SCL Chapter 6

legacy MRP system

A broad label used to describe an older information system that usually works at an operational level to schedule production within a single facility.

Chase Strategy

Adjusts capacity to match demand, so firm hires and lays off workers to match demand. Finished goods inventory remains constant. Works well for make-to-order firms

Bill of Materials (BOM)

Document showing an inclusive listing of all component parts and assemblies making up the final product

What is Available to Promise Quantity? (ATP)

The uncommitted portion of the firm's planned production. - Difference between confirmed customer orders and the quantity the firm planned to produce

match or tracking capacity strategy

a moderate strategy that adjusts capacity in small amounts in response to demand and changing market conditions

Lag Capacity Strategy

a reactive approach that adjusts capacity in response to demand

operations planning is usually hierarchical and can be divided into three broad categories:

long range, intermediate, and short range

Disadvantage of MRP

loss of visibility, especially acute for products with a complicated BOM, and ignores capacity and shop floor conditions

MRP requires

• Independent demand information • Parent-component relationships from the BOM • Inventory status of final product and components • Planned order releases (the most important output of the MRP system)

long-range

Aggregate Production Plan (APP) usually covers a year or more, involves the construction of facilities and major equipment purchase

Short-Range

plan covers a few days to a few weeks. Detailed planning process for components and parts to support the master production schedule (i.e., materials requirement planning - MRP)

Enterprise Resource Planning System (ERP)

provides means for supply chain members to share information so that scarce resources can be fully utilized to meet demand, while minimizing supply chain inventories

Advantage of MRP

provides production and planning information for entire planning horizon

Mixed Production Strategy

Maintains stable core workforce while using other short-term means, such as overtime, subcontracting and part time helpers to manage short-term demand

Level Strategy

Relies on a constant output rate while varying inventory and backlog according to fluctuating demand. Firm relies on fluctuating finished goods levels and backlogs to meet demand. Works well for make-to-stock firms

True or False Manufacturing and service firms need effective production and capacity planning to balance demand and capacity

True

True or False Materials planning, capacity planning, and ERP are used to balance demand with supply

True

True or False Resource planning is the process of determining the production capacity required to meet demand

True

Lead Capacity Strategy

a proactive approach that adds or subtracts capacity in anticipation of future market conditions and demand

Distribution Requirements Planning (DRP)

a time-phased finished good inventory replenishment plan in a distribution network

Which strategy relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern? a)Mixed Production Strategy b)Level Production Strategy c)Chase Production Strategy d)Aggregate Production Strategy e) None of the above are correct

b) level production strategy

Which of the following is considered an advantage/benefit of utilizing in ERP system a) Utilizes multiple databases in order to provide up-to-date information b) Increases the privacy level within an organization, thus functional departments can more easily protect their data from supporting or dependent functional departments c) Allows organizations to more easily communicate information about operational changes to supply chain members d) Increases the bullwhip effect e) None of the above are correct

c) Allows organizations to more easily communicate information about operational changes to supply chain members

Intermediate

plan spans six to eighteen months. Shows the quantity and timing of end items (i.e., master production schedule - MPS)

system nervousness

small changes in the upper-level-production plan cause major changes in the lower-level production plan

Cloud Computing

software vendors offer cloud-based services where end-users log on to remote servers without installing any software or storing data on local hard drives

3 basic methods of calculating ATP quantities:

1. Discrete available-to-promise 2. Cumulative available-to-promise without "look ahead" 3. Cumulative available-to-promise with "look ahead"

firms use a time fence to deal with nervousness by separating the planning horizon into:

1. Firmed Segment (i.e., demand time fence), from current period to several weeks into future. Can only be altered by senior management 2. Tentative segment (i.e., planning time fence), from end of firmed segment to several weeks into the future6

Material Requirements Plan (MRP)

A computer-based materials management system that calculates the exact quantities, need dates, and planned order releases for subassemblies and materials required to manufacture a final product.

Master Production Schedule

A detailed disaggregation of the aggregate production plan, listing the exact end items to be produced by a specific period