Chapter
11 Resource Planning
DISCUSSION QUESTIONS
1. Some responses from each functional area could include:
q Marketing: The available-to-promise quantities because they determine when
orders can be promised to customers, the history of orders accepted for each
product by time period because this information can be useful in projecting future
demand patterns.
q Finance: The projected MPS quantities and inventory levels because they will
indicate cash needs.
q Operations: The MPS start quantities because they indicate when production of
products must begin to meet customer promises and because they provide the
basis for estimating capacity needs at critical workstations.
2. A master flight schedule specifies the arrival and departure times for all the flights an
airline must produce to meet customer demands. Here, the lead time is the time
between departure and arrival, which is similar to the lead time in producing a
quantity of a product. The passenger size of the aircraft is analogous to a production
quantity, and the available-to-promise quantity in manufacturing bears similarity to
the seats available on a given flight. In general, the flight schedule can be used to
estimate the needs for resources such as pilots, flight attendants, airport slots, and
aircraft.
3. The purpose of this exercise is to get the students to think about the usefulness of
ERP for each of their major areas of interest. Because groups consist of different
functional area representatives, the discussion is intended to emphasize the cross-
functional needs that are satisfied with an information system such as ERP. Some
responses to this exercise include:
q Marketing—information about the availability of finished products that can be
promised for delivery; finished goods inventory performance (service levels,
stockouts).
q Finance—short-term financing needs for production plans, developed from the
order releases and projected inventory levels.
q Accounting—billing invoices for products shipped to customers; payments to
suppliers of raw materials and purchased components, developed from the
schedule of orders actually received.
q Operations—the schedule of order releases to support the master schedule;
estimates of capacity requirements at critical work centers.
11-1
Copyright © 2016 Pearson Education, Inc.
,11-2 l PART 2 l Managing Customer Demand
4. The principles of MRP can be used for UPS by identifying bills of resources for
resources such as employees, trucks, planes, and equipment. Forecasts of delivery
requirements and the BORs can be used to estimate resource needs and project the
loads on critical sorting operations.
PROBLEMS
Master Production Scheduling
1. MPS record in Figure 11.29 The following table is from the Master Production
Scheduling Solver in OM Explorer. The ATP row is not required for this problem.
Solver Master Production Scheduling
Enter data in yellow shaded areas.
Lot Size 60
Lead Time 1
Quantity on Hand 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Forecast 20 18 28 28 23 30 33 38
Customer Orders (Booked) 15 17 9 14 9 7
Projected On-Hand Inventory 15 57 29 1 38 8 35 57
MPS Quantity 60 60 60 60
MPS start 60 60 60 60
Available-to-Promise Inv (ATP) 20 20 51 53 60
Override Formulas Restore Formulas
2. MPS record in Figure 11.30
Lot Size: 100 January February
Quantity on Hand: 75 1 2 3 4 5 6 7 8
Forecast 65 65 65 45 50 50 50 50
Customer orders (booked) 40 10 85 0 35 70 0 0
Projected on-hand inventory 10 45 60 15 65 95 45 95
MPS quantity 100 100 100 100 100
MPS start 100 100 100 100 100
3. An end-item
Lot Size: 100 Week
Quantity on Hand: 80 1 2 3 4 5 6 7 8 9 10
Forecast 30 20 35 50 25 25 0 40 0 50
Customer orders (booked) 22 30 15 9 0 0 5 3 7 0
Copyright © 2016 Pearson Education, Inc.
, Resource Planning l CHAPTER 11 11-3
Projected on-hand inventory 50 20 85 35 10 85 80 40 33 83
MPS quantity 100 100 100
MPS start 100 100 100
4. Ball Bearings
Prospective MPS
a.
Solver Master Production Scheduling
Enter data in yellow shaded areas.
Lot Size 500
Lead Time 1
Quantity on Hand 400 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Forecast 550 300 400 450 300 350 200 300 450 400
Customer Orders (Booked) 300 350 250 250 200 150 100 100 100 100
Projected On-Hand Inventory 350 100 150 350 300 50 150
MPS Quantity 500 500 500 500 500 500 500
MPS start 500 500 500 500 500 500
Available-to-Promise Inv (ATP) 250 250 250 150 300 400 400
Override Formulas Restore Formulas
The first order for 500 (in week 4) should be accepted. Through week 4, on hand
(400) plus three MPS quantities of 500 each = 1900. Of those, (300 + 350 + 250 +
250) = 1150 have been sold, leaving 750 available (250 after this commitment).
b. The second order for 400 (in week 5) should be accepted. Through week 5, the
250 remaining after the first order plus one more MPS quantity of 500 = 750. Of
those, 200 have been sold in the 5th week and 150 in the 6th week. Therefore,
(250 + 500 – 200 – 150) = 400 are still available. There will be zero units
remaining for sale even after accepting this order.
