Mpcproblems Institute of Technology

LINKPING INSTITUTE OF TECHNOLOGY
Department of Production Economics, IPE

Ou Tang
TPPE37
EXERCISES
2004-08-25
PRODUKTIONSSTYRNING, 4 pang
/Manufacturing Control/
Lecture1 A general overview of MPC systems

Problem 1.1
Answer the following questions:
1. Distinguish clearly between mass, batch, and jobbing shop production systems.
2. Distinguish clearly between Make to order (MTO), Assemble to order (ATO), and
Engineer to order (ETO) systems.
3. Define an MPC system.
Lecture 2
Material Planning - Inventory control & MRP
Problem 2.1
Assume that 10% of annual production consists of item A and that the demand is
approximately constant and continuous over the year. The company uses an order point
order quantity (OP/OQ) system and the lead time for item A is two weeks. Determine the
safety stock necessary if the probability of stock out should be 5% (SERV1) given that the
forecast error is normal distributed N(=0, =5) and that demand in different periods are
independent of (non-correlated with) demand in other periods.
Proposal solution
SS A = k ( )L = 1645
.
5 2 0.5 = 1163
.
Problem 2.2
After the merger, Old Framkranz found himself the only inventory clerk left at Allied
Breakwater (ABC). The merger had left ABC with only 10 parts in inventory, and hed been
told to manage them as effectively as possible. Each part was to be reviewed once a week.
(ABC worked a very exhausting five-day week). Framkranz knew inventory-carrying cost
was 20 percent per dollar of cost per year. He also knew, to really manage a parts inventory
well, he would have to spend a full day on the review, but he could do a reasonably good job
in half a day. Even the most cursory review would require one quarter day per part,
however. Files for the 10 parts contain the following information. How should Framkranz
schedule the review of the parts?
Part
number
1
2
3
4
5
6
7
8
9
10
Vendor Unit cost Shipping Cost per Annual

($)
cost/unit order ($) usage
A
0.20
0
10
1000
B
1.00
0.10
20
10
B
0.25
0.10
15
12
C
3.00
0.25
15
100
A
10.00
0
10
300
B
7.00
0.10
15
2
C
0.50
0.25
20
10
A
5.00
0
10
400
C
20.00
0.30
20
2
A
2.00
0
10
200
Reorder Order
point
quantity
50
70
1
45
2
95
20
71
15
55
1
7
2
13
20
39
1
4
10
100
Proposal solution
The scheduling will be done trough an ABC analysis.
Unit Cost ($)
Part #
1
2
3
4
5
6
7
8
9
10
Annual
usage
0,20
1,00
0,25
3,00
10,00
7,00
0,50
5,00
20,00
2,00
Total annual cost volume usage:
1000
10
12
100
300
2
10
400
2
200
Annual cost
Volume usage
($)
200
10
3
300
3000
14
5
2000
40
400
5972
% of
annual
3,35
0,17
0,05
5,02
50,23
0,23
0,08
33,49
0,67
6,70
100,00
ABC
category
B
C
C
B
A
C
C
A
C
B
Thus, Framkranz should schedule the rewiews of the parts as follows:

1. Allot one full day to rewiew each A item (parts # 5 and 8 account for almost 84% of
annual cost volume usage).
2. Allot one-half day to review each B item (parts # 1, 4 and 10 account for over 15% of
annual cost volume usage).
3. Allot one-quarter day to review each C item (parts # 2, 3, 6, 7 and 9 account for only
about 1% of annual cost volume usage).
Total time in a week
A items
B items *
C items
2 days
2 days
1 day
* Part # 9 assigned to the B category to fill out Framkranzs day.
Problem 2.3
The Silver brothers had their own factory. Ed was the general manager, and Robert produced
the finished product from 2 parts Anders made. Here are selected data for the finished
product and part. Requirements for the finished product for the next few periods appear as
well.
Robert
Anders
Order quantity (EOQ)
40
100
5
0
Safety stock
1
1
Lead time
7
12
Current inventory
40
0
Schedule receipt in
period1
Period
Requirements
1
23
2
13
3
36
4
12
5
21
6
8
7
34
8
23
Develop MRP records for Robert and Anders. What are the planned orders releases for
Anders part?
Proposal solution
MRP records for Robert and Anders.
Robert
40
5
1
7
40

Safety stock
Lead time
Current inventory
Schedule receipt in period1
Item no:
Lead time = 1
Lot sizing: EOQ=40
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Net req. consid. planned orders
Planned order receipts
Projected available balance
Planned order releases
PAB = 193
Description: Robert's product

Buffer: 5
1
23
40
24
24
2
13
3
36
4
12
5
21
6
8
7
34
8
23
11
-25
25
30
40
15
40
-37
12
2
40
43
-58
21
-66
8
22
14
40
-100
34
25
40
20
40
-123
23
8
40
37
11
40
Anders
Safety stock
Lead time
Current inventory
Schedule receipt in period1
100
0
1
12
0
Item no:
Lead time = 1
Lot sizing: EOQ=100
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
PAB = 468
Description: Anders' product

Buffer: 0
1
2
80
3
80
6
80
7
80
12
12
-148
52
52
100
-228
80
28
100
72
100
-308
80
8
100
92
-308
12
100
-148
80
48
100
52
-148
12
-68
68
68
100
32
100
92
Problem 2.4
The Chan Hahn Clothing Company is trying to decide which of several lot-sizing
procedures to use for its MRP system. The following information pertains to one of
the "typical" component parts:
Setup cost = $ 80/order.
Inventory cost = $ 1/unit/week.
Current inventory balance = 0 units.
Demand forecast
Week
4
5
60
40
25
100
20
60
10
a) Apply the EOQ, POQ and PPB lot-sizing procedures and show the total cost
resulting from each procedure. Calculate inventory carrying costs on the basis of
average inventory values. Assume orders are received into the beginning
inventory.
b) Indicate advantages and disadvantages of using each procedure suggested in part
a.
Proposal solution
a) EOQ, POQ and PPB; and their total cost.
_
D = (60+40+25+5+100+20+60+10)/8 = 40
EOQ = [(2*40*80)/1] = 80 units
Week number
Requeriments
Order quantity
Beginning Inventory
End Inventory
Average Inventory
1
60
80
80
20
50
2
40
80
100
60
80
3
25
4
5
60
35
47.5
35
30
32.5
5
100
80
110
10
60
6
20
80
90
70
80
7
60
8
10
70
10
40
10
0
5
T.A.I. = 50+80+47.5+32.5+60+80+40+5 = 395

Tot.Cost = Setup cost + Inv. carrying cost = 4*80 + 395*1 = 320 + 395 = $715
POQ = EOQ/D = 80/40 = 2
Week number
Requeriments
Order quantity
Beginning Inventory
End Inventory
Average Inventory
1
60
100
100
40
70
2
40
40
0
20
3
25
30
30
5
17.5
4
5
5
0
2.5
5
100
120
120
20
70
6
20
20
0
10
7
60
70
70
10
40
8
10
10
0
5
T.A.I. = 70+20+17.5+2.5+70+10+40+5 = 235

