Tabard Industries forecasted the following demand for one of its most profitable
ID: 461455 • Letter: T
Question
Tabard Industries forecasted the following demand for one of its most profitable products for the next 8 weeks: 100, 100, 100, 80, 80, 80, 60, and 60 units. The booked customer orders for this product, starting in week 1 are: 110, 80, 50, 40, 30, 10, 0, and 0 units. The current on-hand inventory is 250 units, the order quantity is 200 units, and the lead time is one week. a. Develop a MPS for this product. (Enter your responses as whole numbers. A response of "0" is equivalent to being not applicable.)Explanation / Answer
To obtain the MPS order following steps is repeated for each week.
1.calculate Gross requirement for each week = Forecast (1) + Customer orders (2)
2. Obtain the opening inv. which is equal to projected on-hand of previous period. For first week opening inventory = 200 units.
3. Calculate difference or actual requirement by subtracting (3) from (4). If the difference is positive then don’t place an order for that week. If the difference is negative then place the order of 200 units for the given week as per order policy. For example difference for week 2 is -140, so place order of 200 units. MPS quantity for week 2 is 200 units.
4. Now calculate projected on-hand or ending inventory of the week by adding difference (5) and MPS quantity (7). Or it can be calculated as follows:
Projected on-hand = MPS quantity + Opening inv. – Gross requirement
Week
1
2
3
4
5
6
7
8
1
Forecast
100
100
100
80
80
80
60
60
2
Customer orders
110
80
50
40
30
10
0
0
3
gross req. (1+2)
210
180
150
120
110
90
60
60
4
opening inv.
250
40
60
110
190
80
190
130
5
Difference (4-3)
40
-140
-90
-10
80
-10
130
70
6
Projected on-hand
(7+5) or (7+4-3)
40
60
110
190
80
190
130
70
7
MPS quantity
0
200
200
200
0
200
0
0
Week
1
2
3
4
5
6
7
8
1
Forecast
100
100
100
80
80
80
60
60
2
Customer orders
110
80
50
40
30
10
0
0
3
gross req. (1+2)
210
180
150
120
110
90
60
60
4
opening inv.
250
40
60
110
190
80
190
130
5
Difference (4-3)
40
-140
-90
-10
80
-10
130
70
6
Projected on-hand
(7+5) or (7+4-3)
40
60
110
190
80
190
130
70
7
MPS quantity
0
200
200
200
0
200
0
0
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