A. Given the following master schedule, fill in the projected

a. Given the following master schedule, fill in the projected available and available to promise rows:

b. A customer wants an order of 100 in period 4. What can you tell him?

c. The customer from part (b) cancels his request, but then says he wants 120 in period 5. What do you tell him now?

d. Sales has requested that you add an MPS of 200 in period 9 to cover their needs for a sales promotion. What do you tell them and why?

e. What action (if any) should be taken in period 11? Why is it okay to take the action?

Product A is an assemble-to-order product. It has a lot

Product A is an assemble-to-order product. It has a lot size of 150, and currently has an on-hand inventory of 110 units. There is a 2-week demand time fence and a 12-week planning time fence. The following table gives the original forecast and the actual customer orders for the next 12 weeks:

a. Given this information, develop a realistic master schedule, complete with ATP logic.

b. Tell how you would respond to each of the following customer order requests. Assume these are independent requests, and do not have cumulative effects.

■ 20 units in week 3

■ 40 units in week 5

■ 120 units in week 7

The Williams 3D printer company was experiencing growing pains early

The Williams 3D printer company was experiencing growing pains early in 2015. Jasper Williams had developed his own unique design for making a 3D printer with this relatively new technology that was growing fairly rapidly in interest and in competitors. He had started by using his engineering skills as an individual inventor, but with some borrowed money he was able to set up a small production facility. His sales the first year were modest, as he made and sold only five printers. Now that he had been in the business for three years, he noticed that near the end of his fiscal year, he was likely to sell more than 20 units. He only had three other people on his management staff: John Johnson, the financial officer, Pamela Lopez, the production manager, and Mary Andrews, the marketing and sales manager. The following conversation took place during their most recent monthly planning meeting, where the key item on the agenda was to look at plans for the next fiscal year:

Jasper: “Mary, I think you mentioned that we are gaining a good reputation in a market that is growing rapidly, given that it is in the early stages of the life cycle. What do you think that means for sales this coming year?”

Mary: “I think our good reputation is going to be a real plus. Not only do several of our original customers plan on buying another printer from us, but they have also told other potential customers that they like our design, and some of those potential customers are likely to buy as well. I think it is very likely that we could double our sales next year to possibly 40 or more printers.”

Pamela: “We need to talk about that—perhaps you should hold back on making sales like that. We are already finding it tough to deliver on promises for this year. We have had a couple of late orders this year, and the only reason we didn’t have more late orders was that our workers agreed to work on some weekends. Problem is, I don’t know how agreeable they will be to that next year. While they like the extra money, they all have families and don’t want to spend that much time away from home.”

Mary: “Look, Pamela, we have worked hard to get the good reputation to increase our sales. What good does it do if we can’t meet the needs of people who want to buy from us? Last I knew, we were in business to make sales and therefore make money. We have a good profit margin on the printers that should make the company very profitable.”

Pamela: “Well the only way we can really expand to sell and make 40 units next year is to hire a lot more people. We possibly could hire a second shift, but our workers are skilled people who are making most of these printers in a somewhat unique design based on the specific needs of the customer. Skilled people like that often have several options as to where to work, and I am pretty sure most would not like to work a second shift where they could not spend evenings with their families. We could try to double the number of workers on the regular day shift, but that would mean duplicating all the current equipment as well. Also, while today we probably have the space in our facility to fit duplicate equipment, if we grow more the following year we will also have to expand our space requirements.”

At this point John Johnson, the financial manager, had to break into the conversation:

John: “We need to think long and hard about all this. After three years we are finally looking a little better financially, but adding a whole lot more people and equipment is going to cost us a lot. Also, you have to keep in mind that the printers have a pretty long lead time to produce, given that each customer specifies at least some unique aspect of design based on their individual needs, and also it takes a fair amount of time to build them. That means we get to see the money from the sale only after many weeks after the order is placed, but in the meantime we have to obtain materials and pay workers for today’s new orders—which are larger in number in this growing market we have. This implies that even though the profit per unit is good, we have a struggle with cash flow. Pamela, what about adding just one or two people as the sales grow, and then add some more later in the year as the sales continue to grow?”