PPB (setup cost = $80)
Week number
Requeriments
Order quantity
Beginning Inventory
End Inventory
Average Inventory
1
60
100
100
40
70
2
40
40
0
20
3
25
30
30
5
17.5
4
5
5
0
2.5
5
100
120
120
20
70
6
20
20
0
10
7
60
70
70
10
40
8
10
10
0
5
1. ($1)*[()*(60)] = $30
2. ($1)*[()*(60) + (3/2)*(40)] = $90
1. ($1)*[()*(25)] = $12.5
2. ($1)*[()*(25) + (3/2)*(5) = $20
3. ($1)*[()*(25) + (3/2)*(5) + (5/2)*(100)] = $270
1. ($1)*[()*(100)] = $50
2. ($1)*[()*(100) + (3/2)*(20)] = $80
1. ($1)*[()*(60)] = $30
2. ($1)*[()*(60) + (3/2)*(10)] = $45
b) Advantages and disadvantages.
EOQ
1. Simplicity
2. Limited information
required
3. Time between orders
may vary
1.
2.
3.
4.
EOQ
Assume constant
demand
Doesnt utilize all
information
Fixed lot size
Doesnt evaluate all
material ordering
possibilities
Advantages
POQ
1. Simplicity
2. Limited information
required
3. Lot size may vary
Disadvantages
POQ
1. Doesnt utilize all
information
2. Fixed time between
orders
3. Does not evaluate all
material ordering
possibilities
PPB
1. Utilizes all information
2. Lot size may vary
3. Time between orders
may vary
PPB
1. Complexity
2. Does not evaluate all
material ordering
possibilities
Problem 2.5
A final assembly (A) requires one week to assemble and has a component part (B)
requiring two weeks to fabricate. Five units of final assembly A and seven units of
part B are currently on hand. The gross requirements for assembly A for the next 12
weeks are as follows (three parts B are used on each A):
Week
1
Requeriments 2
2
5
3
4
4
1
5
8
6
2
7
0
8
6
9
3
10
1
11
0
12
7
a) If the safety stock for part A is 2 and for part B is 4, what are the planned order releases
for part B using lot-for-lot lot sizing technique for both parts A and B?
b) What are the planned order releases for part B using POQ = 2 for both parts A and
B?
c) If the cost to order is $35/order and the inventory carrying cost is $2 per unit and
wee, which procedure produces the lowest total cost for the 12-week period?
(Calculate the inventory carrying cost on the basis of weekly ending inventory
values).
d)
Proposal solution
a) Planned order releases for B using LFL.
Item no: A
Lead time 1 week
Lot sizing: LFL
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirement
Item no: B
Lead time 2 week
Lot sizing: LFL
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirement
Description: Final assembly

SS: 2
1
2
2
5
3
4
4
1
5
8
6
2
7
0
8
6
9
3
10
1
11
0
12
7
-7
1
1
1
2
8
-15
8
8
8
2
2
-17
2
2
2
2
-23
6
6
6
2
3
-26
3
3
3
2
1
-27
1
1
1
2
-27
3
4
-6
4
4
4
2
1
-17
-2
2
4
4
2
4
-34
7
7
7
2
Description: component part

SS: 4
(3 B for each A)
1
2
3
4
5
12
12
3
24
6
7
7
21
-5
5
5
9
4
3
-17
12
12
12
4
24
-20
3
3
3
4
6
-44
24
24
24
4
-50
6
6
6
4
18
2
6
2
7
7
18
8
9
9
3
10
11
21
-50
-68
18
18
18
4
3
-77
9
9
9
4
-100
3
3
3
4
21
-100
-121
21
21
21
4
4
9
12
-121
b) Planned order releases for B using POQ=2.

Item no: A
Lead time 1 week
Lot sizing: POQ=2
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirement
Item no: B
Lead time 2 week
Lot sizing: POQ=2
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirement
Description: Final assembly

SS: 2
1
2
2
5
3
4
4
1
5
8
6
2
7
0
8
6
9
3
10
1
11
0
12
7
-6
4
-17
2
2
2
2
-17
-23
6
6
9
5
-26
3
-27
1
1
1
2
-27
3
8
-7
1
1
9
10
-15
8
-2
2
4
8
6
-34
7
7
7
2
2
9
2
2
Description: component part

SS: 4
(3 B for each A)
1
2
3
4
5
24
27
6
7
7
21
-17
17
21
21
4
27
-17
-44
27
27
27
4
6
-44
-50
6
6
6
4
27
2
9
2
1
7
27
9
3
10
11
21
-50
-77
27
27
27
4
3
-77
-80
3
3
3
4
21
-80
-101
21
21
21
4
c) Is lowest cost with LFL or with POQ?

Total cost for LFL = ($35/order X 9 orders) + ($2/unit X 25 units) = $365 & $341
Total cost for POQ = ($35/order X 6 orders) + ($2/unit X 40 units) = $290 & $271
POQ technique produces the lowest cost.
2
7
12
-101
Lecture 3
Capacity Theory
Problem 3.1
The course has covered three different techniques for Rough-cut Capacity planning. Name
these and explain the most significant aspects of each technique. Clarify also under what
conditions each method is preferable compared to the other two.
Proposal solution
Capacity planning using overall factors (CPOF)
Capacity bills
Resource profiles (RP)
For details see section 4.1.1-4.1.3. in MPCS
Problem 3.2
An aircraft manufacturer knows that the available capacity in final assembly depends on
how many aircraft of the same model that have been manufactured before. The learning
effect can be described by a 80% learning curve, i.e. t2 x t x = 0.8 and : t x = 2000 x b where
t x is the time required, measured in time units, for aircraft number x and until today 30
aircraft of this model have been assembled. Available work hours are 4000 time units for the
next year. Determine, based on this information, how much capacity, measured in number
of aircraft, that is possible to produce the next year.
Proposal solution
ln 0.8
Time required for aircraft no x is:

t x = 2000 x ln 2
t(31)++t(36) = 3877 4000 i.e. it is possible to assemble six aircraft during next year
considering the capacity of the final assembly.
Problem 3.3
Define the concepts below and explain how they can be used in manufacturing planning and
control.
- Load
- Demonstrated capacity
- Calculated capacity
- Theoretical capacity
- Efficiency
- Utilisation
- Maximum capacity
Proposal solution
Load. The amount of planned work scheduled for and actual work released to a resource
for a specific span of time.
Demonstrated capacity. The amount of work performed by a resource during a number
of previous periods. It could for instance be calculated as an average over the last six
months. It could be used as a measure of available capacity in CRP.
Rated capacity. Theoretical capacity adjusted for efficiency and utilisation. Usually used
for the same purpose as demonstrated capacity when no relevant historical data are
available.
Theoretical capacity. The available capacity before considering efficiency and utilisation.
Could for instance be the amount of clock hours an operator is being paid for.
Efficiency. How Work is being performed compared to some standards.. Due to
circumstances as a new operator work could be slightly slower than the estimated
standard time and thus result in an efficiency lower than 1.0.
Utilisation. The fraction of time a resource is performing work. E.g. planned maintenance
will occupy some of the theoretical capacity.
Maximum capacity. The maximum capacity available, using e.g. over time, for
temporary peaks in required capacity.
Problem 3.4
Instant Antiques produces a series of antique knickknacks carefully mounted on a

knickknack shelf. One component of the knickknack shelf is an ornate mounting
bracket, which the firm manufactures. The bracket requires forming, cleaning and
inspection, welding, and another cleaning and inspection. Two weeks of lead time are
allowed. The first two operations (forming and the first cleaning and inspection) are
normally done in the first week and the remaining operations in the second. The
company is anxious to try capacity requirements planning to help them manage the
shop.
The MRP record for the mounting bracket for the next few weeks is shown below,
along with capacities and operations times (in hours) for each operation on the
mounting bracket. In addition, loads on each of the three manufacturing areas from
other items in the shop are given for the next four weeks. A report from the shop
floor says the open order (to be finished this week) is a little behind. It has gone
through forming but is waiting to be cleaned and inspected.
Mountain bracket
Gross requirements
Scheduled receipts
Proj. avail. Balance
Q = 20; LT = 2; SS = 2.
1
2
5
3
20
2
17
20
6
20
Operations times and capacities (in hours) are as follows:
Week
3
4
15 12
5
6
6
15
11
13
18
19
20
Setup
1.00
0.50
0.50
0.20
Forming
Cleaning and inspection-1
Welding
Cleaning and inspection-2
Hours/unit
1.00
0.25
0.60
0.50
Capacity
35
40
35
40
Hours of work from other jobs in shop are:
Past due 1
Forming
10.00
Welding
0.00
Cleaning and inspection 10.50
15.00
20.00
31.00
Week
2
5.50
24.00
27.00
24.00
14.50
14.00
6.00
22.00
16.50
a) What's the total capacity required in forming, cleaning and inspection, and welding
during the next four weeks? What percentage of the capacity available does it
represent?
b) Management has got some customers to agree to delay receipt of their goods. The
efforts resulted in a shift of 7 units of gross requirements from week 2(from 17 to
10) to week 5 (from 6 to 13) of the mounting bracket. What does this do to
capacity utilisation in each shop?
c) Still not satisfied, management decided also to increase the lot size from 20 to 40,
since the managers understood this would save on capacity requirements. What's
the effect of this change?
Proposal solution
a) Whats the total capacity and its percentage of the capacity available?
Cleaning and Inspection is badly overload at the beginning of the period and Forming
somewhat so. Welding seems okay. Note that since there is no capacity to the past due, it
is included in the first weeks load.
Week =
Past
Due
Clean & Inspection

