Chapter 4: Supply Chain Planning

Advantage of MRP

provides planning information

MRP

requires: 1.The independent demand information, i.e., finished product forecast 2.Parent-component relationships from BOM 3.Inventory status of final product and each of the components and materials. 4.Planned order releases (output of MRP)

Rough-Cut Capacity Planning (RCCP)

A medium-range capacity plan used to check the feasibility of the Master Production Schedule. Converts MPS from the production needed to the capacity required, then compares it to capacity available.

Rough-Cut Capacity Planning (RCCP)

A medium-range capacity planning module used to check the feasibility of the Master Production Schedule. Converts MPS from the production needed to the capacity required, then compares it to capacity available.

Planning Bill of Materials

An artificial grouping of items (e.g., a product family) in BOM format, used to facilitate master scheduling and material planning.

Single Level Bill of Materials

Display of components that are directly used in a parent item, together with the quantity required of each component (i.e., the planning factor). Shows only the relationships one level down

Mid-level

intermediate range: -Ford Motor Company wants to make 1,000 F-150 pick up trucks/week for the next 3-18 months.

Long-Range

involves planning for actions such as the construction of facilities and major equipment purchase

Distribution Requirements Planning (DRP)

-A time-phased finished good inventory replenishment planin a distribution network. The function of determining the need to replenish inventory at branch warehouses. -is a logical extension of the MRP system and ties physical distribution to the manufacturing planning and control system

Enterprise Requirements Planning (ERP)

-ERP is an extension MRPII and includes DRP which determines the need to replenish finished product inventory at branch warehouses, when there are multiple warehouses in the network. -It is typically implemented through a software platform of integrated functional modules facilitating the sharing of real-time information and collaboration across multiple business functions necessary for the supply chain to operate efficiently and effectively.

Key elements necessary for DRP

-Forecast demands by DC -Current inventory levels by DC -Target safety stock by DC -Recommended replenishment quantities -Replenishment lead times

Closed-loop MRP

-Synchronizes the purchasing or materials procurement plans with the master production schedule. -The system feeds back information about completed manufacture and materials on hand into the MRP system, so that these plans can be adjusted according to capacity and other requirements. -The system is called a closed loop MRP because of its feedback feature.

Change capacity

-Vary production output through overtime or idle time -Vary work force size by hiring or layoff -Using part-time workers Subcontracting

Material Requirements Planning (MRP)

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

Multilevel Bill of Materials

A display of all the components directly orindirectlyused in a parent, together with the quantity required of each component (i.e., the planning factor). If a component is a subassembly, blend, intermediate, etc., all its components and all their components also will be exhibited, down to purchased parts and raw materials

Resource Requirement Planning (RRP)

A long-range capacity planning module used to check whether aggregate resources (i.e., labor and manpower) are capable of satisfying the Aggregate Production Plan.

Capacity Requirement Planning (CRP)

A short-range capacity planning module used to check the feasibility of the Material Requirements Plan.

Increase inventories

Change inventory levels: build stock in advance of demand in order to use available capacity

Decrease inventories

Change inventory levels: temporarily reduce inventory below normal safety stock levels during peak demand periods to meet customer requirements

Aggregate Production Plan

Delvoping... 1.Determining the demandfor each period covered by the aggregate planning horizon. 2.Determining the availablecapacityfor each period covered by the aggregate planning horizon. 3.Identifying any constraintswhich may influence the plan. 4.Determining the direct labor and material costsand the indirect manufacturing costsfor each product or product family covered by the aggregate production plan. 5.Identifying or developing strategiesand contingency plans to manage the potential upside or downside in the market. 6.Agree on a plan that best meets the planning goals and objectives.

Capacity Planning

Determining the amount of capacity required to produce a good or service in the future.

Counter-seasonal product mixing

Develop a product mix with antithetic (seasonal) trends that level the cumulative required production capacity (e.g., lawn mowers and snow blowers)

Enterprise Requirements Planning Systems (ERP)

Information system connecting all functional areas and operationsof an organization, and in some cases suppliers and customers, via common software infrastructure and database

Intermediate-Range

Shows the quantity and timing of end items

Backordering during high demand periods

accept demand greater than supply capabilities.

hierarchical

arranged in order of rank

Short-Range

detailed planning process for components and parts to support the master production schedule

Bill of Materials (BOM)

document that shows an inclusive listing of all component parts and assemblies making up the final product.

Executive level

long range: Ford Motor Company wants to grow their market share by 5% over the next 1 - 3 years

Disadvantage of MRP

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

Planner, 1st line Supervisor

short range: 1,000 engines, 1,000 transmissions, seats, windows, etc. each week over the next 1-12 weeks

Influencing demand

so that it aligns to available production capacity (e.g., airline and hotel weekend discounts, telecommunication companies' weekend rates): -Advertising -Promotional plans -Pricing

Supply Chain Planning

the process of developing various resource plans to support the efficient and effective production of goods and services