The Northridge Company tends to keep the inventory low. At the same time, it is important to respond to demand quickly, since a customer who wants a product K is very likely to get one from a competitor if Northridge Company doesn’t have one available immediately. Northridge Company’s current policy to produce the product K 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 the production for product K 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. Week 1 2 3 4 5 6 7 8 9 10 11 12 Forecast 90 120 110 80 85 95 100 110 90 90 100 110 Customer Orders 105 97 93 72 98 72 53 21 17 6 2 5 The president of Northridge Company 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. The Northridge Company 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 Northridge Company will use the MPS lot size of 300 and that it will produce the first of those lots in week 1. Questions: Develop a master schedule using the information above. A customer has just requested a major order of 100 units of product K 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?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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The Northridge Company tends to keep the inventory low. At the same time, it is important to respond to demand quickly, since a customer who wants a product K is very likely to get one from a competitor if Northridge Company doesn’t have one available immediately. Northridge Company’s current policy to produce the product K 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 the production for product K 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.

Week	1	2	3	4	5	6	7	8	9	10	11	12
Forecast	90	120	110	80	85	95	100	110	90	90	100	110
Customer Orders	105	97	93	72	98	72	53	21	17	6	2	5

The president of Northridge Company 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. The Northridge Company 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 Northridge Company will use the MPS lot size of 300 and that it will produce the first of those lots in week 1.

Questions:

Develop a master schedule using the information above.
A customer has just requested a major order of 100 units of product K 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?

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