Other work 10.50
Open order. 5.50
Planned order 1st week
Planned order 2nd week
Total = . 16.00
Capacity available
0.00
% of capacity available. 0
31.00
10.20
5.50
27.00
14.00
16.50
5.50
10.20
42.70
40.00
106.8
10.20
24.20
40.00
60.50
46.70
40.00
156.8
5.50
22.00
40.00
55.00
Past
Due 1
Week =
Forming
Other work 10.00
Open order.
Planned order ....
Total = . 10.00
Capacity available 0.00
15.00
5.50
24.00
6.00
21.00
36.00
35.00
131.4
21.00
26.50
35.00
75.71
24.00
35.00
68.57
21.00
27.00
35.00
77.14
20.00
24.00
14.50
22.00
32.50
35.00
92.86
12.50
36.50
35.00
104.3
12.50
27.00
35.00
77.14
22.00
35.00
62.86
Past
Due 1
Week =
Welding
Other work
Open order. 12.50
Planned order ....
Total = .
b) If shift of requeriments from week 2 from 17 to 10 to week 5 from 6 to 13. How is

capacity then?
The shift in gross requeriments has helped in week two, but there is still an overload early
on and there is now a problem in week 3 for Forming and week 2 in Welding.
Mounting Bracket
Week
Gross requeriments
Scheduled receipts
Planned Order Releases
Q=20 LT =2 SS =2
1
2
5
Week =
3
20
Past
Due
Clean & Inspection

Other work 10.50
Open order. 5.50
Total = . 16.00
Capacity available
0.00
Week =
Past
Due
Forming
Other work 10.00
Open order.
Planned order ....
Total = . 10.00
2
10
20
13
3
15
4
12
5
13
6
15
18
20
6
20
13
18
31.00
10.20
5.50
27.00
14.00
16.50
5.50
46.70
40.00
156.8
10.20
37.20
40.00
93.00
19.50
40.00
48.75
5.50
10.20
32.20
40.00
80.50
15.00
5.50
24.00
6.00
21.00
36.00
35.00
131.4
5.50
35.00
15.71
21.00
45.00
35.00
128.6
21.00
27.00
35.00
77.14
Past
Due
Week =
Welding
Other work
Open order. 12.50
Planned order ....
Total = .
20.00
24.00
14.50
22.00
32.50
35.00
92.86
12.50
36.50
35.00
104.3
14.50
35.00
41.43
12.50
34.50
35.00
98.57
c) Increase the lot size from 20 to 40. Whats the effect of this change?
The great idea didnt work! Total capacity requeriments have gone down (a little) but the
larger severely impact the early part of the schedule. Better off-load some work, move
some demand or expand capacity.
Mounting Bracket
Week
Gross requeriments
Scheduled receipts
Q=20 LT =2 SS =2
1
2
5
Week =
3
40
Past
Due
Clean & Inspection

Other work 10.50
Open order. 5.50
Total = . 16.00
Capacity available
0.00
Week =
Week =
4
12
5
13
6
15
38
26
40
13
38
31.00
10.20
10.50
27.00
14.00
16.50
10.50
51.70
40.00
169.3
20.20
47.20
40.00
118.0
14.00
40.00
35.00
27.00
40.00
67.50
15.00
5.50
24.00
6.00
41.00
57.00
35.00
188.6
5.50
35.00
15.71
24.00
35.00
68.57
41.00
48.00
35.00
134.3
20.00
24.00
14.50
22.00
32.50
35.00
92.86
24.50
49.00
35.00
138.6
14.50
35.00
41.43
22.00
35.00
62.86
Past
Due 1
Welding
Other work
Open order. 12.50
Planned order ....
Total = .
3
15
Past
Due
Forming
Other work 10.00
Open order.
Planned order ....
Total = . 10.00
2
10
20
13
Problem 3.5
A Company produces certain amount of products in a flow shop layout. Module A is part of
one of the products and unique for that product (it is required one unit per product). Module
A is produced of 2 units of component A1 and 3 units of component A2. These 2
components and module A are produced in manufacturing cell F1 which consist in 3 work
centres (WC1, WC2, WC3).
a) Calculate the MRP for module A and components A1 and A2 (code 10, 11 and 12
respectively).
b) Compare the CRP results with the available capacity in every work centre. The WC1
works one shift and additional 300 minutes per week as maximum overtime. WC2 and
WC3 work 2 shifts without possibility of overtime. Besides this production, some other
components also are produced in manufacturing cell F1 (see table below).
c) Suppose it is Sunday evening and the standard assumptions are valid for the events timing
(i.e. the gross requirement is needed at the beginning of the period and this happens
Monday morning and so on). Is there any capacity problem for the cell F1? If a problem
exists, can you describe it and advice what to do to solve it (if can be solved)? Discuss as
well how the pegging should be done in that case.
The following information has been taken from the MPS system.
Description
Module A
Component A1
Component A2
Work centre
WC 1
WC 2
WC 3
Description
Code
10
11
12
Material List
Lot sizing
Inventory
LFL
200 units
FOQ = 1500 400 units
FOQ = 2000 1000 units
Available time
(min/week)
2 400
4 800
4 800
Code
Module A
Component A1
10
11
Component A2
12
Schedule receipt
400 in week 1
1500 in week 1
2000 in week 1
Lead time
1 week
1 week
1 week
Operations Data
Utilisation
Efficiency
100 %
100 %
100 %
100 %
100 %
100 %
Max.overtime
(min./week)
300
0
0
Set-up time
(min/lot)
30
15
20
15
15
20
Operation time
(min/unit)
3
1
1,5
0,5
1
1,5
Operations List
Work centre
WC 1
WC 2
WC 3
WC 1
WC 3
WC 2
Period
Gross requirement
Gross requirements for module A (units)

1
2
3
4
5
500
400
600
550
450
Period
WC 1
WC 2
WC 3
Capacity requirements for other jobs in F1

(minutes)
2
3
4
5
6
980
1 515
1 515
2 515
2 515
1
1 400
4 735
4 585
6
600
7
500
7
980
8
550
Proposal solution
a) MRP for module A and components A1 and A2.

Item no: 10
Lead time 1 week
Lot sizing: LFL
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Item no: 11
Lead time 1 week
Lot sizing: FOQ=1500
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Item no: 12
Lead time 1 week
Lot sizing: FOQ=2000
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Description: Module A (end product)

Buffer: 0
200
200
1
500
400
100
100
300
2
400
3
600
4
550
5
450
6
600
7
500
8
550
-300
300
300
300
0
600
-900
600
600
600
0
550
-1450
550
550
550
0
450
-1900
450
450
450
0
600
-2500
600
600
600
0
500
-3000
500
500
500
0
550
-3550
550
550
550
0
Description: Component A1 (2*10)

Buffer: 0
2
1200
3
1100
4
900
5
1200
6
1000
7
1100
400
1
600
1500
1300
100
-4100
1000
1000
1300
100
1500
-1900
900
400
1500
1100
1500
-3100
1200
400
-1000
1000
1000
1500
500
1500
-5200
1100
600
1500
800
1500
1400
400
1500
Description: Component A2 (3*10)

Buffer: 0
2
1800
3
1650
4
1350
5
1800
6
1500
7
1650
1000
1
900
2000
2100
300
2100
300
2000
-2700
1350
400
2000
1300
2000
-4500
1800
200
2000
1500
-6000
1500
1000
-1350
1350
1350
2000
650
2000
-7650
1650
1350
2000
350
0
2000
b) CRP analysis.
The CRP analysis is summarised in the following tables, including setup and operation
times.
Setup-time matrix
WC 1
WC 2
WC 3
Product
10
11
12
Total
Product
10
11
12
Total
15
20
35
15
20
35
15
20
35
20
15
35
20
15
35
20
15
35
Product
10
11
12
Total
30
30
15
30
15
30
15
30
30
15
30
30
45
45
45
30
45
30
15
20
35
20
15
35
Operation-time matrix
WC 1
WC 2
WC 3
Product
10
11
12
Total
Product
10
11
12
Total
Product
10
11
12
Total
1
900
2
1800
750
3
1650
750
4
1350
750
5
1800
6
1500
750
7
1650
900
2550
2400
1350
2550
2250
1650
1500
3000
4500
1500
3000
4500
1500
3000
3000
1500
1500
3000
4500
2250
2000
4250
2250
2000
4250
2250
2000
2000
2250
2250
2000
4250
Available
capacity
2400
4800
4800
Total capacity requirements CRP

WC
1
2
3
2330
4735
4585
2595
4535
4285
2445
3125
1830
2295
2660
6050
6050
0
4535
0
4285
6800
2515
4285
0
Total = setup time + operation time + other jobs
0
0
0
c) Problems and possible solutions.

