Case Study Production Planning

7. Production Planning (Bonus Portion)

7.1 Work Centers

The following work centers are available.
SMBRAKE Street Motorcycle Brake Assembly
MCBRAKE Motorcross Motorcycle Brake Assembly
SMASSM Street Motorcycle Assembly
MCASSM Motorcross Motorcycle Assembly
EXTSUB External Sub Contracting

These workcenters are assigned to cost centers and activity types as defined by controlling and production management. The quantity of resources in the workcenter must match the quantities budgeted in controlling.

7.2 Capacity

Assume all work centers are not hierarchically structured and have the following capacity.

  • Start time 8:00 a.m.
  • Stop time 6:00 p.m.
  • One hour break time at lunch.
  • Effectively at 80%.
At each work center labor capacity is to be evaluated. The available capacity should be adapted after a planning run with capacity evaluation. Discuss possible bottlenecks and discuss methods to solve the problem.

7.3 Routings

7.3.1 Routings for the brake assembly

  • Assemble front brake.
  • Assemble rear brake
  • Quality inspection.
7.3.2 Routings for the frame assembly
  • Paint the frame
  • Apply letter and AMI “Screaming Eagle” insignia.
  • Inspection
7.3.3 Routings for the final assembly.
  • Assemble components according to drawing number
  • Quality inspection.
7.4 Bills of  Material

7.4.1 Bill of Material of motocross motorcycle


7.5 Materials Requirements Planning

Master production schedule / materials requirements planning needs to be carried out for the creation of dependent requirements & planned orders. The planned orders need to be converted to production orders on all levels of the assembly.

7.6 Production Orders

The production orders should make use of the bills of material & routings. The assignment of materials to the operational steps is maintained in the routings. Component availability checking should include production orders and purchase orders at the time of the creation and only on-hand available stock at the time of the release of the production orders. Confirmation of the last operation in the routing should trigger a goods movement to inventory. If the automatic goods movement ever fails a rework goods movement should be processed.

7.7 Capacity Planning

The capacity planning is used to identify bottlenecks in available production capacity. In the case that these exist, pre-production is increased in the month of least demand. If this is not sufficient, the earliest date available to promise is determined.

Prototype Presentation

A number of core business functions have been identified. The supporting R/3 transactions are to form the basis for the presentation made to the steering committee.

1. Demonstrate your Implementation project. Due to the lack of time no resource assignment and documentation is required.

2. Display the beginning Balance Sheets and P & Ls for the two subsidiaries.

3. Demonstrate the pre-planning in Cebu and the demand transfer to the production plant. Execute MRP for material 100001 in the production plant.

4. Create a purchase order for the vendor Wheels in Motion.
Convert one of the requisitions generated by MRP into a Purchase Order.

5. Receive inventory against the purchase order

6. Show the service PO created for HVAC cleaning services in the Roces Avenue plant.

7. Demonstrate service entry and acceptance for HVAC cleaning services.

8. Invoice Verification.
Use invoice verification to record the invoice from vendor Wheels in Motion.

9. Create a customer sales order for the Chicago sales office.
Customer, All Terrain Cycles places an order for express delivery as follows:
Material  Quantity
100001 100 PC
100025 75
500026 50
500022 50

Verify the following are correct:

  • Shipping point
  • Delivery Plant
  • Pricing
Process the delivery for this order.  All materials are to be fully delivered. Complete picking and goods issue. Ensure that the storage locations were defaulted accordingly.

10. Create the billing document for this delivery.
Create the billing document and ensure that the posting to financial accounting is successfully completed.
Examine the accounting posting to validate the general ledger accounts used.

11. Create a returns order with reference to the sales order.
The customer has called and complained about the quality of the finish on some of the motorcycles they received. Create a returns order for 5 pieces of material 100001.

12. Create the delivery for the returns order.
Post goods receipt for the return of the damaged goods.

13. Create the corresponding credit memo.
Create the credit for the returns order and examine the accounting posting.

14. Post an incoming payment.
Receive a payment from customer X-Treme Cycles. A deduction was made for PhP23.00 for excess freight charges and USD27.00 for arriving 3 hours late. We have agreed to absorb the PhP23.00, however the USD27.00 still owes and should be recorded using a notation of 'item in dispute'.

15. Post a vendor invoice using an account assignment model.
An invoice has been received by the landlord for the rent to be charged for the month.
The charges are always recorded to the same cost centers prorated by the sq. footage for each cost center.
Cost center Sq footage
11000 1000
12000 1200
15000 900
16. Generate a payment run for all the outstanding invoices.
The payment run should contain at least 3 invoices, one of which is blocked from payment. Create an appropriate blocking reason.

17. Perform an assessment.
The cafeteria costs will be assessed based on the number of employees.

18. Display the profit and loss statement for ABC Motors International.
Display a financial calendar showing all payment runs and financial statements. Include a message, which reminds the controller when the month-end reports are finished and ready for preview.

19. Demonstrate the completion of the partial delivery for your Clark Field order.

20. Perform an actual settlement of the Clark Field rally order.

21.  Be prepared to show and discuss the Cross Company Stock Transfer requirement between AMI ltd. and ABC Motors International.

22. Close the month and reconcile the Balance sheets and P & Ls for the two subsidiaries to the prior month.

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