Pamela: “I don’t see how that can help. Adding a duplicate person without additional equipment for them to work with makes no sense, and even if they could do the work, the other people in areas we don’t add would still have a lot more work to do without the time to do it.”

John: “Well we might be able to get another loan to help, but do we really want to do that just at the point we are starting to show some bottom-line profit?”

Jasper: “Okay, I understand each of your perspectives, but arguing back and forth doesn’t help. We need to figure out something to do that we can all agree on. Let’s get to work.”

Assignment

Try to help the management team out. After listing the key issues and characteristics of the environment and the problem, list all the possible alternative approaches they could take to deal with the issues. For each alternative, try to list the pros and cons likely involved. Then select an approach you would recommend and attempt to justify it.

1. What are the key issues in this case? In

1. What are the key issues in this case? In other words, analyze the case to try to determine the true problems from the symptoms of those problems. How do these issues relate to the issue of strategy?

2. What type of data would you suggest collecting to both verify the problem identifications are correct and to provide solution approaches and support? How would you organize and use that data?

3. What would you suggest she do with her business and why? Provide a comprehensive and integrated plan of action and provide support for your suggestions.

4. Develop an implementation plan for whatever changes you suggest she make. Prioritize the key steps if appropriate.

After Fran graduated with an undergraduate art degree in 2008, she decided to combine her knowledge and love of art with a second love—plants and flowers—toward developing a business. Her intent was to focus on a specialty niche in the flower shop business. She decided to concentrate her efforts on make-to-order special flower arrangements, like are typically found at banquets and weddings. Due to her talent and dedication to doing a good job, she was highly successful, and her business grew to where she now has a shop located in a highly visible and successful strip mall. As with many successful businesses, her success has produced unanticipated problems, some of which are normal growth pains, but others are relatively unique to the type of business. At a recent meeting with her business advisor, she outlined some of the major issues she faces:

1. Business Focus. When she moved into her new shop in the mall, she continued to specialize in the make-to-order specialty arrangements, but customers frequently walked into her shop requesting “spot” purchases, including gifts for sick friends and last-minute flower purchases for occasions such as birthdays, anniversaries, Valentine’s Day, and so forth. As this business represented an attractive addition to the store revenue, she accommodated it with three large climate-controlled display cases stocked with ready-to-sell arrangements of various sizes, types, and costs. Even though she did not aggressively pursue this market with advertising, the heavy mall traffic where her store is located and word of mouth caused the walk-in business to steadily grow to where it now represents almost half of her total revenue. This business has brought her numerous headaches, however, due to several characteristics:

a. Even though some days have predictably high demand (e.g., just prior to Valentine’s day, Mother’s day), most of the time she has no idea how many customers will come in for spot buys an any given day, nor does she have any idea as to the price range they will look for. Even such variables as the weather and the schedule of local sports teams appear to affect her demand. She knows she needs to manage this demand better, because not having what a customer wants could mean the permanent loss of a good potential customer. On the other side, flowers have a limited shelf life, and having too much of the wrong price range could mean a high spoilage rate. It would not take many lost sales on a daily basis to represent the difference between profit and loss for that part of the business.

b. Some customers have become irate that her delivery system, a major part of the make-to-order business, will not accommodate the delivery of a $20 ready-to-sell arrangement to a hospital, for example. Angry customers have even asked her how much they need to spend on an arrangement before she will deliver. She has never really thought about an answer to that question and has not known how to reply. Generally, she just states that she does not deliver premade flower arrangements. She knows this lack of delivery has cost her some goodwill, some business, and perhaps even some potential return customers.

c. Related to the point above, several customers have expressed serious dissatisfaction that she is not a member of some national delivery service, so they can have flowers delivered out of town. She is afraid such a business will pull her even further from her core business of make-to-order, as those services typically focus on catalogs of set designs. As those services are also expensive to belong to, she knows she would have to spend a lot more time and effort in that area to make it financially feasible.

d. Another group of customers wants her to extend her open shop hours, as they say they occasionally drop by for flowers on their way home from work and often find her closed for the day or at least not available while she is setting up a flower order in some other location.

