quarterly demand for a product

1

MGSC-303 EXAM III SUM II-2013

NAME:______________________________________________

1.

The quarterly demand for a product(in units) is given below:

Quarters: Q1 Q2 Q3 Q4

Demand: 1300 1400 1600 1700

Each unit of product requires 5 hours of labor. A worker works for 500 hours per

quarter.

a) Compute the number of workers required each quarter to meet demand?

No. of Workers, Q1 =

No. of Workers, Q2 =

No. of Workers, Q3 =

No. of workers, Q4 =

b) Perform a rough-cut capacity planning analysis. Does the plant have the capacity to meet the total demand for the 4 quarters? Assume 7500 labor hours of capacity is available each quarter.

Qtr. 1

Qtr. 2

Qtr. 3

Qtr. 4

Total

Demand

(units)

Load

Labor hrs

Capacity

Labor Hrs.

Over/Under

Note: Over/Under = Capacity – Load .

What is your recommendation?

2. In problem 1, assume the cost of carrying an item in inventory is $50 per unit per year.

a) If level production, based on average quarterly demand is planned, compute the annual inventory carrying costs. Assume initial inventory of the product is zero. Use the following table to perform your calculations.

Quarters

Aggregate

Demand

Planned

Production

Beginning

Inventory

Ending

Inventory

Avg. Qtrly

Inventory

Q1

Q2

Q3

Q4

Total =

Total =

Average Qtrly demand =

Average Annual Inventory =

Annual Inventory carrying cost =

b) If the production capacity is limited to 1300 units per quarter and excess demand is met through subcontracting at $60 per unit in the above problem, find the annual

subcontracting cost?

Quarter 1

Quarter 2

Quarter 3

Quarter 4

Actual Demand

Production

Subcontracted

Total subcontracted =

Annual cost =

3. Complete the MRP schedule for the product below.

Product A Lot Size = 100 Safety Stock = 75

Lead Time = 1 week Allocated = 250 In hand =600

WEEKS

1

2

3

4

5

Gross requirement

550

700

400

Scheduled receipt

200

Available

Net requirements

Planned order receipts

Planned order releases

Note: Net requirement = Gross requirement – Available

For week 1, Available = In hand + Scheduled receipt – Allocated – Safety stock.

If net requirement for current period is zero, then for next period

Available = Available for current period – Gross reqmnts for current period.

If net requirement for current period is greater than zero, then for next period

Available = Planned order receipt for current period – Net requirement for

current period.

Planned order receipt will depend on net requirements and lot size rule.

4. Product X has the structure given below.

X

P3 R2 S3

Q2 T4 V2

a) If 60 units 0f product X has to be produced, compute the bill of materials.

ITEM

QUANTITY

X

P

R

S

Q

T

V

b) Given the following lead times draw the time phased product structure for X.

If delivery is desired in week 10 from now.

ITEM

LEAD TIME
IN WEEKS

X

2

P

2

Q

2

R

2

S

3

T

2

V

3

1 2 3 4 5 6 7 8 9 10

We have to start production from week 5 to deliver the finished product by week 10.

Total lead time is 5 weeks.