot for Lot
  • Safety stock: 50 units
• Component D:
  • Lead time: 1 week
  • Inventory: 100 units
  • Minimum order quantity: 400 units
  • Ordering policy: Lot size by 400 units
  • Safety stock: 0 units

Solutions:

MPS for K:

| Week | MPS (Product K) | |------|-----------------| | 4 | 100 | | 5 | 200 | | 8 | 100 |

MRP Worksheet for A:

| Week | Gross Requirements | Scheduled Receipt | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Release | |------|--------------------|--------------------|--------------------|-----------------|-----------------------|-----------------------| | 1 | | | 100 | | | | | 2 | | | 100 | | | | | 3 | | | 100 | | | | | 4 | 200 | | 100 | 100 | 250 | 250 | | 5 | 500 | 250 | 100 | 350 | 350 | 350 | | 6 | 1050 | 600 | 500 | 550 | 550 | 550 | | 7 | 1850 | 1250 | 950 | 900 | 900 | 900 | | 8 | 2350 | 2000 | 1750 | 600 | 600 | 600 |

MRP Worksheet for B:

| Week | Gross Requirements | Scheduled Receipt | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Release | |------|--------------------|--------------------|--------------------|-----------------|-----------------------|-----------------------| | 1 | | | 120 | | | | | 2 | | | 120 | | | | | 3 | | | 120 | | | | | 4 | 500 | | 120 | 380 | 600 | 600 | | 5 | 1000 | 600 | 520 | 480 | 600 | 600 | | 6 | 2000 | 1200 | 920 | 1080 | 1200 | 1200 | | 7 | 3000 | 1800 | 1720 | 1280 | 1500 | 1500 | | 8 | 3200 | 2700 | 2720 | 480 | 600 | 600 |

MRP Worksheet for C:

| Week | Gross Requirements | Scheduled Receipt | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Release | |------|--------------------|--------------------|--------------------|-----------------|-----------------------|-----------------------| | 1 | | | 50 | | | | | 2 | | | 50 | | | | | 3 | | | 50 | | | | | 4 | 300 | | 50 | 250 | 800 | 800 | | 5 | 750 | 800 | 50 | 700 | 700 | 700 | | 6 | 2550 | 1550 | 250 | 2300 | 2300 | 2300 | | 7 | 4650 | 3550 | 800 | 3850 | 3850 | 3850 | | 8 | 5650 | 4650 | 2050 | 3600 | 3600 | 3600 |

MRP Worksheet for D:

| Week | Gross Requirements | Scheduled Receipt | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Release | |------|--------------------|--------------------|--------------------|-----------------|-----------------------|-----------------------| | 1 | | | 100 | | | | | 2 | | | 100 | | | | | 3 | | | 100 | | | | | 4 | 200 | | 100 | 100 | 400 | 400 | | 5 | 500 | 400 | 100 | 400 | 800 | 800 | | 6 | 1100 | 800 | 500 | 600 | 1200 | 1200 | | 7 | 1900 | 1400 | 900 | 1000 | 1600 | 1600 | | 8 | 2700 | 2200 | 1500 | 1200 | 1600 | 1600 |

Notes:

• Gross Requirements: The demand for each component in each week, derived from the BOM and the MPS for Product K.
• Scheduled Receipt: The expected receipt of components due to previous orders.
• Projected On Hand: The estimated inventory on hand at the beginning of each week, calculated by subtracting the Gross Requirements from the previous week's Projected On Hand and adding the Scheduled Receipt for the current week.
• Net Requirements: The actual amount of each component needed to meet demand, calculated by subtracting the Projected On Hand from the Gross Requirements.
• Planned Order Receipt: The planned amount of each component to be received in each week, taking into account lead times and ordering policies.
• Planned Order Release: The planned amount of each component to be ordered in each week.

This detailed MRP and MPS analysis provides a comprehensive plan for managing the production of Product K and its components, ensuring timely fulfillment of customer orders and optimal inventory levels.