MRP and Inventory Management

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[Individual Project] Material requirements planning (MRP)

In this final Assignment, you will use the POM-QM for Windows software to solve two MRP-related problems. As you know from your Learning Resources, MRP systems help manage manufacturing processes through planning, scheduling and inventory control systems. With this in mind, you will need to utilise given data to develop MRP tables for finished products and components for the future weeks of a business as well as answer product production queries.

To complete this Assignment:

By Wednesday (Day 7) compile your responses to the questions in one MS Word file and then submit it to the Week 8 Turnitin link.

POM-QM for Windows software: For this part of the Individual Project, you need to use the POM-QM for Windows software:

· Read Appendix IV of the Operations Management (Heizer and Render, 2014) textbook.

· Watch the videos for examples 1 (p. 110) and 2 (p. 112) in inventory management and example 1 (p. 158) in material requirements planning in the POM-QM for Windows Manual.

. Laureate Education (2014) Inventory management in POM-QM software [Video, Online]. (Accessed: 22 January 2015).

. Laureate Education (2014) MRP in POM-QM software [Video, Online]. (Accessed: 22 January 2015).

· Launch the POM-QM for Windows software and, from the main menu, select Module and then Material Requirements Planning.

· Program the MRP for the Individual Project Problem below and solve it with the use of POM-QM for Windows. You may refer to Appendix IV in the Heizer and Render (2014) textbook.

Question 1

Scenario: Figure 1 shows the product structure tree for the finished product A.

Figure 1: Product structure tree for finished product A

The marketing department estimates that product A’s demand will be 60 units for Week 4 and 50 units for Week 6. There is a scheduled receipt of 75 units for component D at the beginning of week 2. Table 1 lists various other MRP-related information for the finished products and the components.

 

A

C

D

E

On hand

12

170

9

5

Lead time

2

2

1

1

Lot size

LFL

150+

multiples of 40

multiples of 22

Table 1: MRP-related information

To answer Question 1:

Provide the MRP tables for all the finished products and the components for the next 6 weeks.

Question 2

Scenario: Frank’s machine shop operates 250 days per year. Frank sells 5,000 units per year of his most popular item, a specialty gear. The set-up cost for this gear is £100, and the monthly unit cost of holding inventory is 1% of the production cost per unit, which is £50. The lead time is 10 days. When the gear is in production, the shop can make 80 gears per day. (Hint: You should use the production model for inventory management.)

To answer Question 2:

Answer the following questions using the POM software:

· How many gears should be produced in each run and at what minimum cost?

· What is the cycle time?

· Find the reorder point.

· Draw a graph to depict inventory level against time and show on it the quantities found prior. In addition, what is the maximum inventory level?