9. The XYZ Company’s production manager is investigating causes of nervousness in the firm’s MRP system. Her study has produced MRP schedules for item X as of the start of weeks 1, 2, 3, and 4.

LT = 0.

SS = 0.

Planned order release quantities calculated using the Wagner-Whitin algorithm.
Ordering cost = $400/order.
Inventory carrying cost = $1/unit/week.

a. Assume the firm needs one unit of raw material item Y to produce one unit of product item X. Calculate gross requirements for item Y covering a four-week planning horizon as of the start of weeks 1, 2, 3, and 4. Compare gross requirements for item Y for each week as they are calculated at the start of weeks 1, 2, 3, and 4. What differences can be observed in item Y’s gross requirements from week to week?

b. If there are no changes to either item X’s gross requirements or beginning inventory over the four-week interval, what is the explanation for changes in the gross requirements for item Y observed in question a of this problem? How can this situation be explained to the production manager? What impact would such changes in gross requirements for item Y have on supplier relations if Y is a purchased part?

Transcribed Image Text:

Item X Week 1 2 3 4 Gross requirements 177 261 207 309 Scheduled receipts Projected available balance 0 261 0 309 0 Planned order releases 438 516 Item X Gross requirements Scheduled receipts Week 2 3 4 5 261 207 309 64 Projected available balance 261 0 373 64 0 Planned order releases 580