According to the CRP calculation, there are some capacity problems for WC1 in weeks
2, 3, 4 and 7. All these problems can be solved using overtime. Even though, in week 4
there is not enough with overtime, thus the suggestion is delayed partly for week 5.
Nevertheless, it is much worse for WC2 in week 3 and 4. A possible solution for this
problem is to postpone the orders for weeks 3 and 4 to one week later, in weeks 4 and
5. This would eliminate the problem, but one should be careful with the consequences
this solution could bring, specially concerning the customers. Similar to this happens for
WC3 in week 4 which might be postponed to week 5.
Pegging could be used going back from CRP to MRP and identifying which gross
requirements are generating the production or purchasing orders in the MRP that cause
the capacity problems. There are two ways of doing pegging (see textbook pp. 33-40).
Lecture 4
Production Activity Control (PAC)
Problem 4.1
Shown below is the MRP record for part number 483. The current shop day is 100
(with 5-day weeks); it's now Monday of week 1. Open orders (scheduled receipts) are
due Mondays (shop days 100, 105, 110, etc) of the week for which they're scheduled.
The shop floor has just reported that the batch of 40 on shop order number 32 has just
been finished at machine center A43 and is waiting to be moved to C06. It takes one
day to move between machine center (or to I02, the inventory location) and one day
of queue time at the machine centers. (The inventory location doesn't require the
queue time, but one day of "machine-time" is shown for clearing the paper work.)
Part number 483's routing and status are also given below.
Part No. 483
Part No.: 483
Lead time:2 weeks
Lot size: FOQ (40)
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Description:
Safety: 5 pieces
1
14
20
2
4
40*
42
20
42
3
10
4
20
5
3
6
10
32
12
32
12
40
1
6
40
40
39
* Shop Order Number 32

Part No. 483
Routing (mach.cent.):
Machine time (days)
Status shop ord. 32:
A12
4
Done
B17
1
Done
A43
3
Done
C06
1
I02
1
a) Replicate the MRP record and calculate the critical ratio for part number 483.
Should the planner take any action?
b) What would the priorities be if the inventory was 23 instead of 20? What action
should be taken now?
c) What if inventory was 17 instead of 20?

Proposal solution
a) Critical ratio for part number 483 and actions.

There is nothing for the planner to do. The part is right on schedule.
* Shop order number 32
Part No. 483
Week
Gross requeriments
Scheduled receipts
Q=40 LT =2 SS =5
1
14
20
Due date
Current date
Time remaining
105
100
5
Work remaining
Move time
Machine time
Queue time
Total
The critical ratio
2
2
1
5
1
2
4
40*
42
3
10
4
20
5
3
6
10
32
12
40
39
b) What if inventory is 23 instead 20? Actions?

There is nothing the planner should do here either, even though the part is ahead of
schedule. The priority on the shop floor should reflect the fact that the part is ahead of
schedule and move it through only if there is nothing of higher priority.
Part No. 483
Week
Gross requeriments
Scheduled receipts
Q=40 LT =2 SS =5
23
Due date
Current date
Time remaining
110
100
10
Work remaining
Move time
Machine time
Queue time
Total
The critical ratio
2
2
1
5
2
1
14
2
4
3
10
40*
35
4
20
5
3
6
10
15
40
12
42
c) What if inventory was 17 instead 20?

There is a problem but a minor one. There will be a need to use some safety stock to
cover the immediate order, and the planner should indicate that the part wont be
finished until next week in case some subassembly is expecting to use it.
Part No. 483
Week
Gross requeriments
Scheduled receipts
Q=40 LT =2 SS =5
17
Due date
Current date
Time remaining
100
100
0
Work remaining
Move time
Machine time
Queue time
Total
The critical ratio
2
2
1
5
0
1
14
40*
43
2
4
3
10
4
20
5
3
6
10
39
29
9
40
36
Problem 4.2
Explain the Input/Output Control technique (backlog concept) and where is used into
the MPC system.
Proposal solution
See MPC textbook pages 137-140, chapter 4 Capacity Theory.

Problem 4.3
The Amigos Company produces a knickknack shelf from two end panels, three
shelves, fasteners, and hangers. The end panels and shelves have the following data
and each requires a setup:
End panel
Operation
1
2
3
Machine
Saw
Planer
Router
Run time
5 min.
2 min.
3 min.
Setup time
0.8 hr.
0.1 hr.
0.8 hr.
Shelf
Operation
1
2
3
4
Machine
Saw
Molder
Router
Sander
Run time
2 min.
3 min.
4 min.
1 min.
Setup time
0.3 hr.
1.2 hrs.
0.7 hr.
0.1 hr.
The knickknack cabinet master schedule for the next three weeks is 50, 80, and 25 units,
respectively. There is a setup for each MPS quantity.
a) What is the total number of hours required on each of the five machine centers for
this master schedule?
b) If each of the two parts is started into production one week (five days) before
needed in assembly, and it takes one day per operation, generate the week-byweek load on the routing machine in hours.
c) If, in question b, the two parts were to arrive at the router on the same day, which
would you process first? Why?
Proposal solution
a) Total number of hours in each machine center.

*Adding all units required for next weeks to find the total account of time:
50 + 80 +25 = 155 knickknack cabinets in total
Machine center: Saw
Setup
Time
End panel
Shelf
48 min.
18 min.
Total Saw
Q
units
3
3
198
Total
Time
(min.)
144
54
Run time
per unit
Q
units
5 min.
2 min.
2x155*
3x155
Total
Time
(min.)
1550
930
2480 = 2678 min.
Total number of hours in Saw machine center = 44.63 hrs.

Machine center: Planner
Setup
Time
End panel
Shelf
Total Saw
6 min.
Q
units
3
18
Total
Time
(min.)
18
Run time
per unit
Q
units
2 min.
2x155
620 = 638 min.
Total
Time
(min.)
620
Total number of hours in Planner machine center = 10.63 hrs.

Machine center: Router
End panel
Shelf
Setup
Time
Q
units
48 min.
42 min.
Total Saw
Run time
per unit
Q
units
Total
Time
(min.)
144
126
3 min.
4 min.
2x155
3x155
270
2790 = 3060 min.
Total
Time
(min.)
930
1860
Total number of hours in Router machine center = 51 hrs.

Machine center: Molder
End panel
Shelf
Setup
Time
Q
units
Total
Time
(min.)
Run time
per unit
Q
units
Total
Time
(min.)
72 min.
216
3 min.
3x155
1395
216
1395 = 1611 min.
Total Saw
Total number of hours in Molder machine center = 26.85 hrs.
Machine center: Sander
End panel
Shelf
Total Saw
Setup
Time
Q
units
Total
Time
(min.)
Run time
per unit
Q
units
Total
Time
(min.)
6 min.
18
1 min.
3x155
465
18
465 = 483 min.
Total number of hours in Sander machine center = 8.05 hrs.
b) Week-by-week load on the routing machine.

