SCO Chapter 16

finite capacity scheduling

-establishes a work schedule to be produced in a certain time period while considering relevant limitations of resources -creates a sequence of activities with associated times so that no resource is assigned more work time than the time available

master schedule

-specifies the end items or output of the production function -contains specific product configurations or final assembly part numbers -driven by the total of future expected demand, including sales and operations planning (S&OP), forecasts, orders form customers, and orders for finished-goods inventory

shop loading

-used in capacity planning -a full parts explosion is run before capacity planning -the resulting shop orders are loaded against work centers through the use of detailed parts-routing data -workforce and machine hours for each work center are projected into the future - -if sufficient capacity is not available, management should adjust either capacity or the master schedule until it is feasible -at this point, a valid materials plan is available

challenges to implementing an ERP system

1. expensive 2. time-consuming 3. risky 4. non-trivial (significance)

5 elements of MRP success

1. implementation planning 2. adequate computer support 3. accurate data 4. management support 5. user knowledge at all levels

MRP system elements

1. master scheduling 2. bill of materials (BOM) 3. inventory records 4. capacity planning 5. purchasing 6. shop-floor control

order-point system

Inventory control system in which a purchase order is automatically placed when the number of units on hand of an item falls to order point

closed-loop MRP system (type II)

MRP system that controls both inventories and the capacity of resources used to support production contains a feedback loop between the orders launched and the master schedule to adjust for the capacity availability is called a Manufacturing Resource Planning system

MRP vs. Order Point

MRP: -dependent demand -requirements philosophy -based on master schedule -controls all items -objective: meet manufacturing needs -discrete lot sizing -lumpy, but predictable demand -inventory: work-in-process and raw materials Order Point: -independent demand -replenishment philosophy -based on past demand -ABC control system -objective: meet customer needs -EOQ lot sizing -random demand pattern -inventory: finished goods and spare parts

MRP vs. JIT

MRP: -represents a push system -management constructs a master schedule that represents future forecasts/orders and that determines which components and parts are to be ordered and pushed through production -used in situations such as batch production, job shops -non-repetitive mass production JIT: -represents a pull system -materials are provided only when there is subsequent demand -repetitive master schedule

time-phased materials plan

Time-phased MRP begins with the items listed on the Master Production Schedule and determines the quantity of all components and materials required to fabricate those items and the date that the components and material are required

types of MRP systems (3 types)

Type I: an inventory control system (order launching) Type II: a production and inventory control system (closed loop) Type III: enterprise resource planning (ERP) system

enterprise resource planning (ERP) system

a companywide system used to plan and control all resources integrates a basic MRP system with information from marketing, sales, finance/accounting, and human resources through a common database can be the basis for cross-functional and supply chain integration

materials requirements planning (MRP)

a comprehensive computer-based planning system for both factory and purchase orders (major module within ERP systems) information system used to plan and control manufacturing of dependent-demand inventory systems

bill of materials (BOM)

a listing of components, parts, and other items needed to manufacture a product, showing the quantity of each required for each intermediate item

cycle counting

a methodology for counting items in storage that counts more important items more often and systematically improves the record-keeping process -a small percentage of items are counted each day by storeroom personnel -errors are corrected in the records, and an attempt is made to find and correct the procedure that caused them -developing accuracy and adopting daily cycle counting can help firms eliminate most errors in inventory records

order-launching MRP system (type I)

a minimal inventory control system that releases manufacturing and purchase orders for the right quantities at the right time to support the master schedule launches orders to control work-in-process and raw-materials inventories this system does not include capacity planning and shop-floor control

engineering-change-order (ECO) system

a request for a change in a product design needed to keep BOMs up to date

planned order

an MRP term for a recommended purchase order or manufacturing order generated by the planning system

manufacturing execution system (MES)

an information system that collects and presents real-time information on manufacturing operations and prioritizes manufacturing operations from the time a manufacturing order is started until it is completed (also called a shop-floor control system)

safety capacity

capacity that is available in case of an emergency the difference between the planned capacity and the planned demand

parts explosion

determines all the parts and components needed to make a specified number of units 3 principal inputs: master schedule, bill of materials (BOM), and inventory records 2 principal outputs: purchase orders and shop orders parts explosion is at the heart of the MRP system

shop orders

go to the factory

purchase orders

go to vendors

dependent-demand inventories

not subject to market conditions. they are dependent on demand for high-level parts and components up to and including the master production schedule

planned lead times

planned replenishment time for an order

independent-demand inventories

subject to market conditions and are thus independent of operations

net requirement

subtract available inventory from the gross requirements

safety lead time

the difference between the planned and the average time required for a task or manufacturing order "extra" planned lead time used in production planning and purchasing to protect against fluctuations in lead time

materials plan

the set of planned orders and firm orders

shop floor control

the system used to schedule, release, prioritize, track, and report on operations done (or to be done) on orders moving through a factory, from order release to order completion (also called a manufacturing execution system MES)

gross requirements

the total demand quantities for a finished product