Procurement are interested in the production plan to know how to service the requirement for a key raw material that is purchased. The Procurement manager tells you that his department does not want to do these calculations on a spreadsheet but would rather have them from you through the state-of-the-art ERP system. Manufacturing and Procurement provide you with the following data of the key raw material as per the BOM for the finished goods SKU AAA001

BOM for SKU AAA001
BOM Base quantity	100 units of SKU AAA001
BOM Element	Component	BOM quantity
BOM Element 1	Raw Material RM001	50
BOM Element 2	Raw Material RM002	100

For Raw Material RM001,

Current stock = 0, Min lot size = 20, Max lot size = 1000, Increments for ordering = 20 units,

Procurement leadtime (all inclusive including goods receipt, quality inspection, etc.) = 2 weeks

Based on this, can you draw up a Procurement plan that gives a view of both when the goods are required in-house as well as when the purchase orders need to be placed.

RM002 is not critical since it is just a label that is printed at need inhouse and therefore decide to not worry about it for now.

You want to now consider the current stocks available for both the FG and the key raw material RM001. Add current stock = 200 units for FG AAA001 and Current stock = 100 units for RM001.

Strategically, you are running out of space for manufacturing expansion at your current factory. Furthermore, your customers want to get goods from the state in which they are located to claim some local tax benefits. You are therefore working on an idea to move the warehouse closer to your customers. However, this means that the warehouse would not be co-located with your plant and there would be an additional leadtime of movement to the warehouse before the goods can be invoiced and sent to customers. Your factory is in East India and the warehouse location could move to Bhiwandi in West India, adding 7 days to the leadtime. The customers would then place orders on the Bhiwandi warehouse from where the goods need to be invoiced and shipped to the customers. Please remodel the entire supply chain to take this into account. You will have to show the MRP split for the two plants and show dependent requirements flowing from one to the other.

You have been asked to check if it would be cheaper to purchase the finished goods as opposed to producing it inhouse. You have a vendor in Pune (close to Bhiwandi) who can make the FG material for you and supply it. Procurement is working on the pricing from the vendor but you want to see how the picture of supply and inventory would change if you moved this to procurement. The key details that you have available with you are:

Procurement leadtime = 2 weeks

Min lot size Procurement wants you to work out two scenarios since a larger min lot size has savings on costs through a lower price. (1) Min lot size of 100 and increments of 100 (2) Min lot sizes of 250 and increments of 250