Chapter 12 operations management

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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


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