PRODUCTION ENGINEERING 2 (PENG 201)

TUTORIAL 7 - MATERIAL REQUIREMENTS PLANNING

1. Given the following diagram for a product, determine the quantity of each component
(BOM) required to assemble one unit of the finished product.

F (2) G H

J (2) D (4) L (2) J(2) A(4) D (2)

Solution
F: 2 G: 1 H: 1
J: 2 x 2 = 4 L: 1 x 2 = 2 A: 1 x 4 = 4
D: 2 x 4 = 8 J: 1 x 2 = 2 D: 1 x 2 = 2

Totals: F = 2; G = 1; H = 1; J = 6; D = 10; L = 2; A = 4
2. Semans is a manufacturer that produces bracket assemblies. Demand for bracket
assemblies (X) is 130 units. The following is the BOM in indented form:

Item Description Usage

X Bracket assembly 1
A Wall board 4
Hanger
B 2
subassembly
D Hanger casting 3
E Ceramic knob 1
C Rivet head screw 3
F Metal tong 4
G Plastic cap 2
Below is a table indicating current inventory levels:

Item X A B C D E F G
Inventory 25 16 60 20 180 160 1000 100

a) Using Excel, create the MRP using the information provided.

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 b) What are the net requirements of each item in the MPS?
Solution
a)

A(4) B(2) C(3)

D(3) E(1) F(4) G(2)

b)

X A B C D E F G

105 404 150 295 270 -10 180 490

Sample MRP schedule worksheet

Period: 1 2 3 4 5 6 7 8

Item: Gross requirements

OH: Scheduled receipts

LT: Projected available balance

SS: Net requirements

Q: Planned order receipts

Planned order releases

Item: Gross requirements

OH: Scheduled receipts

LT: Projected available balance

SS: Net requirements

Q: Planned order receipts

Planned order releases

Item: Gross requirements

OH: Scheduled receipts

LT: Projected available balance

SS: Net requirements

Q: Planned order receipts

Planned order releases

Item: Gross requirements

OH: Scheduled receipts

LT: Projected available balance

SS: Net requirements

Q: Planned order receipts

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 Planned order releases

3. In the following MRP planning schedule for Item J, indicate the correct net
requirements, planned order receipts, and planned order releases to meet the gross
requirements. Lead time is one week. 

Week Number
Item J 0 1 2 3 4 5
Gross requirements 75 50 70
On hand 40
Net Requirements
Planned order receipt
Planned order release
.
Solution
Period: 0 1 2 3 4 5
Item: J Gross requirements 75 50 70
OH: 40 Scheduled receipts
LT: 1 Projected available balance 40 40 0 0 0 0
SS: 0 Net requirements 35 50 70
Q: L4L Planned order receipts 35 50 70
Planned order releases 35 50 70

4. One unit of A is made of three units of B, one unit of C, and two units of D. B is
composed of two units of E and one unit of D. C is made of one unit of B and two
units of E. E is made of one unit of F.
Items B, C, E, and F have one-week lead times; A and D have lead times of two
weeks. Assume that lot-for-lot (L4L) lot sizing is used for Items A, B, and F; lots of
size 50, 50, and 200 are used for Items C, D, and E, respectively. Items C, E, and F
have on-hand (beginning) inventories of 10, 50, and 150, respectively; all other items
have zero beginning inventory. We are scheduled to receive 10 units of A in Week 2,
50 units of E in Week 1, and also 50 units of F in Week 1. There are no other
scheduled receipts. If 30 units of A are required in Week 8, use the low-level-coded
bill of materials to find the necessary planned order releases for all components.

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Solution

Level
A 0

C 1

B(3) B 2

E(2) D E(2) D E(2) D(2) 3

F F F 4

Period: 1 2 3 4 5 6 7 8

Item: A Gross requirements 30

OH: 0 Scheduled receipts 10

LT: 2 Projected available 0 10 10 10 10 10 10 0

balance
SS: 0 Net requirements 20

Q: L4L Planned order receipts 20

Planned order releases 20

Item: C Gross requirements 20

OH: 10 Scheduled receipts

LT: 1 Projected available 10 10 10 10 10 40 40 40

balance
SS: 0 Net requirements 10

Q: 50 Planned order receipts 50

Planned order releases 50

Item: B Gross requirements 50 60

OH: 0 Scheduled receipts

LT: 1 Projected available 0 0 0 0 0 0 0 0

balance
SS: 0 Net requirements 50 60

Q: L4L Planned order receipts 50 60

Planned order releases 50 60

Item: D Gross requirements 50 60 40

OH: 0 Scheduled receipts

LT: 2 Projected available 0 0 0 0 40 0 0 0

balance
SS: 0 Net requirements 50 60 0

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 Q: 50 Planned order receipts 50 100

Planned order releases 50 100

Item: E Gross requirements 100 220

OH: 50 Scheduled receipts 50

LT: 1 Projected available 100 100 100 0 180 180 180 180
balance
SS: 0 Net requirements 0 220

Q: 200 Planned order receipts 400

Planned order releases 400

Item: F Gross requirements 400

OH: 150 Scheduled receipts 50

LT: 1 Projected available 200 200 200 0 0 0 0 0

balance
SS: 0 Net requirements 200

Q: L4L Planned order receipts 200

Planned order releases 200

5. A table is developed using three components, as shown in the accompanying

product structure tree. The company that makes the table wants to ship 100 units
at the beginning of day 4, 150 units at the beginning of day 5, and 200 units at the
beginning of day 7. Receipts of 100 wood sections are scheduled at the beginning
of day 2. There are 120 legs on hand. An additional 10 % of the order size on legs
is added for safety stock. There are 60 braces on hand with no safety stock
requirement for braces. Lead time (in days) for all items is shown below.

