6. The Fisher Products Company produces a line of children’s parlor games. The production process includes two departments: fabrication and assembly. The fabrication shop produces game parts, such as plastic pieces, game markers, and special indicators. The company maintains inventories both of the raw material needed to produce the game parts and of finished game parts themselves. The assembly department consists of a single assembly line that collates and packages all parlor games in Fisher’s product line to meet incoming customer orders. The company maintains no inventory of finished products (games) but produces only to customer order.

Each week the assembly foreman schedules the assembly line and supervises withdrawal from the stockroom of game parts that are needed on the assembly line to meet the production schedule. Sometimes several games are assembled during a single week. Since the company uses MRP to plan and control production of games and game parts, the assembly foreman prepares an MPS for a period covering eight weeks into the future. Exhibit A shows his master schedule with two end products (games A and B).

a. A component (game part) called the toy cup is used in producing the two parlor games (A and B). Two units of the toy cup are needed to produce one unit of game A, and one unit of the toy cup is required to produce one unit of game B. Assuming the toy cup planned lead time is one week, current on-hand inventory is 44 units, and there are no scheduled receipts, complete the MRP record for the toy cup in Exhibit A. Use the POQ ordering policy for lot sizing. Ordering cost for the toy cup is $9/order; inventory carrying cost is $0.10/unit/week.

b. After completing the toy cup’s MRP record in part

a, complete the MRP record in Exhibit A for the plastic molding material needed to produce the toy cup. Two ounces of the plastic molding material are needed to produce one toy cup, planned lead time for the plastic material is one week, 20 ounces of plastic material are currently on hand, a scheduled receipt for 90 ounces of plastic material is due in week 1 from the supplier, and the periodic ordering policy is used for this item. Ordering cost is $5/order; inventory carrying cost is $0.04 per ounce per week.

c. Fisher’s assembly foreman has just handed you the MRP records for the toy cup and plastic molding material in Exhibit B. These MRP records contain a different MPS, changed on-hand inventory values, and a new scheduled receipt value. Also, planned lead time for both items is now two weeks. Complete the new MRP records for both items, assuming the PPB ordering policy is used for the toy cup and plastic material.

d. What problem(s), if any, are apparent after you have completed the MRP records in Exhibit B? What are the MRP planner’s alternative courses of action in resolving the problem(s)? What specific course of action should be taken? Why?

Transcribed Image Text:

End Products Game A master schedule Game B master schedule Toy Cup Week Number 1 2 3 4 5 6 7 8 21 21 20 15 2 2 9 6 3 9 1 2 3 4 5 6 7 00 8 Gross requirements Scheduled receipts* Projected available balance 44 Planned order releases Plastic Molding Material 1 2 3 4 5 6 7 8 Gross requirements Scheduled receipts* 90 Projected available balance 20 Planned order releases *Received at the beginning of each week.