In which of the following situations would you expect MRP to work well? To work poorly? (a) A fabrication plant operating at less than 80 percent of capacity with relatively stable demand (b) A fabrication plant operating at less than 80 percent of capacity with extremely lumpy demand (c) A fabrication plant operating at more than 95 percent of capacity with relatively stable demand (d) A fabrication plant operating at more than 95 percent of capacity with extremely lumpy demand (e) An assembly plant that uses all purchased parts and highly flexible labor (i.e., so that effective capacity can be adjusted over a wide range) (f) An assembly plant that uses all purchased parts and fixed labor (i.e., capacity) running at more than 95 percent of capacity

Step by step solution

01

(a) Less than 80% capacity with stable demand

Since the fabrication plant is operating at less than 80% of capacity and has stable demand, MRP might work well because it can handle the available capacity and predictable demand without much difficulty. There would be enough time and resources to plan, schedule, and execute production accordingly.

02

(b) Less than 80% capacity with lumpy demand

MRP could work poorly in this situation because dealing with unpredictable and lumpy demand can be very challenging. The lack of accurate demand forecasting could lead to overstocking or understocking of materials, resulting in inefficient production planning and execution.

03

(c) More than 95% capacity with stable demand

In this case, MRP could work well as the plant is operating at a high capacity level, and demand is stable. MRP could effectively manage material requirements, production scheduling, and inventory control in such high-capacity situations while maintaining a predictable demand.

04

(d) More than 95% capacity with lumpy demand

MRP might work poorly in this situation due to the combination of the high operating capacity and the lumpy demand. The unpredictability of the demand could cause difficulties in managing materials and scheduling, leading to less efficient execution and suboptimal resource utilization.

05

(e) Assembly plant with flexible labor and purchased parts

MRP is likely to work well in this situation as the assembly plant has flexible labor and uses purchased parts. The plant can easily adjust its effective capacity to match the changes in demand. MRP can manage the material requirements and production scheduling effectively, as labor flexibility allows for better resource allocation and responsiveness to demand fluctuations.

06

(f) Assembly plant with fixed labor, purchased parts, and more than 95% capacity

MRP might work poorly for an assembly plant operating at more than 95% capacity, with fixed labor and purchased parts. The fixed labor reduces the plant's ability to adjust schedules and resources in response to changes in demand, resulting in less efficient material and production management. Running at such high capacity might also pose challenges in maintaining optimal inventory levels and production scheduling.

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