3. Critically evaluate using DDMRP by comparing it to the MRP approach. Show how MRP with safety stock compares to the DDMRP schedule. To keep the calculations simple, assume a safety stock of 31 units is carried. Fast Cycles is a startup that makes an electric assist touring bicycle. The bike is designed to cruise at 30 mph and can travel 150 miles (or further with pedal assist) on a single battery charge. The rugged design has special shock absorbers on the front and rear that make for a comfortable ride on roads with tar strips, ruts and potholes. The company has had some complaints related to the 10 working days lead time that it currently offers customers.

We introduced the company in Chapter 8, Material Requirements Planning. In that version, standard MRP logic was used to plan the fabrication and assembly of the E-Bike. The 10 working days lead time was needed when using the system. The company is now interested in exploring the use of demand-driven material requirements planning (DDMRP) and determining how to ship a bike 3 days after it is ordered. To do this, Fast Cycles will implement a system where a small number of completed bikes are carried in inventory. DDMRP offers planning logic that will enable this improved customer service.

To review the Fast Cycles process, the frame of the bike is fabricated from aluminum tubes which are cut and welded together using special jigs in the factory. Other parts, such as the wheel/tire assembly, brakes, motor, battery, electronic controller, and drive mechanism, are purchased from vendors that specialize in these items.