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CASE STUDY As the distribution inventory planning manager for ABC Electronics, you have been contacted by the manufacturing plant manager regarding the projected channel demand for a high-volume item stocked everywhere in the company's distribution channel, the K200-10, DVD video recorder. The manufacturing manager needs to see the projected demand for this product over the next 8 weeks. REPLENISHMENT IN A MULTI-ECHELON CHANNEL ENVIRONMENT 461 To begin the process, you have reviewed the bill of distribution kept in ABC's DRP system and have found that the distribution channel contains three echelons. You have diagramed the distribution channel and it appears as follows: DC1 DC1 Regional DC Manufacturing Plant The DRP planning system also provides some critical information. 1. All of the distribution centers (DCs) are distribution facilities only. The plant is the only facility that makes the product. 2. DCs 1 and 2 are supplied only from the Regional DC 3. The Regional DC is supplied directly from the Manufacturing Plant. 4. All of the facilities in the channel sell product to the customer, including the Manufacturing Plant 5. Since all of the facilities are subject to independent demand, each facility has a forecast. The forecasts for DCI and DC2 appear in the gross requirements rows on the DRP grid displayed on the next page. 6. The DRP grid for the K200-10 item also shows the DRP in-transit receipts that are awaiting arrival at each of the facilities. 7. Each of the distribution facilities has a minimum order quantity governing planned order releases. For example, the minimum order quantity for the item that can be placed at Distribution Center I is 200 units. If a net requirement exceeds 200 units, the DRP will add the discrete amount above 200 to the min quantity of 200 as the planned order quantity. 8. Based on this information, and the planning data provided on the DRP grids displayed on the next page, calculate the projected channel demand on the Manufacturing Plant for item K200- 462 INVENTORY MANAGEMENT IN THE SUPPLY CHAIN ENVIRONMENT 10. Also, assist the manufacturing manager calculate the MRP plan Distribution Center 1 WEEKLY PERIODS Lead time weeks Order quantity on hand inventory/units Product - 200-10 Gross requirements DRP in transit receipts Projected available balance Net requirements DRP planned order receipt ORP planned order release 1 Distribution Center 2 WEEKLY PERIODS 200 200 Lead time/weeks Order quantity/min On hand inventory/units Product - K200-10 Gross requirements DRP in transit receipts Projected available balance Net requirements DRP planned order receipt DRP planned order release 175 Regional distribution center 100 Lead time/weeks Order quantity/ Forecast/weekly on hand inventory/units Product K200-10 Gross requirements DRP in transit receipts Projected available balance Net requirements DRP planned order receipt DRP planned order release 2 200 WEEKLY PERIODS 3 4 5 200 200 200 6 200 7 200 Manufacturing Plant 1,000 WEEKLY PERIODS Lead time/weeks Order quantity Forecast/weekly On hand inventory/units Product K200-10 Gross requirements MRP scheduled receipts Projected available balance Net requirements MRP planned order receipt MRP planned order release