Ch 14 Ops 301
Net requirements plan logic
(Gross requirements+allocations)~total requirements -(on hand + scheduled receipts)~available inventory
MPS can be expressed in various terms...
-A customer order in a job shop (make-to-order) company - printing, machine shops, fine dining . . . -Modules in a repetitive (assemble-to-stock) company, such as Harley Davidson making engines on a line -An "end item" in a continuous (make-to-stock or build to forecast) company - many items such as steel, beer, bread, light bulbs, etc.
ERP can be customized to meet ____________ biz requirements What can erp systems be integrated with?
-ERP can be customized to meet specific business requirements -ERP systems can be integrated with -----Warehouse management -----Logistics ----Electronic catalogs -----Quality management
BOM 2nd requirement
-List of components, or ingredients, or materials needed to make product (including quantities of each) -Provides product structure ===Items above given level are called parents ===Items below given level are called children (or components)
Master Production Schedule
-MPS is established in terms of specific products -Schedule must be followed for a reasonable length of time, in other words - near term is "frozen". -The MPS is often fixed or frozen in the near-term part of the plan -The MPS is a rolling schedule (as each week is completed, another week is added) -The MPS is a statement of what is to be produced, not a forecast of demand
MRP II
-Once an MRP system is in place, inventory data can be augmented by other useful information ----Labor hours ----Material costs -----Capital costs ------Virtually any resource -System is generally called MRP II or Material Resource Planning
Dependent Demand characteristics
-The demand for one item is related to the demand for another item -Given a quantity for the end item, the demand for all parts and components can and should be calculated -In general, for any well-defined product for which a schedule can be established, dependent techniques should be used. -MRP is the common technique used in a variety of organizations
Gross requirements plan
-uses time-phased product structure & orders to plan required dates & order dates for different components -assumes that there is no inventory on hand Total demand for a component before netting of on-hand inventory and scheduled receipts.
1. A bill of material is a listing of the________________and the ____________________of each required to make one unit of a product.
1. A bill of material is a listing of the components and the quantity of each required to make one unit of a product.
1. An MRP system makes _____________to release replenishment orders for materials.
1. An MRP system makes recommendations to release replenishment orders for materials.
1. Material Requirements Planning (or MRP) is a ___________demand technique.
1. Material Requirements Planning (or MRP) is a dependent demand technique.
1. The Master Production Schedule specifies ___________________
1. The Master Production Schedule specifies what is to be made.
Lead time?
1. The time between recognition of the need for an order and receipt of the order is known as lead time.
When purchase orders are executed, _____________________of those orders and their _______________________dates must be factored into material planning
1. When purchase orders are executed, records of those orders and their scheduled delivery dates must be factored into material planning.
Benefits of MRP
1.Better response to customer orders 2.Faster response to market changes 3.Improved utilization of facilities and labor 4.Reduced inventory levels These benefits re the results of a strategic decision to use a dependent inventory scheduling system
Disadvantages of ERP systems
1.Is very expensive to purchase and even more so to customize 2.Implementation may require major changes in the company and its processes 3.Is so complex that many companies cannot adjust to it 4.Involves an ongoing, possibly never ending, process for implementation 5.Expertise is limited with ongoing staffing problems
What does dependent demand require? what are the inputs for MRP process?
1.Master Production Schedule (MPS) - what to make and when 2.Specifications or Bill of Material 3.Inventory availability (on hand or in stock) 4.Purchase orders outstanding (Expected Receipts) 5.Lead times
Advantages of ERP systems
1.Provides integration of the supply-chain, production, and administration 2.Creates commonality of databases 3.Can incorporate improved best processes 4.Increases communication and collaboration between business units and sites 5.Has an off-the-shelf software database 6.May provide a strategic advantage
3rd and 4th requirements MRP
3. Accurate inventory records are absolutely required for MRP (or any dependent demand system) to operate correctly. As we saw in Ch. 12. Generally MRP systems require 99% accuracy 4.Outstanding purchase orders must accurately reflect quantities and "scheduled receipts"
A Net Requirements Plan adjusts for _____________and ____________________
A Net Requirements Plan adjusts for on-hand inventory and scheduled receipts.
