OPMT 303: Final Exam Ch 12

Enterprise Resource Planning (ERP)

-ERP was the next step in an evolution that began with MRP and evolved into MRPII -EARP, like MRP II, typically has an MRP core Represents an expanded effort to integrate standardized that will permit information sharing among different areas of an organization in order to manage the system more effectively -ERP systems are composed of a collection of integrated modules

Lot-for-lot (L4L) ordering

-The order or run size is set equal to the demand for that period -Minimizes investment in inventory -it results in variable order quantities -a new setup is required for each run

Capacity Requirements Planning (CRP)

-The process of determining short-range capacity requirements. -Inputs to capacity requirement planning --planned-order releases for the MRP --current shop loading --routing information --job time -Key outputs --Load reports for each work center Closed Loop MRP provides feedback about the execution of production plans. By tracking what actually happens on the shop floor and then reflecting that information in the MRP record, plans can be kept valid. Instead of just "launching" orders with no information about completion, closed-loop MRP provides the feedback loop necessary to keep information up to date -When the MRP system has information feedback from its module outputs, this is termed closed-loop MRP

MRP (Material Requirements Planning)

A computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials. The MRP is designed to answer 3 questions: 1. what is needed? 2. how much is needed? 3. when is it needed?

Bills of Materials (BOM)

A listing of all of the assemblies, subassemblies, parts, and raw materials needed to produce one unit of a product Product structure tree: a visual depiction of the requirements in a bill of materials, where all components are listed by levels

Economic Order Quantity (EOQ)

Can lead to minimum costs if usage of item is fairly uniform -this may be the case for some lower-level items that are common to different "parents" -Less appropriate for "lumpy demand" items because inventory remnants often result

MRP Benefits

Enables managers to easily -determine the quantities of each component for a given order size -to know when to release orders for each component -to be alerted when items need attention Additional benefits -low levels of in-process inventories -the ability to track material requirements -the ability to evaluate capacity requirements -the means of allocating production time -the ability to easily determine inventory usage via backflushing --exploding an end item's BOM to determine the quantities of the components that were used to make the item

Manufacturing Resources planning (MRP II)

Expanded approach to production resource planning, involving other areas of the firm in the planning process and enabling capacity requirements planning -Most MRP II systems have the capability of performing simulation to answer a variety of "what if" questions so they can gain a better appreciation of available options and their consequences

MRP Input

Master Schedule: One of 3 primary inputs in MRP; states which end items are to be produced, when these are needed, and in what quantities. Managers like to plan far enough into the future so they have reasonable estimate of upcoming demands The master schedule should cover a period that is at least equivalent to the cumulative lead time Cumulative lead time: the sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly. Inventory Records: Includes information on the status of each item by time period, called time buckets Information about: -gross requirements -scheduled receipts -expected amount on hand Other details for each item such as: -supplier -lead time -lot size policy -changes due to stock receipts and withdrawals -canceled orders and similar events

MRP Outputs:

Primary Outputs: Planned orders: a schedule indicating the amount and timing of future orders Order releases: Authorizing the execution of planned orders Changes: Revisions of the dates or quantities, or the cancellation of orders. Secondary Outputs: Performance-control reports: evaluation of system operation, including deviations from plans and cost information ex: missed deliveries and stockouts Planning reports: Data useful for assessing future material requirements ex: purchase commitments Exception reports: Data on any major discrepancies encountered ex: late and overdue orders, excessive scrap rates, requirements for nonexistent parts

Fixed Period Ordering

Provides coverage for some predetermined number of periods

Closed Loop MRP

When MRP II systems began to include feedback loops, they were referred to as closed loop MRP Closed Loop MRP: systems evaluate a proposed material plan relative to available capacity -if a proposed plan is not feasible, it must be revised --this evaluation is referred to as capacity requirements planning