Note: For these problems, to simplify data handling to include the receipt of orders that have actually been placed in previous periods, the following six-level scheme can be used. (A number of different techniques are used in practice, but the important issue is to keep track of what is on hand, what is expected to arrive, what is needed, and what size orders should be placed.) One way to calculate the numbers is as follows:
One unit of A is made of two units of B and one unit of C. B is made of three units of D and one unit of F. C is composed of three units of B, one unit of D, and four units of E. D is made of one unit of E. Item C has a lead time of one week; Items A, B, E, and F have two-week lead times; and Item D has a lead time of three weeks. Lot-for-lot (L4L) lot sizing is used for Items C, E, and F; lots of size 20, 40, and 160 are used for Items A, B, and D, respectively. Items A, B, D, and E have on-hand (beginning) inventories of 5, 10, 100, and 100, respectively; all other items have zero beginning inventories. We are scheduled to receive 10 units of A in Week 3, 20 units of B in Week 7, 40 units of F in Week 5, and 60 units of E in Week 2; there are no other scheduled receipts. If 20 units of A are required in Week 10, use the low-level-coded bill-of-materials (product structure tree) to find the necessary planned order releases for all components.