The third order for 300 units (in week 1) should not be accepted. At that time, of the
400 on hand, plus 500 MPS quantity to arrive in the first week, a total of 300 plus 350
has been sold. Note that because no MPS is scheduled for the 2nd week, the 350
ordered for the 2nd week must come from those on hand or those arriving in the 1st
week. In total [(400 + 500) – (300 + 350)] = 250 remaining, which will not cover the
order for 300. Although a partial order of 250 could be fulfilled, these 250 units are
required to satisfy orders 1 and 2.
The fourth order for 300 units (in week 7) should be accepted. After accepting the
second order (part ii), zero units remain. In the 7th week 500 units arrive. Of those,
Copyright © 2016 Pearson Education, Inc.
, 11-4 l PART 2 l Managing Customer Demand
demands of 100 in each of weeks 7 and 8 have been promised, leaving (500 – 200) =
300. This order of 300 units would reduce the quantity available to promise to zero
units.
5. Tabard Industries
a. The prospective MPS
Week
Quantity on Hand: 150 1 2 3 4 5 6 7 8
Forecast 120 120 120 100 100 100 80 80
Customer orders (booked) 100 80 60 40 10 10 0 0
Projected on-hand inventory 30 110 190 90 190 90 10 130
MPS quantity 200 200 200 200
MPS start 200 200 200 200
b. The revised MPS given changes in forecasted demand
Week
Quantity on Hand: 150 1 2 3 4 5 6 7 8
Forecast 120 120 120 150 150 150 100 100
Customer orders (booked) 100 80 60 40 10 10 0 0
Projected on-hand inventory 30 110 190 40 90 -60 -160 -60
MPS quantity 200 200 200 200
MPS start 200 200 200 200
The projected on-hand inventory row indicates a negative balance in week 6.
However, this will become problematic only if the new customer orders meet these
forecasts. If the new forecasts are accurate, the MPS quantities will need to be
revised.
c. The revised MPS given a newly accepted customer order
Week
Quantity on Hand: 150 1 2 3 4 5 6 7 8
Forecast 120 120 120 100 100 100 80 80
Customer orders (booked) 100 280 60 40 10 10 0 0
Projected on-hand inventory 30 -50 30 -70 30 -70 -150 -30
MPS quantity 200 200 200 200
MPS start 200 200 200 200
The projected on-hand inventory row indicates a negative balance in week 2.
Since this change represents actual demand, this situation requires that the MPS
quantity be revised or demand must be shifted to future weeks.
Copyright © 2016 Pearson Education, Inc.
11 Resource Planning
DISCUSSION QUESTIONS
1. Some responses from each functional area could include:
q Marketing: The available-to-promise quantities because they determine when
orders can be promised to customers, the history of orders accepted for each
product by time period because this information can be useful in projecting future
demand patterns.
q Finance: The projected MPS quantities and inventory levels because they will
indicate cash needs.
q Operations: The MPS start quantities because they indicate when production of
products must begin to meet customer promises and because they provide the
basis for estimating capacity needs at critical workstations.
2. A master flight schedule specifies the arrival and departure times for all the flights an
airline must produce to meet customer demands. Here, the lead time is the time
between departure and arrival, which is similar to the lead time in producing a
quantity of a product. The passenger size of the aircraft is analogous to a production
quantity, and the available-to-promise quantity in manufacturing bears similarity to
the seats available on a given flight. In general, the flight schedule can be used to
estimate the needs for resources such as pilots, flight attendants, airport slots, and
aircraft.
3. The purpose of this exercise is to get the students to think about the usefulness of
ERP for each of their major areas of interest. Because groups consist of different
functional area representatives, the discussion is intended to emphasize the cross-
functional needs that are satisfied with an information system such as ERP. Some
responses to this exercise include:
q Marketing—information about the availability of finished products that can be
promised for delivery; finished goods inventory performance (service levels,
stockouts).
q Finance—short-term financing needs for production plans, developed from the
order releases and projected inventory levels.
q Accounting—billing invoices for products shipped to customers; payments to
suppliers of raw materials and purchased components, developed from the
schedule of orders actually received.
q Operations—the schedule of order releases to support the master schedule;
estimates of capacity requirements at critical work centers.
11-1
Copyright © 2016 Pearson Education, Inc.
,11-2 l PART 2 l Managing Customer Demand
4. The principles of MRP can be used for UPS by identifying bills of resources for
resources such as employees, trucks, planes, and equipment. Forecasts of delivery
requirements and the BORs can be used to estimate resource needs and project the
loads on critical sorting operations.
PROBLEMS
Master Production Scheduling
1. MPS record in Figure 11.29 The following table is from the Master Production
Scheduling Solver in OM Explorer. The ATP row is not required for this problem.
Solver Master Production Scheduling
Enter data in yellow shaded areas.