2. Personnel Issues. As her business grew, Fran hired another skilled arranger, Molly, to work with her. The unpredictability of the walk-in demand has caused her to bring people issues up as a problem, however. As walk-in customers demand immediate attention, she and Molly are frequently called to the front of the shop to sell arrangement from the cases. This pulls them away from working on their orders, and while she has been late only on a couple of special orders within the last few weeks, several others were delivered before she was satisfied with their appearance, merely to avoid their being late. This worries her a great deal, as she has worked very hard to obtain a reputation for the quality of her arrangements. She thought about hiring a delivery person, but decided it was important that either she or Molly deliver the orders so that they may put last-minute touches on the arrangement in case of disturbance during the delivery process. Instead she opted to hire some part-time unskilled help for the shop to handle the walk-in shop sales. This has proved less than satisfactory, because of two reasons:

a. The unpredictability of demand has her constantly wondering about what hours and how many hours to schedule the help. The extra help adds to overall cost, and paying someone to stand around while no customers come in the shop makes the difference between profit and loss even more sensitive.

b. Customers frequently have questions about the type of flowers in an arrangement, how long they last, and so forth. The unskilled workers she hires often don’t know what to answer. They will then frequently interrupt either Fran or Molly with the question, and even when they get the answer the customer often is left with a poor impression, as they often expect more knowledge from a salesperson. The impression is even worse if both Fran and Molly are out servicing orders, as the only answer the customer gets is “I’m not sure.” Since she pays only slightly above minimum wage, her turnover is high. This means she is constantly trying to hire and train people, further distracting her from her main business. She knows she could reduce the turnover and hire more knowledgeable people if she paid her help more per hour, but that issue again pushes her closer to the loss column for many of the days the shop is open, so she feels she really can’t afford to pay more.

3. Expansion. Several of her regular customers are encouraging her to open another operation on the other side of the city, as well as considering expansion to other cities. They claim several of their friends like her arrangements a great deal, but consider her location too inconvenient from where they live or work. That is typically not a problem for large orders, as she or Molly will typically offer to visit the customer to obtain details for the arrangement. That does take a lot of time, however, so she finds herself more frequently asking the long distance customer to come to the shop if possible. Many decline to do so, and the order is sometimes lost. While expansion is attractive to her, she worries about control—not only for order servicing, but also for delivery. How can she possibly maintain control of quality and design in two or more locations at the same time?

4. Supply. As her purchases of flowers from the wholesaler has grown, the wholesaler has recommended that Fran make a purchasing contract instead of making spot bulk buys as she now does. This contract will give her significant quantity price discounts, but her delivered quantity has to be above a certain amount of each type of flower so that the wholesaler can reduce costs due to economies of scale. The quantities she needs to order are reasonable given her average demand, but the fluctuation around that average is large enough to present significant spoilage during certain periods. She wonders if she would be better off in the long run with the purchasing contract.

1. Using the data, develop a level production plan. How

1. Using the data, develop a level production plan. How much extra cost (inventory and HR costs) are involved in this plan? What additional costs (both financial and nonfinancial) might be involved with such a plan?

2. Using the data, develop a chase production plan. How much extra cost (inventory and HR costs) are involved in this plan? What additional costs (both financial and nonfinancial) might be involved with such a plan?

3. Try to develop a possible hybrid plan that would accomplish the task with smaller total costs than either level or chase.

4. Based on your work, what would you recommend and why? What are some of the pros and cons of the solution you recommend? 

