The Fundamentals of Production Planning and Control Stephen N. Chapman Chapter 4

Question

The Fundamentals of Production Planning and Control

Stephen N. Chapman

Chapter 4, Problem 9.

Chester’s Chippers makes oversized golf clubs. The company president has asked you to show her how master scheduling techniques could be applied to her business. You have the following data:

a. Inventory at the beginning of April is expected to be 50 clubs.

b. Total monthly forecasted demand for April and May are 800 and 1,000 respectively. Demand is expected to be spread evenly throughout the month.

c. The company makes just enough clubs to meet forecasted demand for each month. These clubs will be ready to sell in the first week of every month.

d. The company already has orders booked as follows:

1st week, April    220       1st week, May    240

2nd week            215       2nd week            230

3rd week            215       3rd week            180

4th week            205       4th week            150

a. Complete the ATP below.

   

   

b. Is the company in trouble yet? Explain.

On-hand inventory at beginning of Month April May Week Forecast Demand Orders Booked Projected on-hand Inventory Master Schedule Available-to-promise

Explanation / Answer

Notes:

1)Forecast demand is computed for april = 800/4 =200 per week and for may :1000/4= 250 per week.

2)Projected on hand is : opening balance - higher of ( Customer orders, forecasted demand)

If the value is negative then production has to be done.

For example for week 1 of april: opening is 50 and higher of orders and forecast is 220. So closing inventory is 50 -220 = -170. Since it is negative hence the value for inventory would be zero and equivalent production has to be done. So MPS will be 170. Similarly for week 2 , there is no opening inventory and hence higher of forecast and customer order has to be produced.

3)Available to promise is computed by taking into account the MPS and customer orders booked. For the first week the formula is different.

Opening inventory + MPS - Sum of orders booked upto next MPS (Excluding Order of the next MPS)

For first week of april : 50 +170 -220 : 0

From second week the formula will be : MPS - SUM of orders upto next MPS.

: 215 -215 =0

Order upto next MPS would be the customer order of second week itself since order of next MPS is not to be included. And so on for other weeks.

B) No the company is not yet in trouble since the ATP is not negative and the comlany is in a position to complete deliveries.

On hand inventory 50 Month April May Week 1 2 3 4 1 2 3 4 Forecast demand 200 200 200 200 250 250 250 250 Orders booked 220 215 215 205 240 230 180 150 Projected inventory 0 0 0 0 0 0 0 0 Master Schedule 170 215 215 205 250 250 250 250 Available to promise 0 0 0 0 10 20 70 100

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