Chapter 12 operations management
The following statements are true about master schedule
-it must be at least as long as the cumulative lead times -it does not have a predetermines or fixed time horizon
Advantages of ERP
-it standardizes manufacturing processes -it increases efficiency of operations -it standardizes financial information across the company.
Advantages of MRP
-low levels of in-process inventory -a means to allocate production time -ability to evaluate capacity requirements.
advantages of net-change method of updating MRP records
-the system is always up to date -only the changes are exploded into they system. Everything else stays the same.
Disadvantages of ERP
-there are a number of associated hidden costs -it may require extended use of consultants -it can be very expensive to implement.
The following about bill of materials/product structure tree are true
-they list the requirements for a single unit of product -it is critical that the bill of materials is accurate.
time fences
series of time intervals during which order changes are allowed or restricted; the nearest fence is most restrictive to change, and the farthest is least restrictive to change. Used to prevent nervousness.
Backflushing
Exploding an end items BOM to determine the quantities of the components that were used to make the item.
Potential risks associated with MRP
-assumption of constant lead time -products being produced differently from the bill of materials -Inaccurate forecasts
The following are the key questions MRP is designed to answer
-How much is needed? -When is it needed? -What is needed?
An MRP system has 3 major sources of information
-a master schedule -a bill of materials file -an inventory records file.
In order to implement and operate an effective MRP system, it is necessary to have
1. A computer and the necessary software to handle computations and maintain records. 2. Accurate and up to date Master schedules, bill of materials, and inventory records 3. Integrity of file data
Other benefits of MRP include:
1. low levels of in process inventories, due to an exact matching of supply to demand 2. The ability to keep track of material requirements 3 The ability to evaluate capacity requirements generated by a given master schedule 4. A means of allocating production time 5. The ability to easily determine inventory usage by backlashing
The goal in inventory management for both dependent and independent demand is
Minimize the sum of ordering/setup and holding cost.
distribution resource planning (DRP)
a method used for planning orders in a supply chain. The goal is to achieve a balance of supply and demand
material requirements planning (MRP)
a methodology that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.
product structure tree
a visual depiction of the requirement in a bill of materials, where all components are listed by levels.
net-change system
approach that updates MRP records continuously.
regenerative system
approach that updates MRP records periodically
Order release
authorization for the execution of planned orders. Primary reports
exception reports
data on any major discrepancies encountered. Secondary reports
planning reports
data used for assessing future material requirements. Secondary reports.
dependent demand
demand for items that are subassemblies or component parts to be used in the production of finished goods
load reports
department or work center reports that compare known and expected future capacity requirements with projected capacity available.
ERP is now about
emterprise applications integration
Safety stock is usually held for
end items
performance-control reports
evaluation of system operation, including deviations from plans and cost information. Secondary reports
Manufacturing resources planning (MRP II)
expanded approach to production resource planning, involving other areas of a firm in the planning process and enabling capacity requirements planning. It involves input from marketing and finance, and expands MRP to include capacity requirements.
projected on hand
expected amount of inventory that will be on hand at the beginning of each time period
formula for net requirements =
gross requirements - projected on hand inventory
Enterprise resource planning (ERP)
integration of financial, manufacturing, and Human Resources in a single database.
MRP in services usually involve
material in service package.
Master schedule
one of 3 primary inputs in MRP; states which end items are to be produced, when end items are to be produced, when these items are needed and in what quantities.
Inventory records
one of the three primary inputs in MRP; includes information on the status of each item by time period, called time buckets
Bill of materials (BOM)
one of the three primary inputs of MRP; a listing of the raw materials, parts, subassemblies, and assemblies needed to produce ONE unit of a product.
schedule receipts
open orders scheduled to arrive from vendors or elsewhere in the pipeline
planned order releases
planned amount to order in each time period; planned-order receipts offset by lead times
planned-order receipts
quantity expected to be received by the beginning of the period in which it is shown.
low level coding
restructuring the bill of materials so that multiple occurrences of a component all coincide with the lowest level at which the component occurs.
changes
revisions of due dates or order quantities, or cancelations of orders. Primary reports
Lower level items usually use
safety time
Planned orders
schedule indicating the amount and timing of future orders. Primary reports
net requirements
the actual amount needed in each time period
Capacity planning requirements
the process of determining short-range capacity requirements. Revision of a proposed plan that is not feasible.
pegging
the process of identifying the parent items that have generated a given set of material requirements for an item.
cumulative lead time
the sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to competition of final assembly.
gross requirements
total expected demand for an item or raw material in a time period