Material Requirements Planning: Space Age Furniture Case Study
This paper examines the operational challenges facing Space Age Furniture Company, a manufacturer of television and microwave stands, as it implements a Material Requirements Planning (MRP) system. The central problem involves balancing a zero-inventory policy against the growing burden of overtime placed on a single skilled machinist, Ed Szewczak, to meet demand for Part 3079. The paper applies demand forecasting using a moving-average technique, calculates and compares weekly inventory holding costs against overtime wage costs, and evaluates strategies including minimum stock levels, equipment maintenance, and additional staffing. It also describes the company's batch production process and recommends Enterprise Resource Planning (ERP) software for job tracking.
- Introduction: Company background and MRP system overview
- Recommendations to Address Coral's Problems: Forecasting and staffing solutions for overtime
- Reducing Minimum Quantities of Subassemblies: Minimum stock strategy to control inventory levels
- Cost Implications of Carrying Excess Items in Inventory: Calculated holding costs for parts and finished goods
- Trade-Off Between Inventory Costs and Overtime Costs: Comparing weekly inventory versus overtime wage costs
- Types of Production Processing: Job shop, batch, and continuous production compared
- Conclusion: Summary of recommendations to reduce overtime
✍️ How to write this paper — guide, tools & examples ▾
What makes this paper effective
- Grounds abstract concepts in a concrete case study, using actual cost figures and a six-week master schedule to make arguments about inventory and overtime immediately testable.
- Uses numerical tables consistently — moving-average forecasts, storage costs, and wage calculations all appear as structured data, giving the analysis a quantitative backbone.
- Balances multiple solution strategies (forecasting, minimum stock levels, additional staffing, technology upgrades) rather than advocating a single fix, demonstrating awareness of real operational trade-offs.
Key academic technique demonstrated
The paper demonstrates applied cost-benefit analysis in an operations management context. Rather than simply describing MRP theory, it performs actual calculations — comparing weekly inventory holding costs ($1,350) against overtime wages ($990) — and draws a qualified conclusion that acknowledges unmeasured variables such as worker inconvenience costs. This "calculate, then qualify" approach is a core technique in quantitative business case analysis.
Structure breakdown
The paper opens with a problem statement and company background, then moves through four analytical sections: demand forecasting with moving averages, inventory reduction strategy, cost comparison of holding versus overtime, and a classification of production process types. A final section on ERP job-tracking bridges theory to implementation. The conclusion synthesizes the recommended actions. This structure follows a classic operations management report format: diagnose, quantify, recommend, implement.
Introduction
Space Age Furniture Company specializes in manufacturing cabinets and tables used to hold portable televisions and microwave ovens. The products are manufactured in different sizes and configurations, and all follow the same production and operations process. The subassemblies used in producing the Gemini and Saturn stands share Part Number 3079, which is made on a specialized lathe machine dedicated to that production process. Ed Szewczak is the company's highly skilled and experienced machinist, widely regarded as a dedicated professional.
The company has recently adopted a Material Requirements Planning (MRP) system to help maintain zero inventory and avoid the costs of holding finished goods. To sustain this zero-inventory policy, however, the company has been requiring Ed Szewczak to work continuous overtime in order to meet the growing demand for Part 3079. The company's goal is to maintain zero finished-goods inventory, but it now faces a serious operational challenge: Ed is increasingly uncomfortable with the persistent overtime workload. Operations manager Coral Snodgrass must determine the best course of action to protect the company from losing this critical employee.
Based on the information in the case, the MRP system assists Space Age Furniture in shipping finished goods directly to customers without incurring holding costs. Working regular 8-hour days, Ed can produce only 1,200 parts per week. However, the company must produce 2,000 units of Part 3079 weekly to fulfill orders of 1,000 subassemblies each for the Gemini 435 and the Saturn 257. The weekly master schedule for the next six weeks is presented in Table 1 below.
Table 1: Master Schedule
Week 1 — Gemini: 600, Saturn: 300
Week 2 — Gemini: 400, Saturn: 400
Week 3 — Gemini: 700, Saturn: 400
Week 4 — Gemini: 500, Saturn: 600
Week 5 — Gemini: 400, Saturn: 300
Week 6 — Gemini: 600, Saturn: 300
The data in Table 1 show that weekly demand for Gemini consistently exceeds demand for Saturn. Several strategies are available to help Coral resolve the problems the company currently faces.
Create your account
Always verify citation format against your institution’s current style guide requirements.