Brunswick Motors Case Study Answers

Unformatted text preview: Case Study Chapter 21 Brunswick Motors, Inc. – An Introductory Case for MRP Global Logistics- TRA471 (Section U02 & RXE) Professor Carlos Parra Group 8 Andrea Hernandez (4059227) Cheyenne Meredith (4271688) Marcos Anjos (5700585) Jose Ariza (570192) March 21st , 2016 Background Material requirements planning (MRP) is the key piece of logic that ties the production functions together from a material planning and control view. MRP has been installed almost universally in manufacturing firms, even those considered small. The reason is that MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. MRP also provides the schedule specifying when each of these items should be ordered or produced. MRP is based on dependent demand. Dependent demand is caused by the demand for a higher-level item. Tires, wheels, and engines are dependent demand items based on the demand for automobiles, for example. MRP is most valuable in industries where a number of products are made in batches using the same productive equipment, which means that it is most valuable to companies involved in assembly operations and least valuable to those in fabrication. One more point to note: MRP does not work well in companies that produce a low number of units annually. Brunswick Motors, is a car dealership located in Orpington, Kent. Their business focuses on selling new or used cars at the retail level, based on a their contract with an automaker and their sales subsidiary. Case Description 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 first 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 shown on the next page. 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 Subassembly 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 make the following assumptions: 1. Seventeen gear boxes are on hand at the beginning of week 1, and give gear boxes are currently on order to be delivered at the start of week 2. 2. Forty input shafts are on hand at the start of week 1, and 22 are scheduled for delivery at the beginning of week 2. Case Questions For these case questions, we are given a product structure which is a hierarchical composition of a product that lists raw materials, assemblies, components, parts, and quantities of a product. the Model 1000 Product Structure shows that engine assembly requires one gearbox with a lead time of two weeks, and each Gear Box requires two input shafts with lead times of 3 weeks. We are also given a blank Gear Box requirement sheet and a blank Input Shaft requirements sheet to be filled out in according with the questions. Our input information comes from our Engine Assembly master schedule which shows the 12 weeks of production and the required quantities per week. Lastly, we are given a chart for costs per part to determine the overall cost of production in reference to the setup costs and inventory costs of the product. 1. Con 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 (L4L). For question number one, based off of the master schedule for Engine Assembly and the Product Structure, we can gather that there is one gear box required per engine. So, inputting the engine requirements from the master schedule into a requirement form for gear boxes is the first step. After inputting the correct requirements per period, we must then take into account any other knowledge we have for the production process. In this case, there are seventeen gear boxes on hand at the start of production and five scheduled receipts due at the beginning of week two. We organize that data into the table and then continue on the process. Since the only carryover in inventory is in weeks one and two, the rest of the on hand materials row remains empty. For scheduled receipts, we’ve already established that there is only one scheduled on the second week, and the rest of the rows should remain empty. Next comes the net requirements which can be calculated by the gross requirements, less the on hand inventory and scheduled receipts. It can bee seen here that the numbers roughly follow the gross requirements numbers from the master schedule. Lastly for the gear box requirements chart, one must look at the planned order release. Glancing back at the Model 1000 product structure, we can see that the lead time for a gear box is two weeks time. With that in mind, our planned order releases should be inserted based on the net requirements, however they should be put in two weeks ahead of time. Therefore, the planned order releases line up with the net requirements, only two slots ahead. Next, is the input shaft requirements chart. First, we must look at the product structure again and see that there are two input shafts required per gear box. Therefore, we need to take what we know about the gear box orders and create out input shaft gross requirements based off of that. To do this, we see the numbers in the planned order release column of the gear box requirement chart and multiply those numbers times two. Next, as before, we must acknowledge the other information we had previously been given such as the on hand inventory of 40 at the beginning of the first week and the scheduled receipts of 22 at the beginning of the second week. There is a little math required to subtract the gross requirements from the on hand inventory, but after that, the net requirements can be drawn. For the planned order release, it is similar to the gear box requirements chart, however, the product structure shows that the lead time for the input shaft is three weeks, rather than two weeks. Thus, after determining the net requirements, the planned order release number can be inputted three weeks prior to the dates of the net requirements. This information has been carried out below. Engine Assembly Master Schedule Weeks 1 2 3 4 Quantity 15 5 7 10 5 6 7 8 15 20 10 9 10 11 12 8 2 16 Gear Box Requirements Weeks 1 2 3 Gross requirements 15 5 On Hand: 17 2 2 Scheduled Receipts 4 5 6 7 8 9 10 11 12 7 10 15 20 10 8 2 16 5 10 15 20 10 8 2 16 5 Net Requirements Planned Order Release 5 10 15 20 10 8 2 16 Input Shaft Requirements Weeks 1 2 3 Gross requirements 10 20 On Hand: 40 30 32 Scheduled Receipts 5 30 32 6 7 8 9 10 40 20 16 4 32 38 20 16 4 32 16 4 2 22 Net Requirements