Lot Size 60
Lead Time 1
Quantity on Hand 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Forecast 20 18 28 28 23 30 33 38
Customer Orders (Booked) 15 17 9 14 9 7
Projected On-Hand Inventory 15 57 29 1 38 8 35 57
MPS Quantity 60 60 60 60
MPS start 60 60 60 60
Available-to-Promise Inv (ATP) 20 20 51 53 60
Override Formulas Restore Formulas
2. MPS record in Figure 11.30
Lot Size: 100 January February
Quantity on Hand: 75 1 2 3 4 5 6 7 8
Forecast 65 65 65 45 50 50 50 50
Customer orders (booked) 40 10 85 0 35 70 0 0
Projected on-hand inventory 10 45 60 15 65 95 45 95
MPS quantity 100 100 100 100 100
MPS start 100 100 100 100 100
3. An end-item
Lot Size: 100 Week
Quantity on Hand: 80 1 2 3 4 5 6 7 8 9 10
Forecast 30 20 35 50 25 25 0 40 0 50
Customer orders (booked) 22 30 15 9 0 0 5 3 7 0
Copyright © 2016 Pearson Education, Inc.
, Resource Planning l CHAPTER 11 11-3
Projected on-hand inventory 50 20 85 35 10 85 80 40 33 83
MPS quantity 100 100 100
MPS start 100 100 100
4. Ball Bearings
Prospective MPS
a.
Solver Master Production Scheduling
Enter data in yellow shaded areas.
Lot Size 500
Lead Time 1
Quantity on Hand 400 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Forecast 550 300 400 450 300 350 200 300 450 400
Customer Orders (Booked) 300 350 250 250 200 150 100 100 100 100
Projected On-Hand Inventory 350 100 150 350 300 50 150
MPS Quantity 500 500 500 500 500 500 500
MPS start 500 500 500 500 500 500
Available-to-Promise Inv (ATP) 250 250 250 150 300 400 400
Override Formulas Restore Formulas
The first order for 500 (in week 4) should be accepted. Through week 4, on hand
(400) plus three MPS quantities of 500 each = 1900. Of those, (300 + 350 + 250 +
250) = 1150 have been sold, leaving 750 available (250 after this commitment).
b. The second order for 400 (in week 5) should be accepted. Through week 5, the
250 remaining after the first order plus one more MPS quantity of 500 = 750. Of
those, 200 have been sold in the 5th week and 150 in the 6th week. Therefore,
(250 + 500 – 200 – 150) = 400 are still available. There will be zero units
remaining for sale even after accepting this order.
The third order for 300 units (in week 1) should not be accepted. At that time, of the
400 on hand, plus 500 MPS quantity to arrive in the first week, a total of 300 plus 350
has been sold. Note that because no MPS is scheduled for the 2nd week, the 350
ordered for the 2nd week must come from those on hand or those arriving in the 1st
week. In total [(400 + 500) – (300 + 350)] = 250 remaining, which will not cover the
order for 300. Although a partial order of 250 could be fulfilled, these 250 units are
required to satisfy orders 1 and 2.
The fourth order for 300 units (in week 7) should be accepted. After accepting the
second order (part ii), zero units remain. In the 7th week 500 units arrive. Of those,
Copyright © 2016 Pearson Education, Inc.
, 11-4 l PART 2 l Managing Customer Demand
demands of 100 in each of weeks 7 and 8 have been promised, leaving (500 – 200) =
300. This order of 300 units would reduce the quantity available to promise to zero
units.
5. Tabard Industries
a. The prospective MPS
Week
Quantity on Hand: 150 1 2 3 4 5 6 7 8
Forecast 120 120 120 100 100 100 80 80
Customer orders (booked) 100 80 60 40 10 10 0 0
Projected on-hand inventory 30 110 190 90 190 90 10 130
MPS quantity 200 200 200 200
MPS start 200 200 200 200
b. The revised MPS given changes in forecasted demand
Week
Quantity on Hand: 150 1 2 3 4 5 6 7 8
Forecast 120 120 120 150 150 150 100 100
Customer orders (booked) 100 80 60 40 10 10 0 0
Projected on-hand inventory 30 110 190 40 90 -60 -160 -60
MPS quantity 200 200 200 200
MPS start 200 200 200 200
The projected on-hand inventory row indicates a negative balance in week 6.
However, this will become problematic only if the new customer orders meet these
forecasts. If the new forecasts are accurate, the MPS quantities will need to be
revised.
c. The revised MPS given a newly accepted customer order
Week
Quantity on Hand: 150 1 2 3 4 5 6 7 8
Forecast 120 120 120 100 100 100 80 80
Customer orders (booked) 100 280 60 40 10 10 0 0
Projected on-hand inventory 30 -50 30 -70 30 -70 -150 -30
MPS quantity 200 200 200 200
MPS start 200 200 200 200
The projected on-hand inventory row indicates a negative balance in week 2.
Since this change represents actual demand, this situation requires that the MPS
quantity be revised or demand must be shifted to future weeks.
Copyright © 2016 Pearson Education, Inc.
