chapter 6
Define Key terms used in Resource Planning Systems.
Capacity requirements planning (CRP) is a short-range capacity planning technique that is used to check the feasibility of the material requirements plan
Understand the purposes of an ERP system
The typical ERP system is an umbrella system that ties together a variety of specialized systems, such as production and inventory planning, purchasing, logistics and warehousing, finance and accounting, human resource management, customer relationship management and supplier relationship management using a common, shared, centralized database The concept of the manufacturing information system thus evolved to directly connect all functional areas and operations of an organization and, in some cases, its suppliers and customers via a common software infrastructure and database.
Understand why many ERP implementations fail.
lack of top management commitment lack of adequate resources lack of proper training viewing the implementation as only a technological challenge giving consultants total control of an implementation
Understand the hierarchical categories of operations planning
(1) long-range:cover a year or more, tend to be more general, and specify resources and outputs in terms of aggregate hours and units, Long-range plans usually involve major, strategic decisions in capacity, such as the construction of new facilities and purchase of capital equipment (2) intermediate or medium-range:normally span six to eighteen months,involve minor changes in capacity such as changes in employment levels. (3) short-range planning horizons: cover a few days to a few weeks depending on the type and size of the firm, are the most detailed and specify the exact end items and quantities to make on a weekly, daily or hourly basis.
Understand the Aggregate Production Planning process
1).Chase Production Strategy: The pure chase production strategy adjusts capacity to match the demand pattern. the firm hire and lay off workers to match its production rate to demand. The workforce fluctuates, finished goods inventory remains constant. This strategy works well for make-to-order manufacturing firms since they cannot rely on finished goods inventory to satisfy the fluctuating demand pattern. generally produce one-of-a-kind, specialty products based on customer specifications. 2.) Level Production Strategy: relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern. This strategy works well for make-to-stock manufacturing firms, which emphasize immediate delivery of off-the-shelf, standard goods at low prices. 3.) Mixed Production Strategy: strives to maintain a stable core workforce while using other short-term means such as overtime, an additional shift, subcontracting or the hiring of part-time and temporary workers to manage short-term high demand.
Describe an ERP system, and understand its advantages and disadvantages.
ERP uses a single database and a common software infrastructure to provide a broader scope and up-to-date information, enabling management to make better decisions that can benefit the entire supply chain. ERP is also fairly robust in providing real-time information and, thus, is able to communicate information about operational changes to supply chain members with little delay. ERP systems are also designed to take advantage of Internet technology. Thus, users are able to access the system via the Internet. Advantages: helps organizations reduce supply chain inventories due to the added visibility throughout the entire supply chain. It enables the supply, manufacturing and logistics processes to flow smoothly by providing visibility of the order fulfillment process throughout the supply chain. Supply chain visibility leads to reductions of the bullwhip effect and helps supply chain members to better plan production and end-product deliveries to customers enables an organization, especially a multi-business-unit enterprise, to efficiently track employees' time and performance and to communicate with them via a standardized method. Disadvantages:ERP systems are very complex and have proven difficult to implement, particularly in large multi-business unit organizations. the software is designed around a specific business model based on specific business processes
Define Key terms used in Material Requirements Planning
Parent: The item generating the demand for lower level components. Level 0 is the final product. It is the parent of all Level 1 components. Similarly, each Level 1 item becomes the parent of the Level 2 components used to make that item Gross requirement: A time-phased requirement prior to considering on-hand inventory and lead time to obtain the item. The gross requirement is satisfied from inventory and production. Net requirement: The unsatisfied item requirement for a specific time period. It equals the gross requirement for that period minus the current on-hand inventory and any scheduled receipts. Planned order release: A specific order to be released to the shop (if the component is made in-house) or to the supplier (if the component is purchased) to ensure that it is available on the need date. Explosion: The common term used to describe the process of converting a parent item's planned order releases into component gross requirements. Lot size: The order size for MRP logic. Lot size may be determined by various lot-sizing techniques, such as EOQ (a fixed order quantity) or lot-for-lot (order whatever amount is needed each period). Safety stock: Protects against uncertainties in demand, supply, quality and lead time.
Understand the key components of Master Production Scheduling
System nervousness: can be defined as a situation wherein a small change in the upper-level production plan causes a major change in the lower-level production plan. firms use a time fence system to deal with this problem. it separates the planning horizon into two segments: a firmed and a tentative segment. A firmed segment is also known as a demand time fence, and stretches from the current period to a period several weeks into the future. A firmed segment stipulates that the production plan or MPS cannot be altered except with the authorization of senior management. The tentative segment is also known as the planning time fence, and it stretches from the end of the firmed segment to several weeks farther into the future. It usually covers a longer period than the firmed segment, and the master scheduler can change production to meet changing conditions. Available to Promise: the uncommitted portion of the firm's planned production (or scheduled MPS). It is the difference between confirmed customer orders and the quantity the firm planned to produce, based on the MPS. Bill of Materials: is an engineering document that shows an inclusive listing of all component parts and subassemblies making up the end item. Level 0 is the final product, which is the independent demand item (Needs to be forecasted). Level 1 are components and subassemblies (Do Not need to be forecasted) Material Requirement Planning: is a software-based production planning and inventory control system that has been used widely by manufacturing firms for computing dependent demand and timing requirements. Capacity Planning: In the context of capacity planning, capacity refers to a firm's labor and machine resources. It is the maximum amount of output that an organization is capable of completing in a given period of time. Capacity planning follows the basic hierarchy of the materials planning system Distribution requirements planning (DRP): is a time-phased finished-goods inventory replenishment plan in a distribution network. Distribution requirements planning ties the physical distribution system to the manufacturing planning and control system by determining the aggregate time-phased net requirements of the finished goods, and provides demand information for adjusting the MPS.
Describe the various modules of an integrated ERP system, and have a general knowledge of the ERP market.
The best-of-breed solution picks the best application or module for each individual function in the supply chain (thus, best of breed). The resulting system includes several different applications that must be integrated to work as a single coordinated system to achieve the global scope required of the ERP The single integrator approach picks all the desired applications from a single vendor for the ERP system. The obvious advantages are that all of the applications should work well together, and getting the system up and running should be easier.