John Lopez, president of Meridian Water Pumps (a small water pump producer), was holding a meeting with his department managers. They were in the process of planning production of medium-sized pumps for the next six months. Mr. Lopez tolerated some of the arguments before he felt it necessary to stop the discussion as it was going so that he could direct it toward a solution. A summary of some of the arguments follows:

Mary Welch, marketing and sales manager: “My sales people are very good, but get very frustrated at times. Several times last year the sales people spent lots of their time trying to calm down frustrated customers. As they are supposed to do, the sales people sold as many of these pumps as they could, yet at times the production could not keep up with the orders. Production knows that we have some cyclicality in the demand, but we have plenty of machine capacity. They should be able to hire people so that we can meet the demand that we sell. Why can’t they get their area to work correctly?” 

Frank Jackson, production manager: “Come on, Mary, we know the sales are cyclical, but we never know exactly when the cycles happen. Even if we did, the Human Resource (HR) people always take too long to get us the people we need. By the time we get the new people hired and trained, the sales seem to drop again. What am I supposed to do? If we keep them and allow them to keep producing pumps, our inventory climbs and the finance people start yelling. I can’t just let those new people sit around doing nothing. The only other alternative is to lay them off, but then the HR people get really angry.” 

Elizabeth Conrad, human resource manager: “You bet we get angry. The production people will occasionally start pushing us to hurry and hire more people, yet get very impatient. It takes time to go through the interview process and get people hired and oriented to our business. Then we no sooner get them on site and working when production asks us to lay them off. That is a real problem for two reasons. First, there are costs involved. It takes an average of $100 to get a person hired, and another $100 to lay them off. Second, those people that we hire and then quickly lay off tend to not return. I can’t blame them, since from their perspective it looks like we have no idea how to run our business. In addition, as those people complain to other people about our treatment of them, our reputation is getting to look bad, and that makes it increasingly difficult to find good people to hire.”

Joseph Western, finance manager: “Frank is correct that I get upset when the inventory climbs. It costs us about $5 to keep one of these pumps in our inventory for a month. That cost comes right out of our profit. Since my job is to maximize profitability, I can’t sit by and let those inventory dollars shrink that profitability. The same goes for all that hiring and layoffs. That money also hurts profitability. Can’t we do better?”

At this point Mr. Lopez stopped the discussion and said “Enough of trying to blame each other. It is our job as managers to manage this process more effectively. Marketing has just completed a 6-month forecast of anticipated demand for this family of pumps, and we know from past history that their forecasts are pretty good. We should be able to come up with an approach that we all can live with and focus our efforts to meet. Let’s get to work on it.”

Assignment

Assume you have been given the job to develop an effective approach to the problem. First, here is the forecast developed by marketing:

The production manager said there were currently 50 units in inventory, and they would like to end the six months with only 25 in inventory. He also said that currently each worker produces an average of 25 pumps in any given month. There are currently 20 workers in the medium-size pump area.

1. Complete the master schedule for Product X, including the

1. Complete the master schedule for Product X, including the projected available inventory and the ATP numbers.

2. From the master schedule for Product X and using the data given for components A, B, C, and D, create MRP grids for each of the components for the next ten weeks.

3. Suppose that a customer for Product X wants three additional units for their order scheduled for week 4. What would you tell them? Specifically, if you cannot promise them the three units for week 4, what is the best that you can do given the information you have. Assume that adequate capacity exists in all the production equipment.

4. The customer described in question 3 decides against placing the order for the extra units in week 4, but shortly thereafter you are informed that someone in the warehouse dropped a box of component C and broke 20 of them. They had to be scrapped. Describe the consequences and a plan of action to deal with the problem. Assume the lead time for component C is a firm 2 weeks.

5. It is clear that the company has set the safety stock (planning for extra material “just in case” something goes wrong) level for components at zero in order to minimize their inventory during the slow season. Discuss this policy, pointing out the pros and cons of such a policy. Develop what you might suggest as a policy for safety stock given the information available in the case.