Weekly Router Machine Load
Week
Past Due
Setup Hours
1.5*
15**
Run hours
16.5
Total hours
MPS
1
1.5
24
25.5
50
2
1.5
7.5
9
80
*48 min. (end panel) + 42 min. (shelf) = 90 min. = 1.5 hrs.
25
**(50 units x 2 end panels/cabinet x 3 min./unit) + (50 units x 3 shelves/cabinet x 4

min./unit ) = 900 min. = 15 hrs.
c) Which process first in routing machine?
Since the shelves must be processed at the sanding machine center after routing, they should
be processed first at the router if the two parts arrived at the router on the same time, what
is our case. This way, both parts would be in their final operation at the same time and
complete component sets would be available for assembly sooner.
Problem 4.4
The Ace Company is considering using a priority scheduling rule in its fabrication shop and
must decide whether to use: (1) the Critical Ratio Rule, (2) the Order Slack Rule, (3) the
Shortest Operation Next Rule, or (4) the Slack per Operation Rule. Exhibit A (below) shows
the companys current inventory and shop status.
a) State the formula for calculating the priority index for each of the four sequencing rules
given previously.
b) Compute the scheduling priority for each order in Exhibit A, using each of the four
sequencing rules.
Order
number
1
2
3
4
5
Exhibit A
Manufacturing
Time
Current
lead time
remaining operation
remaining
until
processing
due date
time
15
7
2
15
11
3
20
-2
5
15
-5
4
15
3
1
Number of
operations
remaining
3
4
2
3
12
Total
processing
time
remaining
8
8
8
8
8
Note: Time is measured in days. Manufacturing lead time remaining includes both
the machine processing time and the length of time orders spend moving and waiting
to be processed in a machine queue. Current operation processing times (as well as
total processing time remaining).
Proposal solution
a) Scheduling formulas.
Critical Ratio = (due date-now) / lead time remaining
Order slack = (due date-now) (setup time + runtime)
Shortes operation next = smallest operation processing time
Slack per operation = Order slack / number of operations remaining

b) Scheduling priority for each order in Exhibit, using each of the four sequencing rules.
Priority Index Calculations
1
2
3
0,467
0,733
-0,100
-1,000
3,000
-10,000
2,000
3,000
5,000
-0,333
0,750
-5,000
Rule \ Order
Critical Ratio
Order Slack
Shortest Operation
Slack per Operation
Rule
Critical Ratio
Order Slack
Shortest Operation
Slack per Operation
Resulting Priority Sequences

Order tu run next
4
4
5
3
-0,333
-13,000
4,000
-4,333
0,200
-5,000
1,000
-0,417
other jobs sequence

3-5-1-2
3-5-1-2
1-2-4-3
4-5-1-2
Problem 4.5
a) Use the Johnson algorithm to solve the sequencing problem below where there are four
jobs to be processed on two machines, first in machine 1 and then in machine 2.
Machine 1
Machine 2
Job 1
4
3
Job 2
1
7
Job 3
8
2
Job 4
8
5
b) What criterion is the objective when optimising based on the Johnson algorithm? Give
examples of when these criteria are not suitable.
Proposal solution
a) Johnson generates the sequence: 2-4-1-3.

b) The Johnson-algorithm minimises the time it takes to process the material in front of the
machine, the make-span. This means not that e.g. WIP or the average time a part spends
in the system is minimised or that long run machine utilisation maximised. Differences in
priority between orders or sequence dependent setups are not considered.
Lecture 5
Master Production Scheduling
Problem 5.1
Powder Blast makes a line of snowblowers on a make-to-order basis as well as other types
of products. The snowblower product lines eight different end products (catalogue
numbers) vary according to horsepower, drive unit, and starting mechanism. Powder Blast
expects to sell one third of the snowblowers in two 2 kW and two thirds in 4 kW. The
expected breakdown for drive units is 40 percent and 60 percent, for chain and gear,
respectively. Similarly, the breakdown on starters is 50-50.
Catalogue no.
1000
1100
1200
1300
1400
1500
1600
1700
Drive unit
Chain
Chain
Gear
Gear
Chain
Chain
Gear
Gear
Starter
Auto
Manual
Auto
Manual
Auto
Manual
Auto
Manual
Components
401
200
150
130
115
101
170
600
401
200
150
135
115
101
175
600
401
200
160
130
120
101
170
600
401
200
160
135
120
101
175
600
801
200
150
130
115
101
170
800
801
200
150
135
115
101
175
800
801
200
160
130
120
101
170
800
801
200
160
135
120
101
175
800
kW
a) Create a super bill for the product family of small make-to-order snow-blowers.
b) Show how super bills can be used to master schedule the snowblower product line,
indicating how requirements for the component items would be exploded. Prepare sample
MRP and MPS records for the 2 kW option and item 401 (suitable matrices are available
in the appendix). In preparing these records, assume that the safety stock is zero, the
planning horizon is 8 weeks and the order quantity is 100 for both items. Current on-hand
quantity for the 2 kW option is 65 units and the on-hand for item 401 is 140 units.
Booked orders for snowblowers are 91, 82, 52 and 10 in week 1 to 4 respectively. Of
these customer orders 25 are in week 1, 18 in week 2, 6 in week 3 and 4 in week 4
specified for the 2 kW option. assume that the production plan for the snowblower family
is 100 per week and that an MPS-quantity is generated when the is a net requirement. The
lead time for assembly of snowblowers is short and thus set to zero weeks but the lead
time for item 401 is two weeks.
c) What are the advantages and disadvantages of this approach to MPC based on the Super
Bill concept?
Proposal solution
a) It is important that the components are included!
Snowblower
1 Common
- 200, 101
0.33 2 kW
- 401, 600
0.4
Chain
- 150, 115
0.5
Auto
- 130, 170
0.67 4 kW
- 801, 800
0.6
Gear
- 160, 120
0.5
Manual
- 135, 175
b)
Family: Snowblowers
Week
Sales and operations plan
Customer orders
Net (ATP)
Item no:
Lead time
Lot sizing: FOQ=100
Period
Item Forecast
Production Forecast (33%)
Actual Demand
Proj. Avail. balance (PAB)
Available to promise (ATP)
MPS (finish)
MPS (start)
Item no:
Lead time 2 weeks
Lot sizing: FOQ=100
Period
Gross requirements
Scheduled receipts
Inventory position
Net requirements
1
100
91
9
2
100
82
18
3
100
52
48
4
100
10
90
5
100
0
100
6
100
0
100
7
100
0
100
8
100
0
100
3
16
6
91
4
30
4
57
5
33
6
33
7
33
8
33
24
91
58
25
Description:
Buffer: Demand time fence (DTF): Planning time fence (PTF): 1
3
25
37
65
2
6
18
13
100
100
100
100
Description:
Buffer: 1
3
100
6
100
140
140
140
40
40
40
60
60
140
140
140
40
40
100
40
60
60
60
100
40
40
40
c) + Related to how the items are sold.

