Inventory management

Complete the “Analytics Exercise: An MRP Explosion – Brunswick Motors,” at the end of Chapter 21 in the textbook. Answer Questions 1-3.

APA format is not required, but solid academic writing is expected.

You are not required to submit this assignment to Turnitin.

A n a l y t i c s E x e r c i s e : A n M R P E x p l o s i o n —

B r u n s w i c k M o t o r s

Recently, Phil Harris, the production control manager at

Brunswick, read an article on time-phased requirements

planning. He was curious about how this technique might

work in scheduling Brunswick’s engine assembly operations

and decided to prepare an example to illustrate the

use of time-phased requirements planning.

Phil’s fi rst step was to prepare a master schedule for one

of the engine types produced by Brunswick: the Model

1000 engine. This schedule indicates the number of units of

the Model 1000 engine to be assembled each week during

the last 12 weeks and is shown below. Next, Phil decided to

simplify his requirements planning example by considering

only two of the many components that are needed to complete

the assembly of the Model 1000 engine. These two

components, the gear box and the input shaft, are shown

in the product structure diagram below. Phil noted that the

gear box is assembled by the Subassembly Department and

subsequently is sent to the main engine assembly line. The

input shaft is one of several component parts manufactured

by Brunswick that are needed to produce a gear box subassembly.

Thus, levels 0, 1, and 2 are included in the product

structure diagram to indicate the three manufacturing

stages that are involved in producing an engine: the Engine

Assembly Department, the Subassembly Department, and

the Machine Shop.

The manufacturing lead times required to produce the gear

box and input shaft components are also indicated in the product

structure diagram. Note that two weeks are required to produce

a batch of gear boxes and that all the gear boxes must be

delivered to the assembly line parts stockroom before Monday

morning of the week in which they are to be used. Likewise,

it takes three weeks to produce a lot of input shafts, and all the

shafts that are needed for the production of gear boxes in a

given week must be delivered to the Sub assembly Department

stockroom before Monday morning of that week.

In preparing the MRP example Phil planned to use the

worksheets shown on the next page and to make the following


  1. Seventeen gear boxes are on hand at the beginning of

Week 1, and fi ve gear boxes are currently on order to

be delivered at the start of Week 2.

  1. Forty input shafts are on hand at the start of Week 1,

and 22 are scheduled for delivery at the beginning of

Week 2.

Q u e s t i o n s

1 Initially, assume that Phil wants to minimize his inventory

requirements. Assume that each order will be

only for what is required for a single period. Using the

following forms, calculate the net requirements and

planned order releases for the gear boxes and input

shafts. Assume that lot sizing is done using lot-for-lot


2 Phil would like to consider the costs that his accountants

are currently using for inventory carrying and

setup for the gear boxes and input shafts. These costs

are as follows:

Given the cost structure, evaluate the cost of the

schedule from question 1. Assume inventory is valued

at the end of each week.

3 Find a better schedule by reducing the number of

orders and carrying some inventory. What are the

savings with this new schedule?


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