Supply Chain Planning

The main tool this week is Material Requirements Planning (MRP).

PIMS, Inc., has been manufacturing plumbing equipment since 1999. Because of the depressed economic conditions, component parts are assembled in batch runs. At any given time, each level of production has several partially assembled components. Given the following assembly and inventory information, construct a product structure diagram for the oil leak valve, and plan the order releases necessary to assemble 400 oil leak valves for period 10.

Description of the Production Process

Production of the valve begins with the base. The base is placed and secured in a housing. Ball bearings are then installed on opposing sides of the base housing. The rear base cover is fitted on and held while the front cover is secured with U-bolts. Next, the anchor assembly is connected. Finally, two sets of brackets are screwed on and the oil leak valve is checked before shipping.

Assume the use of the multiple of fixed lot sizes technique.

1. First, draw a diagram of the B.O.M. for this product.
2. Then, using Excel, complete the MRP record for the Oil Leak valve and all subcomponents. Use this template:  MRP Assignment Week 1 (1).xlsx
3. Next, consider the options for the next six months for short-range capacity planning for Oil Leak valve assemblies as discussed on pg. 218. Determine which approach allows for the lowest total cost given:  

Data Beginning Inventory0Beginning Workers20St. Time Hrs. per worker per month160Max. OT Hours per worker per month40Hiring Cost per worker$4,000Layoff Cost per worker$5,000St. Time Pay per worker per hour$18OT Pay per worker per hour$25Labor Hours per unit produced10Raw Materials Cost per unit$10Holding cost per unit per month$2Shortage Cost per unit per month$5Subcontracting Cost per unit$120

4. Finally, explain what you did in this assignment with regards to MRP and Capacity Planning as if you were describing the concepts to someone unfamiliar with Operations and Supply Chain Planning.