+ Good support for ATP-calculations.
+ Good support for disaggregation of the production plan.
Not directly related to how the parts are designed.
Sensitive to changes in product mix unless the percentages are updated
frequently
Simplifies monitoring availability of MTS-modules.
Problem 5.2
The Master Production Schedule consists of three different kinds of manufacturing orders.
Define these orders and clarify when each of them is used and what the most important
differences between them are.
Proposal solution
Released Order is an order presently in production or at a supplier.
Firm Planned Order, FPO is a planned order firmed by the master scheduler both in time
and quantity and this type of order is only present inside the planning time fence, PTF.
Computer Planned Order, CPO is a suggestion from the system and normally only
exists outside the PTF.
Problem 5.3
Determine the Available-to-promise (ATP), the Cumulative ATP and projected available
balance (PAB) based on the data below and explain how the production forecast usually is
determined.
Item no:
Lead time 1 period
Lot sizing: 100 items
Description:
Buffer: Demand time fence (DTF):
Planning time fence (PTF): 6 periods
PTF
Period
Item Forecast
Production Forecast
Actual Demand
Proj. avail. balance (PAB)
Cum. available to promise
MPS (start)
10
30
0
35
2
33
2
33
20
10
30
35
5
38
50
100
100
100
Proposal solution
The production forecast is usually based on a super bill and ATP at the product family level.
ATP corresponds to end items not booked by a customer and the super bill percentages
determine the expected fraction of demand related to each type.
Item no:
Lead time 1 period
Description:
Buffer: Demand time fence (DTF): Planning time fence (PTF): 6 periods
PTF
Period
Item Forecast
Production Forecast
Actual Demand
MPS (finish)
MPS (start)
50
10
0
30
35
10
75
19 (20) 0 (1)
19
19
100
100
2
33
40
2
33
5
30
38
45
35
5
5
19
19
20
10
75
85
104
100
104
104
100
67
100
204
100
100
Problem 5.4
Gte Gjut, master scheduler at Bengtssons Elektriska, explained the firms approach to
scheduling production: Basically, its fairly straightforward. We get an annual forecast
from marketing, break it up into weeks, and set the lot size at two weeks worth. Then
depending on the lead time, we can figure out when to order. In the case of the model 47
rotary arm, the forecast works out to 50 per week, which means lot size is 100. Since theres
a four-week lead time, we place an order every other week for delivery four weeks later.
Right now, we ordered last week, so orders are due in weeks 2 and 4. Next week well order
100 units for week 6. When asked what happened when actual sales differed from the
constant rate of 50 per week, Gte replied, Well, first of all, you really have to learn how to
handle those turkeys from marketing. What a bunch of cry babies. I usually just tell them Id
like to help them out, then ask where did they come in? By and large, we just hang in there,
and the averages work out. If the overall forecast for the year is wrong, then we sometimes
have to make an adjustment.
a) Given the preceding information, the following set of booked orders and new orders to be
promised, and the MPS techniques from the course. Gte has 20 on-hand inventory of
model 47 and uses time fences. For model 47 the demand time fence (DTF) is set at week
4 (between week 4 and 5) and a planning time fence (PTF) at week 7. (Use an 11-week
planning horizon in preparing your analysis. Assume assembly time is negligible).
Order number
1
2
3
4
5
6
7
8
9
Booked orders
Promise week
1
1
1
2
3
4
4
6
7
New orders to be promised

10
ASAP*
11
ASAP
12
ASAP
*As soon as possible
Quantity
10
5
2
60
60
50
60
20
10
1
10
25
b) Suppose assembling a #47 rotary arm requires a critical component, the #687 link, which
is purchased from a supplier. Re-do your analysis in question a), considering the
following information about the #687 link: One #47 rotary arm assembly requires three
#687 links. Purchasing lead time for the #687 link equals 3 weeks. Theres an open
purchase order (scheduled receipt) for 400 units scheduled to be received Monday
morning of week 2 in the future. (The supplier has just advised you that 44 pieces of this
order have been scrapped.) Currently (at the start of week 1) there are 123 #687 links on
hand in inventory. (Already 600 #687 links have been removed from inventory for use on
the two MPS orders for the #47 rotary arm due to be completed in weeks 2 and 4.) The
current order quantity for the #687 link is 400 pieces. The supplier has made a
commitment to ship a maximum of 100 pieces per week or 400 pieces in any four-week
time interval.
c) Now suppose theres a 110 SEK ordering cost and a 0.55 SEK inventory carrying cost
per piece per week for the #47 rotary arm. Recommend the best ordering policy and the
time this ordering policy can be implemented. Indicate all factors you consider in this
analysis.
d) Identify all alternative courses of action Gte can take in the short run to solve the
problems in question a), b) and c). Give each alternative solutions pros and cons.
Recommend one solution and justify your choice.
e) What are the probable motives for the above positioning of the time fences? What
consequences would your answer in c) have for the positioning of the time fences if they
were to be implemented?
Proposal solution
a) In the matrix below we can see that we cannot fill the customer orders in week 3 and 4.
The MPS quantities in week 2 and 4 are too small. We can fill the new orders at the
earliest in week 6.
Item no:
Lead time 4 periods
Period
Item Forecast
Production Forecast
Actual Demand
Description:
Buffer: Demand time fence (DTF): Period 4
Planning time fence (PTF): Period 7
1
50
20

MPS (finish)
MPS (start)
2
50
17
60
3
43
(3) 0 (-20)
-17
0
-17
100
100
3
50
4
50
5
50
6
50
7
50
60
-17
110
-27
-10
-77
20
-27
70
10
-77
-17
-27
100
100
43
100
100
43
-27
8
50
9
50
10
50
11
50
-27
100
-77
-27
100
-77
143
100
143
243
100
243
b) Gtes problems in this case are:

The scheduled receipt in week 1 is too early.
Insufficient balance between gross req. and order quantities.
Item no:
Lead time 3 weeks
Lot sizing: FOQ (400)
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Net req. consid. Planned orders
Description:
Buffer: 1
123
123
123
123
400
2
300
356
179
179
4
300
179
-121
121
121
400
279
179
400
279
6
300
10
300
21
400
379
EOQ
2KD
and POQ =
= 3.
h
D
Therefore, order 150 every three weeks. Policy can be implemented for MPS quantity in
week 6, using inventory and scheduled receipts for #687 link. Vendor cannot support in
long run.
c) EOQ =
11
d) - Reacknowledge booked orders that cannot be met.

- Promise new orders based on ATP loic.
- Try to increase MPS to meet demand.
- Improve the forecast.
- Consider safety stock to buffer erratic demand.
- Set better supply on component part.
e) Manufacturing of the end item takes four weeks which eliminates the product mix
flexibility when the parts are used. Total (cumulate) lead time corresponds 7 weeks which
means that the orders to the suppliers mast be released at least 7 weeks before the
delivery date of the end item.
Problem 5.5
a) Develop a sheet model of the two-level MPS records for Family A and Model I in
the following situation. Family A consists of several models, of which Model I
represents 50 percent of the demand. The company uses a planning fence at period
5 for the family and at period 4 for the models.
Production plan for Family A:
Master schedule for Family A:
10/period (1-6)
10/period (1-5)
Actual Orders for
Period
Sched. recpt.
Inventory
Lot sizing
Safety stock
1
2
3
4
Family A
Model I
MPS for
Model I
10
8
6
2
6
4
5
1
0
5
6
5
Family A
Model I
0
0
LFL
0
5 (period 1)
2
LFL
3
b) What happens if the production plan is changed to eight per period for periods 3
through 6 (with no other changes)?
Proposal solution
a) MPS in two levels.
Family A (PFP = 5 )
Weeks
Production Plan
Actual orders
Project Available Balance
Available to promise
MPS
On hand = 0; Lot for lot; SS = 0
1
10
10
0
10
Model 1 A (PFP = 4 )
Weeks
Production Forecast
Actual orders
Scheduled Receipts
Project Available Balance
MPS
1
6
5
1
1
2
10
8
0
2
10
3
10
6
0
4
10
4
10
2
0
8
10
5
10
6
10
0
10
10
-10
2
1
4
3
2
5
4
4
1
5
5
1
1
5
0
1
6
0
4
5
-5
b) MPS in two levels if the forecast change to 8 per period

Family A (PFP = 5 )
Weeks
1
Production Plan
10
Actual orders
10
Project Available balance
0
MPS
10
Model 1 A (PFP = 4 )
Weeks
Production Forecast
Actual orders
Scheduled Receipts
Project Available balance
MPS
1
6
5
1
1
2
10
8
0
2
10
3
8
6
0
2
8
4
8
2
0
6
8
5
8
6
8
0
8
8
-8
2
1
4
3
1
5
4
3
1
5
4
1
1
5
1
1
6
2
4
5
-2
If we have this situation, with these data mean that we are not accomplishing the SS=3 but at
least this case is less worse than the previous one.
Lecture 6
Demand Management & Forecasting.
Problem 6.1
What are the significant differences between the forecasting techniques Moving Average and
Exponential Smoothing?
Proposal solution
Exponential Smoothing (ES) is a exponentially weighted average whereas the Moving
Average (MA) is a linear average. To use ES we only need to save the previous forecast
( Ft e ) but To use MA we must save the last n demand data. ES makes it easier to use with
adaption techniques (a system that automatically adjusts the forecast sensitivity) since all we
have to do is to change the -value. If we increase n in MA we must also supply the
forecasting system with more (older) data.
Problem 6.2
Forecasting at the aggregate level (Sales and Operations Planning) is commonly performed
with a forecasting horizon of 12 to 18 months. Explain how multiplicative seasonal indices,
to be used in aggregate forecasting, are calculated.
Proposal solution
See pages 671-674 in Manufacturing Planning and Control Systems by Vollmann, Berry
and Whybark or the lecture notes.
Problem 6.3
The Acme Machine Company's master production scheduler has been analysing options on
orders received for the firm's industrial valve product line. All customer orders for industrial
valves require either option A or option B. During the past six months the following
customer order data have been collected. Each customer order is for one valve.
Month
February
March
April
May
June
July
Total number of
industrial valve
orders received
30
35
40
50
55
65
Number of orders
requiring option A
Number of orders
requiring option B
6
10
12
18
25
28
24
25
28
32
30
37
a) Develop a basic exponential smoothing model to forecast the percentage of customer