Benzie Products Company produces several lines of products, but one (they call it “product X”) uses unique parts to produce it and the demand is very seasonal. There are some possible variations in the design, so the company tends to use available-to-promise (ATP) logic to master schedule the product. Since the components to produce it are quite expensive, the company tries very hard to minimize any inventory of the product or its components during the seasons with very low sales. Product X is just now entering the low season, and the following chart represents the forecast data and actual customer orders for the next ten weeks:

There are currently (at the start of week 1) 27 product X left in inventory. The following represents the product structure for product X:

The following table gives the relevant data for components A, B, C, and D at the start of week 1:

1. What are the key issues brought about in the

1. What are the key issues brought about in the conversation? What are the key symptoms, and what are the underlying problems? Be specific in your answers. 

2. Use the product information to develop an MRP approach to the problems. Would MRP solve the problems? If so, show specifically how MRP would avoid the problems discussed by Ken and Jack. 

3. Do any conditions bother you about the ability of MRP to deal with the problems? What specifically are those conditions?

4. Suppose it was discovered that only 250 of component E were in stock instead of the 300 listed on the inventory record. What problems would this cause (if any), and what are some of the ways that these problems could be addressed? How would (if at all) MRP help you when other methods might not?

5. Suppose that the design engineer advises that he has a new design for component F. It won’t be ready until sometime after week 2, but he wants you to give a date for the first supplier shipment to come in, and you should be ready to tell the supplier how many to ship. Since the change is transparent to the customer, the design engineer advises you to go ahead and use up any existing material of the model. How will MRP help you to deal with this issue?

6. Can you think of any other “what if” questions that might be more easily addressed by a systematic approach such as MRP?

Ken Mack, plant manager for the Apix Polybob Company, was having a heated discussion with Jack Gould, the production and inventory control manager. Ken was getting tired of frantic calls from Jim Uphouse, the marketing manager, concerning late orders for their Polybob (polybobs are a fictitious product) customers and was once again after Jack to solve the problem. Some of the discussion points follow:

Jack: “Look, Ken, I’m not sure what more we can do. I’ve reexamined the EOQ (economic order quantity lot size) values and all the reorder points for all our inventory for all our Polybob models, including all component levels and purchased items. I’ve implemented strict inventory control procedures to ensure our accuracy levels to at least 80%, and I’ve worked with the production people to make sure we are maximizing both labor efficiency and utilization of our equipment. The real problem is with those salespeople. We no sooner have a production run nicely going, and they change the order or add a new one. If they’d only leave us alone for a while and let us catch up with our current late order bank, we’d be okay. As it is, everyone is getting tired of order changes, expediting, and making everything into a crisis. Even our suppliers are losing patience with us. They tend to disbelieve any order we give them until we call them up for a crisis shipment.”

Ken: “I find it hard to believe that you really have the EOQ and reorder point values right. If they were, we shouldn’t have all these part shortages all the time while our overall inventory is going up in value. I also don’t see any way we can shut off the orders coming in. I can imagine the explosion from Jim if I even suggested such a thing. He’ll certainly remind me that our mission statement clearly points out that our number-one priority is customer service, and refusing orders and order changes certainly doesn’t fit as good customer service.”

Jack: “Then maybe the approach is to deal with Frank Adams (the chief financial officer). He’s the one who is always screaming that we have too much inventory, too much expediting cost, too much premium freight costs from suppliers, and poor efficiency. I’ve tried to have him authorize more overtime to relieve some of the late order conditions, but all he’ll say is that we must be making the wrong models. He continually points to the fact that the production hours we are paying for currently are more than enough to make our orders shipped at standard, and that condition has held for over a year. He just won’t budge on that point. Maybe you can convince him.”

