Use MRP and excel for this prob. Thanks You\'ve chosen Plain White Tees to produ

Question

Use MRP and excel for this prob. Thanks

You've chosen Plain White Tees to produce all of the t-shirts sold at the ice cream parlor. Last week Plain White Tees' production manager, Tom, mentioned that although his company uses both the chase and stable workforce production strategies, he is unhappy with the hiring and firing that occurs under the chase plan and the variable work hours of the stable plan. You suggest a level production plan and offer to help Tom develop one for the next four months. Given the following demand forecasts, help Tom develop a pure level output plan (this means that you produce the same number of t-shirts each month) that specifies the level of production needed to avoid back orders during any period and to keep ending inventory at a minimum. Beginning inventory is 80 units.

Explanation / Answer

Beginning inventory = 80 units. Total requirement for January to April = 7,075 units.

Total production = requirement - beginning inventory = 7075 - 80 = 6995 units. Aggregate production should be = 6995/4 = 1748.75 or 1749 units

However, producing at the rate of 1749 per month will result in a stock out in March. As no back order is allowed, there should be no stock outs.

Case when monthly production is 1749:

(ending inventory = beginning inventory+production - demand)

Thus, there is a shortage in the month of March and this will lead to back order. But, backorders are not allowed. So this shortgae cannot be allowed. Thus, the shortgae of 848 will have to be divided between the months of Jan, Feb and March.

848/3 = 283 (rounded off). Thus the production level should be = production as per the aggregate demand+283 = 1749+283 = 2,032 units. The situation will be:

Thus a level production of 2,032 units will ensure no back orders and will keep the inventory at a minimum. Production in any quantity that is less than 2032 units will result in stock outs and hence in back orders.

Month Beginning inventory Production Demand Ending inventory Jan 80 1749 1800 29 Feb 29 1749 1725 53 March 53 1749 2650 -848 April 1749 900

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