orders requiring the use of option A for August. Assume the initial forecast of orders with
option A is 15%, and Acme wants to use a smoothing constant of = 0.4.
b) What alternative forecasting models might be applied to forecast the percentage of
customer orders requiring option A?
Proposal solution
a) A basic exponential smoothing model to forecast the percentage of customer orders
requiring the use of option A for August.
Month
February
March
April
May
June
July
August
Total order
30
35
40
50
55
65
%
Options A
Orders
0.20
0.29
0.30
0.36
0.45
0.43
Option A
orders
6
10
12
18
25
28
End month
Exponential
Average
0.17
0.22
0.25
0.29
0.36
0.39
Forecast
0.15
0.17
0.22
0.25
0.29
0.36
0.39
Alpha = 0.40
Model: Alpha * (% option A orders) + (1- Alpha) * Old Exponential Average
b) Alternative forecasting models might be applied.
Trend adjusted exponential smoothing model. Simple exponential smoothing model lags
actual sales. To see how and further explanation of why see MPCs textbook pages 660662 (fourth edition).
Problem 6.4
Sue Sayer is employed as a forecasting analyst for the Barry M. Stiff Casket Corporation.
Ms. Sayer has collected the following sales data on Stiffs best selling casket, Model 12-A:
Period
Sales
1
28
2
32
3
39
4
40
5
38
6
47
7
50
8
59
9
56
a) Whats the three-period moving average forecast for period 8 made at the end of period 7.
b) If the forecast for period 5 were 35, what would be the forecast for period 6 made at the
end of period 5, using basic exponential smoothing and smoothing constant of a = 0.2?
c) If the base at the end of period 7 were 54 and the trend at the end of period 7 were 4 (a =
0.2, b = 0.4), what would be the forecast for period 9 made at the end of period 8?
d) Given the model described in c, what would be the forecast for period 10 made at the end
of period 9?
e) Given the model described in c and d, what would be the forecast for period 11 made at
the end of period 9?
f) What would be the mean absolute deviation of forecast errors, given that forecasts for
periods 1,2,3, and 4 were 30,31,35, and 38, respectively?
g) Which forecast model is better and why?
Proposal solution
a) Three-period moving average forecast for period 8 made at the end of period 7.
MAF8 = (38 + 47 + 50) / 3 = 45
b) Forecast for period 6 made at the end of period 5, using basic exponential smoothing.
Forecast for period 5 = 35
= 0,2
ESF6 = (0,2)(38) + (0,8)(35) = 35,6
c) Forecast for period 9 made at the end of period 8?
Base value 7 = 54
Trend 7 = 4
Forecast 8 = 54 + 4 = 58
= 0,2, = 0,4
Base Value 8 = (0,2)(59) + (0,8)(58) = 58,2
Trend 8 = (0,4)(58,2 54) + (0,6)(4) = 4,08
TEF 9 = 58,2 + (1)(4,08) = 62,28

d) Forecast for period 10 made at the end of period 9 according with c.
Base Value 9 = (0,2)(56) + (0,8)(562,28) = 61,024
Trend 9 = (0,4)(61,024 58,2) + (0,6)(4,08) = 3,578
TEF 10 = 61,024 + (1)(3,578) = 64,602

e) Forecast for period 11 made at the end of period 9 according with c.
TEF 11 = 61,024 + (2)(3,578) = 68,18

f) Mean absolute deviation of forecast errors, if forecasts for periods 1,2,3, and 4 were
30,31,35, and 38, respectively?
Period
1
2
3
4
Actual sales
28
32
39
40
MAD = 9/4 = 2,25 units

g) Best forecast model and why?
See textbook pp 667-670
Demand forecast
30
31
35
38
Absolute Deviation
2
1
4
2
Lecture 7
Production Planning
Problem 7.1
The Johanssons Companys forecast for the first three months of next year is: January
100; February 0; March 300 (in 1,000 pounds). Beginning inventory is 100,000 pounds.
a) Plot cumulative demand and a level aggregate production plan that meets demand with
no back orders and no ending inventory in March.
b) What production each month is needed to meet part a)s conditions?
Proposal solution
a)
400
Cumulative Production
Cum. Dem. 300
& product.
In 1000 units
200
Cumulative Demand
100
Jan
Feb
Mar
b) A production rate of 100 units per months is required in order to avoid backorders and
result in no ending inventory in March.
Problem 7.2
Below is the demand for Joans Joyous Nature Food (in pounds) for the next four months.
Beginning inventory is 10 pounds.
Month
1
2
3
4
Demand
100
150
0
40
a. How much should Joan produce each month if she wishes to have a level production
plan with no backorders or stockouts? Plot your cumulative production on the
preceding graph.
b. What is ending inventory for month 4 under this plan?
c. Joan decides to have a level production, level employment production plan with no
ending inventory at the end of the planning horizon. How much should she make each
month? What are the monthly backorders?
d. Given inventory carrying costs of $2/pound/month (on the average inventory) and
backorders of $4/pound/month (based on the month-end backorders), calculate the
cost of backorders and inventory for the plan in part c.
Proposal solution
500
400
Cumulative Production
Ending Inv.
300
200
100
Cumulative Demand
0
1
a) Joan should produce 120 units each month.

b) The ending inventory for month 4 is 200 units.
c) Joan should produce 70 units each month. See below for backorders.
[(100 + 150 + 0 + 40 10)/ 4]= 70
d)
Month:
1
Beginning Inventory
10
Production
70
Demand
100
Ending inventory
0
Average inventory
5/3
Carring cost
5/3*2=$3.33
Backorders (cumulative)
20
Backorder cost
$80
3
0
70
150
0
0
$0
100
$400
4
0
70
0
0
0
$0
30
$120
Total inventory cost = $ 3.33

Total backorder cost = $600
Lecture 8
Push/Pull, JIT/The Kanban system
Problem 8.1
Graham Manufacturing has completed the following ABC analysis of the 10 products it
makes. Graham has an assembly line that can produce 300 products per hour and works
eight hours per day:
0
70
40
0
0
$0
0
$0
Product
Forecast
[pieces/day]
800
500
400
300
200
100
50
25
12.5
12.5
2400
1
2
3
4
5
6
7
8
9
10
Total
a) Prepare a daily level schedule for Graham assuming a batch (container size) of 100 for
each product. Design one schedules based on minimising the setup time (assume
sequence independent setup times) and one schedule based on minimisation of capital
tied up (assume the same value for each product).
b) Calculate the number of kanban cards required for each product, assuming a 0.5 days lead
time and a 20% safety factor. What is the total number of kanban cards for all products?
c) Assuming storage space is proportional to the number of kanban cards, by what
percentage will storage be reduced if the lead time can be reduced to one hour?
d) What are the benefits, if any, of being able to cut all batch and container sizes to 50 units
instead of 100?
Proposal solution
a) Schedule for products 1 through 10 during a day:
201-300
101-200
1-100
Timme
3
2
1
1
4
3
1
2
5
2
1
3
4
2
1
4
5
3
1
5
6
2
1
6
4
2
1
7
7,8,9,10
3
1
8
Product 7 runs every other day, product 8 runs every fourth day and product 9 and 10
runs every eighth day.
D L (1 + )
a
Product 1 = 8000.51.2/100 = 4.8 5
Product 2 = 5000.51.2/100 = 3.0 3
Product 3 = 4000.51.2/100 = 2.4 3
Product 4 = 3000.51.2/100 = 1.8 2
Product 5 = 2000.51.2/100 = 1.2 2
Product 6 = 1000.51.2/100 = 0.6 1
Product 7-10 = = 1
A total of 20 Kanbans
b) Number of Kanbans =
c) Reduce lead time to 1/8 day.

