Principles of Logistics and supply chain management

ASSIGNMENT 2

APP AND MRP

Exercise 1

The bus of company A has plan their capacity in terms of ‘bus-days’. Forecasts show expected annual
demands for the next year to average 400,000 full-day passengers and 840,000 half-day passengers. The
company has 61 buses, each with an effective capacity of 40 passengers a day for 300 days a year.
Breakdowns and other unexpected problems reduce efficiency to 90%. They employ 86 drivers who work
an average of 220 days a year, but illness and other absences reduce their efficiency to 85%. If there is a
shortage of buses the company can buy extra ones for $110,000 or hire them for $100 a day. If there is a
shortage of drivers they can recruit extra ones at a cost of $20,000 a year, or hire them from an agency for
$110 a day.

How can the company approach its tactical planning? Please recommend the company A the best plan
and explain in detail reasons for the selection

Exercise 2

Company X currently has 150 workers. Company has to work 20 working days per month and 8 hour per
day. Each worker can produce 70 units per period.

There are associated costs for    

Spare transport that is not used 2 $/unit

Shortage of transport 50 $/unit

Cost of moving to this function from

other jobs 300 $/employee

Cost of moving an employee from this

function to other jobs 500 $/employee

Number of employee 150 Employees

Number of unit per employee 70 Units

Regular-time cost of employee 4 $/hour

The company is confusing between two strategies for their aggregate planning as following:

Strategy 1: level strategy

 Principles of Logistics and supply chain management

Month 1 2 3 4 5 6 Total

Forecasting demand 10000 11000 15000 18000 25000 26000 105000

Cummulative forecast
             
demand

Supply rate              

Cummulative supply              

Unused supply              

Shortage of supply              

Cost of unsed supply              

Cost of shortage              

Number of employee              

Cost of moving
             
employees

Regular-time cost of
             
employees

Total cost              

Strategy 2: Chase strategy

Month 1 2 3 4 5 6 Total

Forecasting demand 10000 11000 15000 18000 25000 26000 105000

Cummulative forecast
             
demand

Supply rate              

Cummulative supply              

Unused supply              

Shortage of supply              

Cost of unsed supply              

Cost of shortage              

Number of employee              
 Principles of Logistics and supply chain management

Cost of moving
             
employees

Regular-time cost of
             
employees

Total cost              

Finish aggregate planning for the company. Which strategy is the best for company? Explain for your
suggestions.

Exercise 3:

An order has been received for 50 units of product B in period 8 with the product structure below. The
on-hand stock levels are B = 5, C = 29, D = 60, and E = 18. If components are ordered as required (no
fixed lot size), what should be the size of each order? When should ordered be released for each
component?

B
LT = 2

C(2) D(3)
LT = 1 LT = 1

D(2) E(3)
LT = 1 LT = 1

Exercise 4: 
 Principles of Logistics and supply chain management

The XY Corporation assembles a product as shown in the product structures below. It has orders for 320
on week 8 and 100 units on week 9 of product X. The information of each item are as table below.
Develop the MRP table and conclude the order quatity for Item D.

Item Amount on hand Schedule receipts Lot-sizing rule

X 120 0 L4L
A 300 0 L4L
B 100 50 (week 6) L4L
C 200 0 L4L
D 50 0 Periodic Order
Quantity (2 weeks)
E 200 0 L4L

X
LT = 2

A (2) B (1) C (3) D (2)

LT = 2 LT = 2 LT = 1 LT = 2

E (2)
LT =2
 Principles of Logistics and supply chain management

Item: D Leadtime: Lotsize:

week 1 2 3 4 5 6 7 8 9

Gross Requirements

Scheduled Receipts

Current stock

Net requirements

Place order

Scheduled delieveries

Exercise 5: 

Products A and B are made according to the bill of materials diagram shown
below.  Scheduled quantities of the end products are, for A, 95 units in week 4, 150 units
in week 6, and 130 units in week 8, and for B, 80 units in week 3, 70 units in week
6.  Lead-times: A = 2 weeks, B = 1 week. 

The table below shows additional data for the items C, D, and E. 

  C D E
Lot size L4L L4L L4L
Lead-time 2 1 3
 Principles of Logistics and supply chain management

Beginning inventory 625 350 85

Scheduled receipts none none 200 week 2

Exercise 6:

A Corporation assembles two products as shown in the product structures below. It has
orders for 480 on period 8 and 100 units on period 9 of product X.. Develop the MRP
table for each of the item.

Item Amount on hand Schedule receipts Lot-sizing rule

X 180
A 100
B 50
C 50
D 50
0 L4L
0 Periodic order
quantity (2 weeks)
0 100
0 200
0 400

X
LT = 2

A (2) B (1) C (3) D (1)

LT = 2 LT = 2 LT = 1 LT = 3

D (2)
LT =2