Question

A Master Production Schedule (MPS) which was developed from the MRP technique for inventory planning and control, indicates that a company to produce and supply tires to 800 vehicles in 40 weeks period. The bill of materials (BOM) provides for 5 tires per vehicle. The inventory status is at 1500 hundred tires and the remaining tires need to be produced; Draw the Materials Requirements Plan (MRP) and calculate the following: (a) Calculate the Gross requirements (number) in terms of the total tires needed to be produced and supplied. (b) Calculate the net requirements (number) in terms of the total tires needed to be produced and supplied. (c) What will be the lead time in weeks and at what time will the production be initiated.

Answer 1

a. Gross requirement = 800 vehicles * 5 tires per vehicle = 4000 tires

b. Net requirement = gross requirement - inventory + safety stock = 4000 - 1500 + 0 = 2500

c. Assume equal requirement every week, 4000 tires over 40 weeks = 100 tires produced and supplied every week

Lead time is dependent on production schedule and delivery time, say this is 2 weeks (exact data should be calculated)

In aggressive case, the production can start immediately at the rate of 100 tires/week

In conservative case, the company needs to produce last batch of 100 by week 38 in order to delivery by week 40.

Working backwards at 100 tires/week, it needs 25 weeks to produce and supply 2500 tires. Hence it needs to start producing by week 14