Question A: Stay Safe International manufactures industrial safety equipment at
ID: 329155 • Letter: Q
Question
Question A: Stay Safe International manufactures industrial safety equipment at its plant in Evans- ville, Indiana. The company has initiated DRP to coordinate finished goods distribution from the plant to DCs in Dallas, Texas, and Lexington, Virginia. a. Given the accompanying information regarding hardhats, complete the DRP sched- ule for the warehouse and each DC. Dallas Distribution Center On-hand balance: 220 Safety stock: 80 Performance cycle: 1 week Order quantity: 200 Past due Week 60 70 80 85 90 80 Gross requirements Scheduled receipts Projected on-hand Planned orders DCI Lexington Distribution Center On-hand balance: 420 Safety stock: 100 Performance cycle: 2 weeks Order quantity: 400 Week Past due 100 115 120 125 140125 Gross requirements Scheduled receipts Projected on-hand Planned orders Evansville Warehouse On-hand balance: 900 Safety stock: 250 Lead time: 2 weeks Order quantity: 650 Past Week ue Gross requirements Scheduled receipts Projected on-hand Planned ordersExplanation / Answer
a)
For The Dallas DC, we can meet the gross requirements for the 1st week and 2nd week using the On-Hand Inventory of 220 units.But if we do the same for the 3rd week ,our Projected Available Balance(PAB) would fall below the Safety Stock(SS).Hence we plan an order of 200 quantity on 2nd week, so as our PAB remains above the SS. Please find the next Table for a complete answer.Note that order released on 2nd week, would be available as Scheduled Receipt on 3rd week.
We can notice that our PAB of 5th week falls below the SS of 80 units.Hence we have to plan an order on 4th week.So the Final Table for Dallas DC is :
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Similarly we do the same for the Lexington DC.Except that lead time here is two weeks.It means that the
order we made on 1st week will be received on 3rd week.
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So add the planned orders made by both DC's for the respective weeks to prepare the gross requirements for the warehouse.
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The complete table for Warehouse is as follows:
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b) The order quantiy for the warehouse would be 500 units per week.Lets the situation what happens
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The PAB for the 4th week falls below the SS.It can also be avoided by placing an order release on the 1st week
But this situation creates a large inventory at the warehouse.If suppose the warehouse is not able to meet particular week requirements for the DC's. It can always use Partitioning Allocation Rule to distribute its existing inventory among the DC's. The Partitioning Allocation Rule can be based on the number of unit requirements or share of profit.Hence the warehouse shouldn't delay any shipments but always allocate when needed as the carrying costs at DC's will be more than the warehouse
Dallas DC on-Hand 220 SS 80 Weeks Past Due 1 2 3 4 5 6 Gross Requirements 60 70 80 85 90 80 Scheduled Receipts Projected on Hand 160 90 10 Planned Orders