Ken: “I’m not sure that’s the answer either. I think he has a point, and he certainly has the numbers to back him up. I’d have a real rough time explaining what we were doing to Ron Marrison (the CEO). There’s got to be a better answer. I’ve heard about a systems approach called material requirements planning or something like that. Why don’t you look into that? Take a representative model and see if that approach could help us deal with what appears to be an impossible situation. I’m sure something would work. I know other factories have similar production conditions yet don’t seem to have all our problems.”

Following is the information about Polybob model A that Ken suggested as a representative model to use for the analysis:

The following are the master schedule production lots for Model A:

Complete 50 units, week 3

Complete 50 units, week 5

Complete 60 units, week 7

Complete 60 units, week 9

Complete 50 units, week 11

Upon seeing this information, Jack stated, “Look at how regular our production schedule is for this model. The reorder points will more than cover requirements, and none have lead times that make it tough to respond. This analysis should show that all the work I did on EOQ and reorder points was right, and the real problem lies with those sales and finance people who don’t understand our production needs.”

What are the key issues in this case? Be sure

What are the key issues in this case? Be sure to classify them as much as possible as symptoms versus core causes. Be sure to keep in mind the constraints as defined by the type of customer and the internal conditions. Once you have analyzed and classified the issues, develop a comprehensive solution for MasterChip that can deal more effectively with their situation.

Sally Jackson, production manager of the MasterChip Electronics Company, was having another frustrating day. The final assembly area was woefully behind schedule, and several large orders were several days, and some several weeks, behind the promised delivery date. Customers were not happy and were giving lots of angry messages to the sales force. At the same time, some of the work areas in the early portions of the production process apparently did not have enough work. Sally viewed this as an equally important issue, since she could think of only two possible solutions—either let the people stand around and do nothing or have them work ahead on some of the components even though no order existed for those components. Working ahead was risky because their products competed in a market where customers could demand a lot of options for a basic product, and some of those options had highly variable demand (one option, for example, could go for months with no demand and then all at once have a very large demand as one customer ordered a large number of a product with that option). That was not likely to change since most of their customers were large retail chain stores. Letting people stand around was also bad, since she was evaluated on labor efficiency and utilization, and a worker not working would make those numbers look very bad.

She would like to be able to send some of the workers home for a day or part of a day, but the local union agreement prohibited that. She also liked to think about the possibility of using some of those workers to help out in another area (final assembly, in this current situation), but the union agreement also had specific work classifications for each worker, and those could not be violated. Even if that were possible, she knew it could be a problem since most of the production workers in the area with little work knew almost nothing about how the final assembly area worked, and that could generate lots of quality problems.

Sally made a note to herself to develop some specific numbers for her weekly meeting with the human resources manager. Every week she looked at the demand for each area and put together a set of recommendations for laying off some workers in one area and calling back some workers for another area. She knew that was allowed, on a week by week basis, under the union contract, but she still hated that task. Even though she could usually come up with some good numbers, she could not neglect the following impacts:

■ These workers often were the sole source of income for their families, and even a week of layoff would likely imply hardships on their families.

■ The longer a worker was not working, their skills were not allowed to remain at a high level of effectiveness. When they returned, they typically would not be able to work as efficiently as before, and also represented the potential for a larger number of quality problems.

■ Even if they remained effective (if, for example, they had only been gone for a week), it was highly likely they would be resentful of the layoff, and why should they feel loyalty to the company when the company had not been loyal to them? The feelings of resentment might make them less efficient on purpose.

■ Many of their best workers had skills that were in demand by several other companies. Why should a highly skilled worker with those skills in demand put up with those occasional layoffs when they had other choices? Just in the last few months, she had lost more than 10 of her best workers by having them go to work for one of the competitors of MasterChip.

