Operations Management: Material Requirements Planning (MRP) for Product K and its Components

This case study focuses on material requirements planning (MRP) for a product, K, and its components A, B, C, and D. We will create a Master Production Schedule (MPS) for K and individual MRP worksheets for each component, considering lead times, inventory, order quantities, and safety stock.

Product K:

• Bill of Materials (BOM):
  • 2 units of A are required per K.
  • 5 units of B are required per K.
  • 1 unit of B is required per A.
  • 3 units of C are required per A.
  • 2 units of D are required per A.
• Demand:
  • 100 units needed in week 4.
  • 200 units needed in week 5.
  • 100 units needed in week 8.
• Lead Time: 1 week
• Inventory on Hand: 0 units
• Order Policy: Lot for Lot

Components:

• A:
  • Lead Time: 1 week
  • Inventory on Hand: 100 units
  • Minimum Order Quantity: 250 units
  • Order Policy: Lot for Lot
  • Safety Stock: 50 units
• B:
  • Lead Time: 1 week
  • Inventory on Hand: 120 units
  • Minimum Order Quantity: 600 units
  • Order Policy: Lot size by 300 units
  • Safety Stock: 0 units
• C:
  • Lead Time: 1 week
  • Inventory on Hand: 50 units
  • Minimum Order Quantity: 800 units
  • Order Policy: Lot for Lot
  • Safety Stock: 50 units
• D:
  • Lead Time: 1 week
  • Inventory on Hand: 100 units
  • Minimum Order Quantity: 400 units
  • Order Policy: Lot size by 400 units
  • Safety Stock: 0 units

Master Production Schedule (MPS) for Product K:

| Week | MPS | |---|---| | 1 | 0 | | 2 | 0 | | 3 | 0 | | 4 | 100 | | 5 | 200 | | 6 | 0 | | 7 | 0 | | 8 | 100 |

MRP Worksheet for Component A:

| Week | Gross Requirements | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Releases | |---|---|---|---|---|---| | 1 | 0 | 100 | 0 | 0 | 0 | | 2 | 0 | 100 | 0 | 0 | 0 | | 3 | 0 | 100 | 0 | 0 | 0 | | 4 | 200 | 100 | 100 | 250 | 0 | | 5 | 500 | 100 | 400 | 400 | 250 | | 6 | 0 | 250 | -250 | 0 | 250 | | 7 | 0 | 250 | -250 | 0 | 250 | | 8 | 200 | 50 | 150 | 250 | 0 |

MRP Worksheet for Component B:

| Week | Gross Requirements | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Releases | |---|---|---|---|---|---| | 1 | 0 | 120 | 0 | 0 | 0 | | 2 | 0 | 120 | 0 | 0 | 0 | | 3 | 0 | 120 | 0 | 0 | 0 | | 4 | 500 | 120 | 380 | 600 | 0 | | 5 | 1000 | 120 | 880 | 600 | 600 | | 6 | 0 | 620 | -620 | 0 | 600 | | 7 | 0 | 620 | -620 | 0 | 600 | | 8 | 500 | 120 | 380 | 600 | 0 |

MRP Worksheet for Component C:

| Week | Gross Requirements | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Releases | |---|---|---|---|---|---| | 1 | 0 | 50 | 0 | 0 | 0 | | 2 | 0 | 50 | 0 | 0 | 0 | | 3 | 0 | 50 | 0 | 0 | 0 | | 4 | 300 | 50 | 250 | 800 | 0 | | 5 | 300 | 50 | 250 | 800 | 800 | | 6 | 0 | 850 | -850 | 0 | 800 | | 7 | 0 | 850 | -850 | 0 | 800 | | 8 | 150 | 800 | 0 | 0 | 0 |

MRP Worksheet for Component D:

| Week | Gross Requirements | Projected On Hand | Net Requirements | Planned Order Receipt | Planned Order Releases | |---|---|---|---|---|---| | 1 | 0 | 100 | 0 | 0 | 0 | | 2 | 0 | 100 | 0 | 0 | 0 | | 3 | 0 | 100 | 0 | 0 | 0 | | 4 | 200 | 100 | 100 | 400 | 0 | | 5 | 600 | 100 | 500 | 400 | 400 | | 6 | 0 | 500 | -400 | 0 | 400 | | 7 | 0 | 500 | -400 | 0 | 400 | | 8 | 200 | 100 | 100 | 400 | 0 |

This MRP plan ensures that the required quantities of product K and its components are available when needed, considering lead times, inventory levels, and order policies.