Chapter 14, Problem 10P

a)

Summary Introduction

To develop: A gross requirements plan for all the items.

Introduction:

Gross requirements plan:

The gross requirements plan is the plan where the independent and dependent demand for a product or a component before the on-hand inventory and the scheduled receipts are netted with.

Explanation of Solution

Given information:

Product structure:

Master production schedule for X1:

	MPS for X1
Period	7	8	9	10	11	12
Gross requirements		50		20		100

Inventory and lead time:

Item	X1	B1	B2	A1	C	D	E
Lead time	1	2	2	1	1	1	3
On hand	50	20	20	5	0	0	10

Item X1:

	Week
Item X1	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								50		20		100
Order release							50		20		100

The gross requirements are 50, 20 and 100 (1 assembly of X1) in weeks 8, 10 and 12 respectively derived from the master production schedule of X1. The lead time is 1 week. Therefore, the order release will be 50, 20 and 100 in weeks 7, 9 and 11 respectively.

Item B1:

	Week
Item B1	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							50		20		100
Order release					50		20		100

The order release of X1 will become the gross requirements of B1. The gross requirements are 50, 20 and 100 (1 assembly of B1) in weeks 7, 9 and 11 respectively. The lead time is 2 weeks. Therefore, the order release will be 50, 20 and 100 in weeks 5, 7 and 9 respectively.

Item B2:

	Week
Item B2	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							100		40		200
Order release					100		40		200

The order release of X1 will become the gross requirements of B2. The gross requirements are 100, 40 and 200 (2 assemblies of B2) in weeks 7, 9 and 11 respectively. The lead time is 2 weeks. Therefore, the order release will be 100, 40 and 200 in weeks 5, 7 and 9 respectively.

Item A1:

	Week
Item A1	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					50		20		100
Order release				50		20		100

The order release of B1 will become the gross requirements of A1. The gross requirements are 50, 20 and 100 (1 assembly of A1) in weeks 5, 7 and 9 respectively. The lead time is 1 week. Therefore, the order release will be 50, 20 and 100 in weeks 4, 6 and 8 respectively.

Item C:

	Week
Item C	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					200		80		400
Order release				200		80		400

The order release of B2 will become the gross requirements of C. The gross requirements are 200, 80 and 400 (2 assemblies of C) in weeks 5, 7 and 9 respectively. The lead time is 1 week. Therefore, the order release will be 200, 80 and 400 in weeks 4, 6 and 8 respectively.

Item D:

	Week
Item D	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements					100		40		200
Order release				100		40		200

The order release of B2 will become the gross requirements of D. The gross requirements are 100, 40 and 200 (2 assemblies of C) in weeks 5, 7 and 9 respectively. The lead time is 1 week. Therefore, the order release will be 100, 40 and 200 in weeks 4, 6 and 8 respectively.

Item E:

	Week
Item E	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements				200	50	80	20	400	100
Order release	200	50	80	20	400	100

The order release of B1 and D will become the gross requirements of E. The gross requirements are 50, 20 and 100 (1 assembly of E) in weeks 5, 7 and 9 respectively. The lead time is 3 weeks. Therefore, the order release will be 50, 20 and 100 in weeks 2, 4 and 6 respectively.

The gross requirements are 200, 80 and 400 (2 assembly of E) in weeks 4, 6 and 8 respectively. The lead time is 3 weeks. Therefore, the order release will be 200, 80 and 400 in weeks 1, 3 and 5 respectively.

b)

Summary Introduction

To develop: A net requirements plan for all the items.

Introduction:

Net requirements plan:

The net requirements plan is the plan which is established on the gross requirements plan formed by deducting the stock on and the scheduled receipts. If the total requirement is below the safety stock levels, a planned order is made based on the given lot sizing technique.

Explanation of Solution

Given information:

Product structure:

Master production schedule for X1:

	MPS for X1
Period	7	8	9	10	11	12
Gross requirements		50		20		100

Inventory and lead time:

Item	X1	B1	B2	A1	C	D	E
Lead time	1	2	2	1	1	1	3
On hand	50	20	20	5	0	0	10

Item X1:

	Week
Item X1	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements								50		20		100
Scheduled  receipt
On hand (50)								50		0		0
Net requirement								0		20		100
Planned order receipt										20		100
Planned order release									20		100

Week 8:

The gross requirement is 50 (1 assembly)derived from the master production schedule of X1. The on hand inventory is 50. Hence, the net requirement is 0. The lead time is 1 week. Therefore, there will be no planned order release.

