Chapter 14 - MRP

Material Requirements Planning (MRP)

A dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements.

Bill of Material (BOM)

A listing of the components, their description, and the quantity of each required to make one unit of a product.

Lot-for-lot

A lot-sizing technique that generates exactly what is required to meet the plan.

Periodic Order Quantity (POQ)

A lot-sizing technique that issues orders on a predetermined time interval with an order quantity equal to all of the interval's requirements.

Planning Bills (or kits)

A material grouping created in order to assign an artificial parent to a bill of material; also called "pseudo" bills.

Time Fences

A means for allowing a segment of the master schedule to be designated as "not to be rescheduled."

Low-Level Coding

A number that identifies items at the lowest level at which they occur.

Load Report

A report for showing the resource requirements in a work center for all work currently assigned there as well as all planned and expected orders. Tactics for smoothing the load and minimizing the impact of changed lead time. include: overlapping, operations splitting, and order, or lot splitting.

Gross Material Requirements Plan

A schedule that shows the total demand for an item (prior to subtraction of on-hand inventory and scheduled receipts) and (1) when it must be ordered from suppliers, or (2) when production must be started to meet its demand by a particular date.

Material Requirements Planning II (MRP II)

A system that allows, with MRP in place, inventory data to be augmented by other resource variables; in this case, MRP becomes material resource planning.

Closed-loop MRP System

A system that provides feedback to the capacity plan, master production schedule, and production plan so planning can be kept valid at all times.

Distribution Resource Planning (DRP)

A time-phased stock replenishment plan for all levels of a distribution network.

Master Production Schedule (MPS)

A timetable that specifies what is to be made and when. What is to be produced, not a forecast of demand.

Enterprise Resource Planning (ERP)

An information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders.

Phantom Bills of Material

Bills of material for components, usually subassemblies, that exist only temporarily; they are never inventoried.

Modular Bills

Bills of material organized by major subassemblies or by product options.

System Nervousness

Frequent Changes in an MRP system

Pegging

In material requirements planning systems, tracing upward the bill of material from the component to the parent item. Four approaches for integrating MRP and JIT are (1) finite capacity scheduling (2) small buckets (3) balanced flow (4) supermarkets.

Lead Time

In purchasing systems, the time between recognition of the need for an order and receiving it; in production systems, it is the order, wait, move, queue, setup, and run times for each component.

Efficient Consumer Response (ECR)

Supply-chain management systems in the grocery industry that tie sales to buying, to inventory, to logistics, and to production.

Lot-Sizing Decision

The Process of, or techniques used in, determining lot size.

Planned Order Receipt

The quantity planned to be received at a future date.

Net Material Requirements

The result of adjusting gross requirements for inventory on hand and scheduled receipts.

Planned Order Release

The scheduled date for an order to be released.

Buckets

Time units in a material requirements planning system. Finite capacity scheduling (FCS) considers department and machine capacity. FCS provides the precise scheduling needed for rapid material movement.