A bill of material is a listing of_______________and the ________________of each required to make _____________ of a product.
A bill of material is a listing of the components and the quantity of each required to make one unit of a product.
Materials Requirement Planning (MRP)
A dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements.
What is a list of quantities of components, ingredients, and materials required to make a product? A. bill-of-material B. purchase order C. engineering change notice D. master production schedule
A. BOM
An MRP system makes ___________________to release ___________________for materials.
An MRP system makes recommendations to release replenishment orders for materials.
Define ERP
An info system for identifying and planning the enterprise wide resources needed to take, make, ship, and account for customer orders
Scheduled Receipt
An open order that has an assigned due date
Good inventory management is an absolute necessity for MRP systems
Good _________________is an absolute necessity for MRP systems.
Gross Requirements assume that there is no __________________
Gross Requirements assume that there is no inventory on hand.
5th requirement of MRP
Lead times --time required to purchase, produce, or assemble an item in purchasing systems, the time between placing an order and receiving it; in production systems, the wait, move, queue, setup, and run times for each component produced
MRP is primarily a _________________, as opposed to an inventory or short-term "dispatching" technique.
MRP is primarily a planning tool, as opposed to an inventory or short-term "dispatching" technique.
MRP uses a _____________________, a _______________, _______________________, _______________and ________________________to determine material requirements.
MRP uses a master production schedule, a bill of material, inventory, expected receipts and lead times to determine material requirements.
what does mrp use to determine material requirements?
MRP uses a master production schedule, a bill of material, inventory, expected receipts and lead times to determine material requirements.
MRPII allows inventory plans to be augmented by planning for___________________
MRPII allows inventory plans to be augmented by planning for other resources
MRPII allows inventory plans to be augmented by planning for other ________________.
MRPII allows inventory plans to be augmented by planning for other resources.
Is MRP dependent demand technique or independent?
Material Requirements Planning (or MRP) is a dependent demand technique
Gross requirements assume
NO ON HAND INV
Net Requirements =
Net Requirements = Gross Requirements + Allocations -
EVOLUTION
Paper based- MRP- MRP II- ERP-APS FROM: Individual resource scheduling to schedule and optimize a supply chain of enterprise resoiurces
Net Requirement
Result of applying gross requirements (and allocations), against inventory on hand and scheduled receipts (and safety stock). Net requirements, lot sized and offset for lead time, become planned orders.
The ERP section describes how firms are trying to significantly extend MRP and create _____________________business functions where all relevant information is easily ______________as needed.
The ERP section describes how firms are trying to significantly extend MRP and create fully integrated business functions where all relevant information is easily obtainable as needed.
The MRP section of the chapter is basically about planning ________________so that everything is in place to produce the final product on time.
The MRP section of the chapter is basically about planning ahead so that everything is in place to produce the final product on time.
The Master Production Schedule specifies _______________
The Master Production Schedule specifies what is to be made.
Planned Order Receipt
The quantity planned to be received at a future date as a result of a planned order release. Planned Order Receipts differ from scheduled receipts in that they have not been released.
Planned Order Release
The quantity planned to be received at a future date as a result of a planned order release. Planned Order Receipts differ from scheduled receipts in that they have not been released.
The time between recognition of the need for an order and receipt of the order is known as ______________________________
The time between recognition of the need for an order and receipt of the order is known as lead time.
Time-phased MRP is accomplished by exploding the BOM, adjusting for inventory quantities on-hand or on-order, and offsetting the_______________ by the appropriate ___________________
Time-phased MRP is accomplished by exploding the BOM, adjusting for inventory quantities on-hand or on-order, and offsetting the net requirements by the appropriate lead time.
When purchase orders are executed, records of those orders and their _______________________must be factored into material planning.
