1. List out the shortcomings of the current MRP system.

Mr. Khurana, the CEO of Interior Furnishing Ltd., was holding a monthly meeting with the heads of the key departments to discuss the performance of the company. It has been in business of manufacturing furni- ture such as tables, chairs, file cabinets, etc. for about 100 years, and has recently faced tough competition from its major competitors. The signs of trouble were company's declining sales and slipping market share. Mr. Khurana was concerned about the company's ability to meet customer order delivery schedules. The other problem areas were cost increase due to frequently working overtime and expediting late orders and excessive levels of work-in-process. Mr. Agarwal, the head of Production, indicated that the company seemed to have enough capacity to meet demand, was using highly experienced and motivated workforce and had reliable suppliers providing good quality materials, but expressed his concern about the production plans received from the Production Plan- ning Department. The orders received by the Production Department were often unworkable due to mate- rial shortages or already occupied resources. This created high levels of work-in-process inventories waiting for other parts to be completed. The production attempted to solve these problems by working overtime or expediting both purchase and work orders in order to meet customer due dates. Mr. Batra, PPC Incharge, said that the Materials Requirement Planning system has been in use for 20 years. The orders were aggregated on a weekly basis and then simply calculated the release times for work orders and procurements using the bill of materials, inventory status, scheduled receipts and lead-time informa- tion. The plan was revised and executed on weekly basis after making appropriate adjustments for the capacity constraints. The production plans were also used to provide quotes to the customers. Mr. Batra seemed to be very optimistic that the current system itself, (AERPS), could be improved to a significant level.