Just as she was starting to work on the numbers for her meeting with the human resources manager, Andy Morgan (the sales manager) came into her office. The conversation went like this:

Andy: “Sally, I’ve got some good news and some bad news for you. First, the good

News: I just got off the phone with the buyer for Ajax Department Stores. They want a very large order of over 1000 of the A77 product. They have some sort of promotion in the works and that product is to be featured.”

Sally: “When did you promise them that we would have the order done?”

Andy: “I gave them our standard lead time for the product, six weeks.”

Sally: “That’s going to be a problem for us. The A77 uses a power supply that is somewhat expensive, so we have only about 200 in stock. It generally takes us 8–10 weeks to get those in from our supplier. I suppose we could expedite a shipment, but that supplier would demand a much higher price since it disrupts their own operation so much to do an expedite. It might cost us enough extra to almost eliminate any profit on the order for us.”

Andy: “Why don’t you people keep enough inventory—you know ours is a competitive business and we have to be responsive to our customers? If we can’t make this order in six weeks, we are messing with a planned promotion from a major retail chain, and they won’t be at all pleased. I wouldn’t be a bit surprised if they started buying from one of our competitors. That point brings me to the bad

News: I’m getting lots of angry phone calls about those orders you have behind schedule in final assembly. Remember, the customers of our customers tend to walk out of a store that doesn’t have a product they want and go to a different store. Our customers are very sensitive to having their orders shipped on time. Can’t your production people get your act together?”

Sally: “You should know that we can’t keep a lot of inventory sitting around. It is expensive to hold, since electronics are easily subject to being damaged in storage, and as the technology changes so fast it also may become obsolete before we can even use it. Management would not like it too well if our inventory expense kills all our possible profit. Also, you taking an order like this without checking first if we can do it, is kind of stupid. It’s that kind of thing that causes the problems we have.”

Andy: “Sally, that’s just silly. I have a customer on the phone that wants to spend a lot of money with us for a big order. How do you think it would sound if I told them to wait while I get permission from someone else to take the order? We can’t mess around like that in sales; we need to work hard to get orders, and we did quote the standard lead time we give all our customers for that A77 product. You people have to work better. We can do our job to sell it, why can’t you do your job to make it?”

All Sally could do after that conversation was to search for a pain killer for her newly developed headache, knowing she had to deal with that before she started to think on how she should deal with the problems she had in addition to the new one that was just handed to her by Andy.

1. Develop a master schedule using the information above.2. A

1. Develop a master schedule using the information above.

2. A customer has just requested a major order of 45 pumps for delivery in week 5. What would you tell the customer about having such an order? Why? What, if anything, would such an order do to the operation?

The Acme Water Pump company has a problem. The pumps are fairly expensive to make and store, so the company tends to keep the inventory low. At the same time, it is important to respond to demands quickly, since a customer who wants a water pump is very likely to get one from a competitor if Acme doesn’t have one available immediately. Acme’s current policy to produce pumps is to produce 100 per week, which is the average demand. Even this is a problem, as the production manager has pointed out, since the equipment is also used for other products and the lot size of 300 would be much more efficient. He said he is currently set up for water pump production for the next week and states that he has capacity available to produce 300 at a time next week.

The following lists the forecasts and actual customer orders for the next 12 weeks

The president of Acme has said that he wants to consider using a formal MPS with ATP logic to try to meet demand more effectively without a large impact on inventory. Acme has decided to use a demand time fence at the end of week 3 and has also found out that its current inventory is 25 units. Assume Acme will use the MPS lot size of 300 and that it will produce the first of those lots in week 1.

An order for 100 of a product is processed on

An order for 100 of a product is processed on work centers A and B. The setup time on A is 50 minutes, and run time is 5 minutes per piece. The setup time on B is 60 minutes, and the run time is 5 minutes per piece. Wait time between the two operations is 5 hours. The move time between A and B is 40 minutes. Wait time after operation B is 5 hours, and the move time into stores is 3 hours. Queue at work center A is 25 hours and at B is 35 hours. Calculate the total manufacturing lead time for the order.