41747_ch12case01 5/3/02 2:31 PM Page 1
CASE FLASHY FLASHERS, INC.
Jack Jacobs, the P & IM Manager of Flashy Flashers, Inc.,
stopped for a moment to adjust his tie knot and run his
fingers through his hair before entering the office of Ollie
Prout, the vice president of operations. From the tone of
Prouts voice over the telephone, Jacobs knew that he was
not being called for a social tte--tte. posed to and what do we have to do to hold onto valuable
COMPANY BACKGROUND
Flashy Flashers, Inc., is a medium-sized firm employing
500 persons and 75 managerial and administrative person-
nel. The firm produces a line of automotive electrical com-
ponents. It supplies about 75 auto parts stores and
Moonbird Silverstreak car dealers in its region.
Johnny Bennett, who serves as the president, founded
the company. Bennett is a great entrepreneur who started
producing cable assemblies in his garage. Through hard
work, consistent product quality, and high customer service,
he expanded his business to produce a variety of
electrical components. Bennetts commitment to cus-
tomer service is so strong that his company motto, Love
Thy Customers As Thyself, is etched on a big cast-iron
plaque under his giant oil portrait in the buildings front
lobby.
The companys two most profitable products are the
automotive front sidelamp and the headlamp. With the
recent boom in the auto industry and the rising popularity
of Eurosport sedans such as the Moonbird Silverstreak,
Flashy Flashers has enjoyed substantial demand for these
two lamp items.
Last year, on Prouts recommendationand for better
management of the inventory systemBennett approved
the installation of a new MRP system. Prout worked
closely with the task force created to bring MRP on-line.
He frequently attended the training sessions for selected
employees, emphasizing how MRP should help Flashy
Flashers secure a better competitive edge. On the day the
system went up, there was an aura of tranquility and
good-will. The days of the informal system of fire fighting
were over!
A year later, Prouts mood is quite different. Inventory
and overtime levels had not dropped as much as expected,
customer service was getting worse, and there were too
many complaints about late shipments. Convinced that
this should not happen with MRP, Prout is attempting to
find out what is going wrong.
THE PROBLEMS
Jacobs had barely taken two steps inside Prouts office
when his voice cut across the room. Jack, whats going on
out there? Ive just received another call from a customer
complaining that weve fallen back on our lamp shipment
to them again! This is the umpteenth time Ive received
complaints about late shipments. Johnny has been on my
back about this. Why isnt our system working as it is sup-
customers and stay in business?
Jacobs gulped and took a moment to regain his com-
posure before answering Prout. Were trying our best
to maintain the inventory records and BOM files. With
our system, theres a new explosion each week. This
gives us an updated material requirements plan and action
notices for launching new orders. Some of my group
think we should extend our outputs to get priority
and capacity reports. As you know, we decided to get the
order-launching capability well established first. How-
ever, we dont seem to have a formal system of priority
planning, and thats creating scheduling problems on the
shop floor.
I think our purchasing and marketing departments
also are at fault. We seem to experience too many stock-
outs of purchased parts even though weve worked closely
with Jayne Springs group to get realistic lead-time esti-
mates. And marketing keeps taking last-minute orders
from favorite customers. This plays havoc with our master
production schedule.
Well, Im really getting fed up with this, Prout cut in.
Talk with the people concerned and find out what exactly
is going wrong. Ill expect a complete report from you in
two weeks, giving me all the details and recommendations
for improvement.
Jacobs decided to get to the bottom of things, as he
walked out of Ollies office. He first called on Sam
McKenzie, the shop superintendent.
PRODUCTION
Jacobss conversation with McKenzie suggested that the
pre-MRP informal system is still alive and well. Im start-
ing to wonder about this MRP system, even though it
looks great on paper, McKenzie commented. Last week
we hardly had any work, and I was forced to overproduce
on several orders just to keep everyone busy. This week is
just the opposite, so many new orders were released with
short fuses that almost everyone will need to work over-
time. Its either feast or famine! Our priority planners
dont seem to update the due dates assigned to each order,
but things change pretty quickly around here.
Another thing is the inventory records. When I get an
order, I first check the inventory record for that item to find
out the current stock situation. More often than not, the
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actual number of units is less than what the records indicate. TABLE C12.2 Master Production Schedule
This means that I often have to produce more than planned.
This plays havoc with our capacity plans. We cant stick to The following data show the MPS start dates.
our lead times when things are so fluid around here! ITEM DESCRIPTION AND MPS
PART NUMBER QUANTITY START DATE
PURCHASING
Sidelamp (SL100E) 100 Week 13
Jacobss next conversation was with Jayne Spring, the pur- 80 Week 15
chasing manager. It was equally disconcerting. Our buy- 110 Week 16
ers are really getting frustrated with this new system. Headlamp (HL200E) 120 Week 14
Theres no time for creative buying. Almost all of their 90 Week 15
time is spent following up on late orders because of con- 75 Week 16
stant expediting notices. For example, the other day we
received an action notice to bring in 200 units of part
HL222P in just two weeks. We tried all possible vendors,
but they said that a delivery in two weeks was impossible. TABLE C12.3 Replacement Part Demand
What are the planners doing? The perplexing thing is that ITEM DESCRIPTION AND
the planned lead time in the inventory record for this part PART NUMBER QUANTITY DATE
is correctly stated as four weeks. Doesnt MRP offset for
lead time? On top of this, we also have some problems Side lens (SL111P) 40 Week 13
with unreliable vendor lead times. This requires us to carry 35 Week 16
more safety stock for some items than is necessary.
Jacobs tried to assimilate all this information. He then
proceeded to collect all the required information about the