Week 10:

The gross requirement is 20 (1 assembly) derived from the master production schedule of X1. The on hand inventory is 0. Hence, the net requirement is 20. The lead time is 1 week. Therefore, the planned order release will be 20 in week 9 which will be the planned order receipt in week 10.

Week 12:

The gross requirement is 100 (1 assembly) derived from the master production schedule of X1. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 1 week. Therefore, the planned order release will be 100 in week 11 which will be the planned order receipt in week 12.

Item B1:

	Week
Item B1	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements									20		100
Scheduled  receipt
On hand (20)									20		0
Net requirement									0		100
Planned order receipt											100
Planned order release									100

Week 9:

The gross requirement is 20 (1 assembly) derived from the planned order release of X1. The on hand inventory is 20. Hence, the net requirement is 0. The lead time is 2 weeks. Therefore, there will be no planned order release.

Week 11:

The gross requirement is 100 (1 assembly) derived from planned order release of X1. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 2 weeks. Therefore, the planned order release will be 100 in week 9 which will be the planned order receipt in week 11.

Item B2:

	Week
Item B2	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements									40		200
Scheduled  receipt
On hand (20)									20		0
Net requirement									20		200
Planned order receipt									20		200
Planned order release							20		200

Week 9:

The gross requirement is 40 (2 assembly) derived from the planned order release of X1. The on hand inventory is 20. Hence, the net requirement is 20. The lead time is 2 weeks. Therefore, the planned order release will be 20 in week 7 which will be the planned order receipt in week 9.

Week 11:

The gross requirement is 200 (2 assembly) derived from planned order release of X1. The on hand inventory is 0. Hence, the net requirement is 200. The lead time is 2 weeks. Therefore, the planned order release will be 200 in week 9 which will be the planned order receipt in week 11.

Item A1:

	Week
Item A1	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements									100
Scheduled  receipt
On hand (5)									5
Net requirement									95
Planned order receipt									95
Planned order release								95

Week 9:

The gross requirement is 100 (1 assembly) derived from the planned order release of B1. The on hand inventory is 5. Hence, the net requirement is 95. The lead time is 1 week. Therefore, the planned order release will be 95 in week 8 which will be the planned order receipt in week 9.

Item C:

	Week
Item C	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							40		400
Scheduled  receipt
On hand (0)							0		0
Net requirement							40		400
Planned order receipt							40		400
Planned order release						40		400

Week 7:

The gross requirement is 40 (2 assembly) derived from the planned order release of B2. The on hand inventory is 0. Hence, the net requirement is 40. The lead time is 1 week. Therefore, the planned order release will be 40 in week 6 which will be the planned order receipt in week 7.

Week 9:

The gross requirement is 400 (2 assembly) derived from planned order release of B2. The on hand inventory is 0. Hence, the net requirement is 400. The lead time is 1 week. Therefore, the planned order release will be 400 in week 8 which will be the planned order receipt in week 9.

Item D:

	Week
Item D	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements							20		200
Scheduled  receipt
On hand (0)							0		0
Net requirement							20		200
Planned order receipt							20		200
Planned order release						20		200

Week 7:

The gross requirement is 20 (1 assembly) derived from the planned order release of B2. The on hand inventory is 0. Hence, the net requirement is 20. The lead time is 1 week. Therefore, the planned order release will be 20 in week 6 which will be the planned order receipt in week 7.

Week 9:

The gross requirement is 200 (1 assembly) derived from planned order release of B2. The on hand inventory is 0. Hence, the net requirement is 200. The lead time is 1 week. Therefore, the planned order release will be 200 in week 8 which will be the planned order receipt in week 9.

Item E:

	Week
Item E	1	2	3	4	5	6	7	8	9	10	11	12
Gross requirements						40		400	100
Scheduled  receipt
On hand (10)						10		0	0
Net requirement						30		400	100
Planned order receipt
Planned order release			30		400	100

Week 6:

The gross requirement is 40 (2 assembly) derived from the planned order release of B2. The on hand inventory is 10. Hence, the net requirement is 30. The lead time is 3 weeks. Therefore, the planned order release will be 30 in week 3 which will be the planned order receipt in week 6.

Week 8:

The gross requirement is 400 (2 assembly) derived from the planned order release of B2. The on hand inventory is 0. Hence, the net requirement is 400. The lead time is 3 weeks. Therefore, the planned order release will be 400 in week 5 which will be the planned order receipt in week 8.

Week 9:

The gross requirement is 100 (1 assembly) derived from the master production schedule of B1. The on hand inventory is 0. Hence, the net requirement is 100. The lead time is 3 weeks. Therefore, the planned order release will be 100 in week 6 which will be the planned order receipt in week 9.