When purchase orders are executed, records of those orders and their scheduled delivery dates must be factored into material planning.
Which of the following is NOT a key benefit of MRP? A. improved utilization of facilities and labor B. reduced inventory levels C. increased quality D. better response to customer orders E. faster response to market changes
Which of the following is NOT a key benefit of MRP? A. improved utilization of facilities and labor B. reduced inventory levels C. increased quality Your answer is correct. D. better response to customer orders E. faster response to market changes
Bill of Materials
a list of the hierarchy of components, their description, and the quantity of each required to make one unit of a product
Other types of BOM- Low level coding
a number that identifies items at the lowest level at which they occur -Item is coded at the lowest level at which it occurs -BOMs are processed one level at a time
Net requirements plan
adjusts for on-hand inventory as well as scheduled receipts
MRP II systems
are seldom standalone programs. Most are tied into other computer software. Purchasing, Production scheduling, capacity planning, inventory, and warehouse management systems are a few examples of this data integration
Other types of BOM- Phantom Bills
bills of material for components, usually assemblies that only exist temporarily, they are never inventoried -Describe subassemblies that exist only temporarily -These "items" to directly into another assembly and are never inventoried
Other types of BOM - modular bills
bills of material organized by major subassemblies or by product options -Modular Bills =====Modules are not final products but components that can be assembled into multiple end items =====Can significantly simplify planning and scheduling
The minimum record accuracy required for successful MRP is approximately which of the following? Part 2 A. 90% B. 95% C. 99% D. 97% E. lower than 90%
c 99%
The MPS _______________the Aggregate Production Schedule
disaggregates
Purchase Orders Outstanding
knowledge of outstanding orders exists as a by-product of well-managed purchasing and inventory-control departments. When purchase orders are executed, records of those orders and their scheduled delivery dates must be available to production personnel. Only with good purchasing data can managers prepare meaningful production plans and effectively execute MRP system.
The time-phased product structure, unlike the bill of material, adds the concept of _________________
lead times.
Other types of BOM - planning bills
material groupings created in order ton assign an artificial parent to a bill of material- also called pseudo bills -Created to assign an artificial parent to the BOM -Used to group subassemblies to reduce the number of items planned and scheduled -Used to create standard "kits" for production
Customer Relationship Management (CRM)
software for the "incoming side" of the business. CRM is designed to aid analysis of sales, target the most profitable customers and manage the sales force.
The time-phased product structure
when a bill of material is turned on its side and modified by adding lead times for each component
Master Production Schedule
▶Specifies what is to be made and when, in order to satisfy demand ▶Must be in accordance with the aggregate production plan / S&OP which includes inputs from financial plans, customer demand, engineering, supplier performance, HR and more ▶As the process moves from planning to execution, each step must be tested for feasibility ▶The MPS is the result of the production planning process
Demand for a given item is said to be dependent if: Part 2 A. there is a deep bill of material. B. there is a clearly identifiable parent. C. the finished products are mostly services (rather than goods). D. it originates from the external customer. E. the item has several children.
Demand for a given item is said to be dependent if: B. there is a clearly identifiable parent. Your answer is correct.
Define Dependent demand
Demand that is directly related to or derived from the BOM structure for other items or end products. Such demands are therefore calculated and should not be forecast.
What is an information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders? A. ERP B. EIS C. SCM D. MRP
ERP
Enterprise Resource Planning module includes
ERP modules include -Basic MRP -Finance -Human resources -Supply chain management (SCM) -Customer relationship management (CRM)
Enterprise Resource Planning (or ERP) is an _________________________for identifying and planning for enterprise-wide resources.
Enterprise Resource Planning (or ERP) is an information system for identifying and planning for enterprise-wide resources.
Enterprise Resource Planning (or ERP) is an information system for identifying and planning for __________________resources.
Enterprise Resource Planning (or ERP) is an information system for identifying and planning for enterprise-wide resources.