side- and headlamps (shown in Tables C12.1C12.5 and

TABLE C12.1 Part Numbers and Descriptions
Figure C12.1) and decided to gain further insights into the
C206P: Screw problem by working out the MRP explosion manually for
C310P: Back rubber gasket the next six weeks.
HL200E: Headlamp
HL211A: Head frame subassembly
HL212P: Head lens YOUR ASSIGNMENT
HL222P: Headlamp module
Put yourself in Jacobss place and write the report to your
HL223F: Head frame
boss, Ollie Prout. Specifically, you are required to do a
SL100E: Sidelamp
manual MRP explosion for the side- and headlamps for
SL111P: Side lens the next six weeks (beginning with the current week).
SL112A: Side frame subassembly Assume that it is now the start of week 11. Fill in the
SL113P: Side lens rubber gasket planned order releases form provided. It should show the
SL121F: Side frame planned order releases for all items for the next six weeks.
SL122A: Side bulb subassembly Include it in your report.
SL123A: Flasher bulb subassembly Your report should identify the good and bad points of
SL131F: Side cable grommet and receptacle MRP implementation at Flashy Flashers. Supplement your
SL132P: Side bulb discussion with worksheets on the manual MRP explo-
SL133F: Flasher cable grommet and receptacle sion, indicating the types of action notices that should be
made for order releases and adjusting priorities. Conclude
SL134P: Flasher bulb
by making suggestions for change.

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TABLE C12.4 Selected Data from Inventory Records
LEAD TIME SAFETY STOCK LOT-SIZING ON-HAND SCHEDULED RECEIPT
PART NUMBER (WEEKS) (UNITS) RULE (UNITS) (UNITS AND DUE DATES)

C206P 1 30 FOQ  2500 150

C310P 1 20 FOQ  180 30 180 (week 12)
HL211A 2 0 L4L 10 50 (week 12)
HL212P 2 15 FOQ  350 15
HL222P 4 10 POQ (P  4 week) 50 110 (week 14)
HL223F 1 0 L4L 70
SL111P 2 0 FOQ  350 15
SL112A 3 0 L4L 20 100 (week 13)
SL113P 1 20 FOQ  100 20
SL121F 3 0 L4L 0 70 (week 13)
SL122A 1 0 L4L 10 50 (week 12)
SL123A 1 0 L4L 0
SL131F 2 0 POQ (P  2 week) 0
SL132P 1 25 FOQ  100 35 100 (week 12)
SL133F 2 0 POQ (P  2 week) 0 180 (week 12)
SL134P 1 25 FOQ  100 20 100 (week 11)

HL200E SL100E

C206P HL211A HL212P C206P SL111P SL112A SL113P

(4) (1) (1) (2) (1) (1) (1)

C206P C310P HL222P HL223F C310P SL121F SL122A SL123A

(2) (1) (1) (1) (1) (1) (1) (1)

SL131F SL132P SL133F SL134P

(1) (1) (1) (1)
Note: Usage quantities are shown in parentheses.

FIGURE C12.1 Bills of Materials

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TABLE C12.5 Planned Order Release Form

(Fill in the planned order releases for all components.)

WEEK

ITEM DESCRIPTION
AND PART NUMBER 11 12 13 14 15 16

Side lens (SL111P)

Side lens rubber
gasket (SL113P)
Side frame
subassembly (SL112A)
Side frame (SL121F)
Side bulb
subassembly (SL122A)
Flasher bulb
subassembly (SL123A)
Side cable grommet and
receptacle (SL131F)
Flasher cable grommet
and receptacle (SL133F)
Side bulb (SL132P)
Flasher bulb (SL134P)
Head frame
subassembly (HL211A)
Head lens (HL212P)
Headlamp module
(HL222P)
Head frame (HL223F)
Back rubber gasket
(C310P)
Screws (C206P)

Source: This case was prepared by Professor Soumen Ghosh, Georgia Institute of Technology, for the purpose of classroom discussion only.