Quantity Lead time Table

1 – 200 1
201 - 550 2
551 - 999 3
Wood Braces Legs(4)
sections (2) (3)
Prepare a material requirements plan for table, wood sections, braces and legs using lot-
for- lot ordering.

Solution

Beg.
Master Day 1 2 3 4 5 6 7
Inv.
Schedule
Quantity 100 150 200

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 Table Beg. 1 2 3 4 5 6 7
Inv.
Gross requirements 100 150 200
Scheduled receipts
Projected on hand
Net requirements 100 150 200
Planned-order receipts 100 150 200
Planned-order releases 100 150 200

Wood Sections Beg. 1 2 3 4 5 6 7

Inv.
Gross requirements 200 300 400
Scheduled receipts 100
Projected on hand 100 0
Net requirements 100 300 400
Planned-order receipts 100 300 400
Planned-order releases 400 400

Braces Beg. 1 2 3 4 5 6 7
Inv.
Gross requirements 300 450 600
Scheduled receipts
Projected on hand 60 60 60 0
Net requirements 240 450 600
Planned-order receipts 240 450 600
Planned-order releases 240 450 600

Legs Beg. 1 2 3 4 5 6 7
Inv.
Gross requirements 400 600 800
Scheduled receipts
Projected on hand 120 120 120 28 88 88 168
Net requirements 280 600 800
Planned-order receipts 308 660 880
Planned-order releases 968 880

6. The MRP gross requirements for Item A are shown here for the next 10 weeks.
Lead time for A is three weeks and setup cost is R10. There is a carrying cost of
R0.01 per unit per week. Beginning inventory is 90 units.

WEEK

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 1 2 3 4 5 6 7 8 9 10

  Gross requirements 30 50 10 20 70 80 20 60 200 50

Use the least total cost and the least unit cost lot-sizing method to determine what
quantity the first order should be released and for which period.

Solution
Calculations
Weeks Quantity Carrying Order Total
ordered cost cost cost Unit cost
4 20 R0.00 R10.00 R10.00 R0.500
4 to 5 90 0.70 10.00 10.70 0.119
4 to 6 170 2.30 10.00 12.30 0.072
4 to 7 190 2.90 10.00 12.90 0.068
4 to 8 250 5.30 10.00 15.30 0.061
4 to 9 450 15.30 10.00 25.30 0.056
4 to 10 500 18.30 10.00 28.30 0.057
9 200 0.00 10.00 10.00
9 to 10 250 2.50 10.00 12.50

Least Total Cost

Period 1 2 3 4 5 6 7 8 9 10
Gross Requirements 30 50 10 20 70 80 20 60 200 50
Projected available 60 10 0 230 160 80 60 0 50 0
balance
Net requirements 20 200
Planned order receipts 250 250
Planned order releases 250 250

Least Unit Cost

Period 1 2 3 4 5 6 7 8 9 10
Gross Requirements 30 50 10 20 70 80 20 60 200 50
Projected available 60 10 0 430 360 280 260 200 0 0
balance
Net requirements 20 50
Planned order receipts 450 50
Planned order releases 450 50

For Least Total Cost, order for periods 4 through 8, since carrying cost is the closest to
ordering cost. For Least Unit Cost, order for periods 4 through 9, since this has the
lowest unit cost.

7. Product A consists of two units of Subassembly B, three units of C, and one unit of
D. B is composed of four units of E and three units of F. C is made of two units of H
and three units of D. H is made of four units of E and two units of G.
a) Construct a simple bill of materials (product structure tree).
b) Construct a product structure tree using low-level coding.

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 c) Construct an indented parts list.
d) To produce 100 units of A, determine the numbers of units of B, C, D, E, F, G, and
H required.

Solution

a) Product Structure Tree

Level
A 0

B(2) C(3) D 1

E(4) F(3) H(2) D(3) 2

E(5) G(2) 3

b) Low-level Coded Product Structure Tree

Level
A 0

B(2) C(3) 1

F(3) H(2) D(3) D 2

E(4) E(5) G(2) 3

c)

Indented bill of materials Single level bill of materials

Level 0 Level 1 Level 2 Level 3
A A
B(2) B(2)

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 E(4) C(3)
F(3) D
C(3) B
D(3) E(4)
H(2) F(3)
E(5) C
G(2) D(3)
D H(2)
H
E(5)
G(2)

d) Level 0 100 units of A

Level 1 200 units of B
300 units of C
Level 2 600 units of F
600 units of H
1000 units of D (3x3x100 + 1x100)
Level 3 3800 units of E (4x2x100 + 5x2x3x100)
1200 units of G