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2. What are the phases of Production planning and control? What are the functions of each
Phase?
3. What are the roles of production planning and control?
Benefits
MRP enables managers to easily determine the quantities of every component for a
given order size, to know when to release orders for each component, and to be
alerted when items need attention. Still other benefits include the following:
1. Low levels of in-process inventories, due to an exact matching of supply to
demand.
2. The ability to keep track of material requirements.
3. The ability to evaluate capacity requirements generated by a given master
schedule.
4. A means of allocating production time.
5. The ability to easily determine inventory usage by back flushing.
Requirements
In order to implement and operate an effective MRP system, it is necessary to have
1. A computer and the necessary software programs to handle computations and
maintain records.
2. Accurate and up-to-date
a. Master schedules.
b. Bills of materials.
c. Inventory records.
3. Integrity of file data.
7. An automatic drive-in teller at American National Bank has the capacity of handling 2,000
entries per regular banking day (according to the firm that sold it to the bank). However,
because of limitations imposed by automobile access, the teller is available only 60 per
cent of the time. It is actually being used for about 800 entries per day. What is the
system efficiency? What is the system utilization? Explain benefits of capacity
requirement planning.
System Efficiency
2,000 entries with 60 per cent of the time = Expected Output = 1200
Actual Output = 800
System Efficiency = 800/1200 = 66.67%
System Utilization
Actual Utilization = 1200
System Capacity = 2000
System Utilization = 60%
System Efficiency
Effective capacity = 40 trucks
Actual output = 36 trucks
System Efficiency = 36/40 = 90%
System Utilization
Effective capacity = 40 trucks
Design capacity = 50 trucks
System Utilization = 80%
9. What kind of activities should be considered in the different phases of production planning
and control?
Unit II Part B
11. Consider the Example of Beta Corporation. The forecast for a group of items is
reproduced below.
12. Consider the Example of Beta Corporation. The forecast for a group of items is
reproduced below.
Quarter Demand Cumulative Demand
1 270 270
2 220 490
3 470 960
4 670 1630
5 450 2080
6 270 2350
7 200 2550
8 370 2920
Suppose that the firm estimates that it costs Rs.150 per unit to increase the production
rate, Rs.200 per unit to decrease the production rate, Rs.50 per unit per quarter to carry
the items on inventory and Rs.100 per unit if subcontracted. Compare the cost incurred if
changing inventory levels pure strategy is followed.
13. Consider the Example of Beta Corporation. The forecast for a group of items is
reproduced below.
14. Consider the Example of Alpha Corporation. The forecast for a group of items is
reproduced below.
15. Consider the Example of Alpha Corporation. The forecast for a group of items is
reproduced below.
Unit II Part C
Case Study
Material Requirement Planning
Master Production Schedule
Week 1 2 3 4 5 6 7 8
Demand 100 150 140 200 140 300
PRODUCT STRUCTURE
The Bill of Materials Structure is given in the following figure.
Fire
extinguish
er
Valve
assemblie Cylinder
s
Valve
Valve
housing
Calculate MRP for Fire extinguisher, Cylinder, Valve assemblies, Valve and Valve housing.
MRP calculations for Fire extinguisher
LT=1
EOQ=300 WEEK
PERIOD 0 1 2 3 4 5 6 7 8
PROJECT
100 150 140 200 140 300
REQUIREMENT
RECEIPTS 300 300 300
STOCK ON 15
HAND 0 50 50 200 60 160 20 20 20
-100 -140 -280
PLANNED
ORDER
RELEASE 300 300 300
PERIOD 0 1 2 3 4 5 6 7 8
400 400
PROJECT REQUIREMENT
35 35
RECEIPTS 0 0
15 15 10 10 10
STOCK ON HAND 150 0 0 0 0 0 50 50 50
- -
25 30
0 0
35 35
PLANNED ORDER RELEASE 0 0
400 400
PROJECT REQUIREMENT
45
RECEIPTS 0
35 35 40 40 40
STOCK ON HAND 350 0 0 0 0 0 0 0 0
-50
45
PLANNED ORDER RELEASE 0