Planned Order Release 4 38 20 32 11 12 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. For question number two, we are asked to consider the costs that are currently being used for inventory and setup. We are given the following information: Part Cost Gear Box Setup= $90/ order Inventory Carrying= $2/unit/period Input Shaft Setup = $45/order Inventory Carrying = $1/unit/period Based on this information, we can say that the setup cost for the gear box is $720 and the inventory carrying cost is $8 giving us a total of $728 for the cost of setup and inventory for the gear box. With the input shaft, we can see that the setup cost comes out to $225 and the inventory carrying cost is $96, giving us a total of $321. The overall total for the engine production in terms of setup costs and inventory costs is $1,049. The calculations are shown below. Part Cost Gear Box Setup Cost: 8 x $90 = $720 Inventory Carrying: 4 x $2 = $8 Total: $728 Input Shaft Setup Cost: 5 x $45 = $225 Inventory Carrying: 96 x $1 = $96 Total: $321 Total= $1,049 3. Find a better schedule by reducing the number of orders and carrying some inventory. What are the savings with this new schedule? When using LTC we compare the carrying costs and the order costs for the different lots. Then we can devise a schedule where the costs will be as low as possible. In this particular case the order costs are much higher than the carrying costs and for this reason we decided to minimize the number of orders and increase the inventory. Using the Least Total Cost (LTC) Method we came up with the following information: Week: Gross Requirements Schedule Receipts Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release Week Gross Requirements Schedule Receipts Projected Available Balance Net Requirements Planned Order Receipt Planned Order Release 1 15 2 15 Gear Box Requirement 2 3 4 5 6 5 7 10 0 15 5 2 10 0 0 30 5 0 0 15 15 45 45 8 10 9 0 10 8 11 2 12 16 10 0 0 0 26 0 0 18 8 26 16 0 0 8 52 9 10 11 12 0 0 0 0 0 Input Shaft Requirements 1 2 3 4 5 6 7 30 90 2 2 3 10 2 32 0 0 0 0 5 8 5 8 Input Shaft 52 58 Gear Box Set up Cost = 3 orders x $90 =$270 Inventory 88 x $2 = 176 Total = $446 Conclusion 7 20 52 52 Set up Cost = 2 orders x $45 =$90 Inventory 74 x $1 = 74 Total = $164 Total Cost = $610 After completing the case it is evident that MRP is an essential tool for any manufacturing business. With it, decision making as well as planning are made easier allowing for a better structured business strategy. This is precisely what we saw within the case. By using MRP we were able to adjust the schedule in a way that we minimized the costs. This ability will be invaluable anytime we are dealing with manufacturing. Looking forward MRP is a tool we must always consider when making business regardless of our work area, since it dictates the inner workings of any business. Bibliography Jacobs, F. Robert., and Richard B. Chase. Operations & Supply Chain Management: The Core. Toronto: McGraw-Hill Ryerson, 2010. Print. ...
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b 584 -.-.-.+.: sedion 4 ::r t,pt t ,${n lJr.lr txrr lr._. .,6.. .11:-..:".,.," * I't.lt,itrtr, ,\tit) CoNTHol Analytics Exe rcise: An MRP ExplosionBrunswick Mo tors Recently, Phil Harris, the production control manager at Bmnswick, read an article on time-phased requirements shafis that are needed fbr the production of gear boxes in a given week must be delivcred to the Suba.ssembly Department stockroom before Monday moming of that week. In prepiuing the MRP example Phil planned to use the planning. He was curious about how this technique rnight work in scheduling Brunswick's engine assembly operations and decided to prepare an example to illustrate the worksheets shown on the next page and to make the fbl- ol iirne-phased requirernents planning. Phil's first step was to prepare a master schedule lor one the engine Lypes produced by Brunswick: the Model use ol lowing assumptions: 1 1000 engine. This schedule indicates the number of units of thc Modcl 1000 cnginc to bc asscmbled cach weck during the last 12 weeks and is shown below. Next, Phil decided to simplify his rcquircments planning examplc by considering only two of the many components that are needed to complcte thc asscmbly ol'thc Modcl I000 enginc. Thcsc 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 suhsequently is sent to the main engine assemhly 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, l, and 2 are included in the product structure diagrarn to indicate the three manufaururing stages that are involved in producing an engine: the Engine Assembly Department, the Subassembly Department, and the Machirie Shop. . 2. Seventeen gear boxes are on hand at the beginning ol Week 1, and five gear boxes are currently on order to be delivered at the start of Week 2. Forty input shafts arc on hand at thc staft of Week l, and,22 are scheduled for delivery at the beginning ot' Week 2. 1 initially, assume that Phil wants to minimize his inventory requircrrents. Assume that cach ordcr will bc only for what is required for a single period. Using the following fbrms. calculate thc net rcquirements and planned order releases lbr the gear boxes and input shafts. Assumc that lot sizing is clone using lot-for-lot (L-4L). 2 Phil would like to cilnsider the costs that his accoun[ants are currently using for inventory carrying and setup f'or the gear bores and input shafis. These costs are as fbllows: The manufacturing lead times required to produce the gear box and input shali components are also indicated in the product struclure diagram. Note that two weeks are required to produce a batch ol'geir boxes antl ilrat all thc gear boxes must be delivered to thc assembly line parts stockroom befbre Monday moming o1'thc wcck in which they arc to be used. Likcwiso. it takes three weeks to produce a lot ofinput shatts, and all the PART Gear Box SetuP : I 2 3 4 lnventory carrying cost 1.5 5 7 10 6 7 8 15 2A 10 -5 9 Model 1000 product structure Gcar hox I-eadtirne:2weeks Used: 1 per engine Input shafr Leadtime:3weeks Used: 2 per gear box - S2lunit/week : S1/unit/week SetuP: $45lorder lnput Shaft Model 1000 master schedule Wcek $9g/order lnventory carrying cost 10 1l 1Z 8 7 t6

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