The widget product structure is as follows:
Widget
X(2) Y(1)
Z(2) T(3)
(A widget is produced from two components, X and Y. Component X is produced from two components, Z and T).
The respective number of components for each widget is indicated in the product structure in brackets.
WM currently uses an MRP system and the following demand information illustrates the demand for the widget for a 5-week period:
Week 0 1 2 3 4 5
Gross requirements 50 25 150 90 100
The company obtains component X from a supplier in Gauteng. The supplier has offered the following quantity discount:
Purchase cost R20/unit (orders below 200 units), lead time 1 week
Purchase cost R15/unit (orders 200 units and more), lead time 2 weeks
Currently WM orders 130 units at a time. The following additional costs apply:
Order cost R500/order
Weekly inventory carrying cost R5/unit
Use the additional information to complete MRP matrices to decide whether to accept the offer of the supplier with respect to component X:
Inventory on-hand 150 components
Scheduled receipt 50 components in week 3
