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OPERATIONS MANAGEMENT II
Session 7: Materials requirement planning

Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 11

Product Structure A 1

B 1

C 4 C 1

E 1 D 2 E 1 D 2 E 1

F 3 F 3
F 1 F 3
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Initial data
Units Lead Time Inventory Procurement Schedule
(weeks) Available Policy Receipt
A 1 2 20 units L4L
B 1 2 0 50
C 5 1 50 units 100 100 unit week 1
D 10 3 100 units L4L 100 unit week 3
E 6 2 10 units L4L
F 19 2 0 50

Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 13

Solution
Item: A Lead Time: 2 weeks Lot Sizing Method: Lot of lot Initial Inventory: 20

Week 1 2 3 4 5 6 7 8 9 10
Forecast
Cutomer order
(booked) 40
Projected - on had
inventory 20 20 20 20 20 20 20 20 20 20 0
MPS quanity 20
MPS start 20
Available-to- promise
inventory

Projected on-hand On-hand MPS quantity Projected

inventory at end = inventory at + due at start requirements
of this week t end of last week of this week t this week t
(t-1) Max (Forecast, Customer order )
Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 14

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Item: A Lead Time: 2 weeks Lot Sizing Method: Lot of lot Initial Inventory: 20

Week 1 2 3 4 5 6 7 8 9 10
Forecast
Solution
Cutomer order
40
(booked)
Projected - on had
inventory
20 20 20 20 20 20 20 20 20 20 0
MPS quanity 20
MPS start 20
Available-to- promise
inventory

Item: B Lead Time: 2 weeks Lot Sizing Method: 50 fixed Initial Inventory: 0
Week 1 2 3 4 5 6 7 8 9 10
Gross Requirements 20
Scheduled Receipts
On hand inventory0 0 0 0 0 0 0 0 30 30 30
Planned order receipt 50
Planned order
releases
50
Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 15

Solution
Scheduled
Projected on-hand Inventory on Gross
or planned
inventory balance = hand at end of + requirements
receipts in
at end of week t last week (t-1) in week t
week t

Item: B Lead Time: 2 weeks Lot Sizing Method: 50 fixed Initial Inventory: 0
Week 1 2 3 4 5 6 7 8 9 10
Gross Requirements 20
Scheduled Receipts
On hand inventory 0 0 0 0 0 0 0 0 30 30 30
Planned order receipt 50
Planned order
releases
50

Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 16

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Item: C Lead Time: 1 weeks Lot Sizing Method: 100 fixed Initial Inventory: 50

Week 1 2 3 4 5 6 7 8 9 10
Gross Requirements 200 20
Scheduled Receipts 100
On hand inventory 50 150 150 150 150 150 50 50 30 30 30
Planned order receipt 100
Planned order
releases
100

Item: D Lead Time: 3 weeks Lot Sizing Method: L4L Initial Inventory: 100

Week 1 2 3 4 5 6 7 8 9 11
Gross Requirements 200
Scheduled Receipts 100
On hand inventory100 100 100 200 200 0 0 0 0 0 0
Planned order receipt
Planned order
releases
Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 17

Item: E Lead Time: 2 weeks Lot Sizing Method: L4L Initial Inventory: 10

Week 1 2 3 4 5 6 7 8 9 11
Gross Requirements 100 50
Scheduled Receipts

On hand inventory 10 10 10 10 10 0 0 0 0 0 0
Planned order receipt 90 50
Planned order
releases
90 50

Item: F Lead Time: 2 weeks Lot Sizing Method: 50 Initial Inventory: 0

Week 1 2 3 4 5 6 7 8 9 11
Gross Requirements 270 150 50
Scheduled Receipts

On hand inventory 0 0 0 30 30 30 30 30 30 30 30
Planned order receipt 300 150 50
Planned order
releases
300 150 50
Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 18

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Next session

Materials Requirement Planning 2

Copyright 2014 Vasanth Kamath TA Pai Management Institute. McGraw-Hill/Irwin 19