Product 1 = 8000.1251.2/100 = 1.2 2
Product 2-10 = = 4.8 1
A total of 11 Kanbans which is a reduction of 45%.
251-300
201-250
151-200
101-150
51-100
1-50
Timme
5
3
2
2
1
1
1
6
4
3
2
1
1
2
5
4
3
2
1
1
3
7
4
3
2
1
1
4
5
3
2
2
1
1
5
6
4
3
2
1
1
6
5
4
3
2
1
1
7
8,9,10
4
3
2
1
1
8
Product 8 runs every other day, product 9 and 10 runs every fourth day.
d) Product 1 = 8000.51.2/50 = 9.6 10
Product 2 = 5000.51.2/50 = 6.0 6
Product 3 = 4000.51.2/50 = 4.8 6
Product 4 = 3000.51.2/50 = 3.6 4
Product 5 = 2000.51.2/50 = 2.4 4
Product 6 = 1000.51.2/50 = 1.2 2
Product 7-10 = = 1
A total of 31 Kanbans
Even though the number of Kanbans increases, each one represents half the volume, so
inventory has not doubled. Products 7, 8, 9 and 10 are all run more frequently.
Problem 8.2
A company is planning their procurements using an MRP system. The records below are for
two successive weeks.
a) What transactions made during week 1 would result in the record as of week 2?
b) How would this set of transactions be changed if rate-based scheduling and JIT-based
shop-floor control were implemented at the vendor with lead time of one day?
Item no:
Lead time 3 weeks
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Description:
Buffer: 20 pcs
1
25
20
20
80
5
25
25
80
75
80
2
25
80
50
3
25
4
25
5
25
6
25
7
25
8
25
25
25
25
50
25
105
135
110
75
25
15
80
165
100
25
130
0
20
20
80
160
80
140
Item no:
Lead time 3 weeks
Week
Gross requirements
Scheduled receipts
Inventory position
Net requirements
Description:
Buffer: 20 pcs
2
25
3
25
70
45
20
70
45
20
4
25
80
75
5
25
6
25
7
25
8
25
9
25
50
25
25
25
50
25
75
80
50
25
0
20
20
80
80
55
30
Proposal solution
a) Release an order for 80 units due in week 4
Changed the due date on 80 units in week 2 to week 1

80 units delivered to inventory in week 1 when the order was closed
5 units removed from the inventory record due to e.g. record error
(Other interpretations could also be possible!)
b) All inventory, due date changes, and order release transactions could be cut out. The order
size would now be 25 with zero lead time.
Lecture 9
Bottleneck Scheduling, TOC
Problem 9.1
Manufacturing planning according to the OPT-principles is often illustrated with the drumbuffer-rope analogy. Explain what the drum, the buffer and the rope corresponds to in terms
of manufacturing control. Explain also how these three components are used for
manufacturing planning and control and what specific advantages this approach to MPC
provide.
Proposal solution
Drum:
The constraining resources in the flow sets the rate for the whole system and is hence
refereed to as the drum. This corresponds to a MPS created based on the bottlenecks.
Buffer:
Since some parts of the flow are more critical than others we must be careful when we
allocate the buffers in the system. The critical parts are of course related to the
bottlenecks. Before the bottlenecks, the flow from non-critical parts of the network, and
finally before the customers to protect the delivery due dates. These buffers are refereed
to as time buffers since they are based on the bottleneck plan a few days into the future
and not a static safety stock of specified amount of different material.
Rope:
Since the stations before the bottlenecks have over capacity the output from these stations
must be controlled to limit capital tied up in the process. This is performed by controlling
the gateways (the first resources of the flow) in particular and relate this plan to what is
required at the bottlenecks (the drums). This control corresponds to what is referred to as
the rope that limits the amount of WIP between the bottlenecks and the first stations.
The advantage with this approach is the focus on what is important from a system
perspective, i.e. the total flow obtained. This is achieved through a plan based on the
customer orders and the bottlenecks in the system. The rest of the system is the subordinated
to the bottlenecks and setup to support the bottlenecks in the best possible way with help of
the time buffers.
Problem 9.2
Two of the so called OPT rules concern lot sizes explicitly. Formulate these and explain how
they could be used in the laborytory Scheduling of a small capacity constrained shop (OPTgame) to obtain a good result.
Proposal solution
The transfer batch may not and many times should not be equal to the process batch
This simply means over lapping. It is used to keep the bottleneck running (the blue
machine). E.g. small lots are transferred to the red machine to generate cash enabling the
investment of more raw material (RM1) to extend the time between setups in the blue
machine.
The process batch should be variable not fixed. There could be large differences of the
batch sizes (the no of items produced between two setups) between green and blue
machine in the manufacturing of P2.
Lecture 10 Manufacturing strategy and Integrated MPC Systems

Problem 10.1
Answer the following questions:
1. Summarise the main features and differences between MRPII, JIT and TOC.
2. How must be an MPC system designed and based on what?
3. What is order qualifiers and order winners?
4. What is level of customisation?
5. What does a hybrid system mean?

Mpcproblems Institute of Technology

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Mpcproblems Institute of Technology

Transféré par

Droits d'auteur :

Formats disponibles

LINKPING INSTITUTE OF TECHNOLOGY

Department of Production Economics, IPE

Lecture1 A general overview of MPC systems

Material Planning - Inventory control & MRP

Vendor Unit cost Shipping Cost per Annual

Total annual cost volume usage:

Thus, Framkranz should schedule the rewiews of the parts as follows:

* Part # 9 assigned to the B category to fill out Framkranzs day.

Order quantity (EOQ)

Description: Robert's product

Description: Anders' product

T.A.I. = 50+80+47.5+32.5+60+80+40+5 = 395

T.A.I. = 70+20+17.5+2.5+70+10+40+5 = 235

Description: Final assembly

Description: component part

b) Planned order releases for B using POQ=2.

Description: Final assembly

Description: component part

c) Is lowest cost with LFL or with POQ?

POQ technique produces the lowest cost.

Time required for aircraft no x is:

Instant Antiques produces a series of antique knickknacks carefully mounted on a

Operations times and capacities (in hours) are as follows:

Hours of work from other jobs in shop are:

Clean & Inspection

b) If shift of requeriments from week 2 from 17 to 10 to week 5 from 6 to 13. How is

Clean & Inspection

Clean & Inspection

Gross requirements for module A (units)

Capacity requirements for other jobs in F1

a) MRP for module A and components A1 and A2.

Description: Module A (end product)

Description: Component A1 (2*10)

Description: Component A2 (3*10)

Total capacity requirements CRP

c) Problems and possible solutions.

Production Activity Control (PAC)

* Shop Order Number 32

c) What if inventory was 17 instead of 20?

a) Critical ratio for part number 483 and actions.

b) What if inventory is 23 instead 20? Actions?

c) What if inventory was 17 instead 20?

See MPC textbook pages 137-140, chapter 4 Capacity Theory.

a) Total number of hours in each machine center.

2480 = 2678 min.

Total number of hours in Saw machine center = 44.63 hrs.

620 = 638 min.

Total number of hours in Planner machine center = 10.63 hrs.

2790 = 3060 min.

Total number of hours in Router machine center = 51 hrs.

1395 = 1611 min.

Total number of hours in Molder machine center = 26.85 hrs.

Machine center: Sander

465 = 483 min.

Total number of hours in Sander machine center = 8.05 hrs.

b) Week-by-week load on the routing machine.

*48 min. (end panel) + 42 min. (shelf) = 90 min. = 1.5 hrs.

**(50 units x 2 end panels/cabinet x 3 min./unit) + (50 units x 3 shelves/cabinet x 4

Slack per operation = Order slack / number of operations remaining

Resulting Priority Sequences

other jobs sequence

a) Johnson generates the sequence: 2-4-1-3.

Master Production Scheduling

a) It is important that the components are included!