krajewski om9 ppt 15.ppt€¦ · 7/14/2010 2 Enterprise Resource Planning zWhat an ERP system does Integrating the firm’s functional areas UsedbymanydifferenttypesoforganizationsUsed

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Resource PlanningResource Planning15

15 – 1Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall.

For For Operations Management, 9eOperations Management, 9e by by Krajewski/Ritzman/Malhotra Krajewski/Ritzman/Malhotra © 2010 Pearson Education© 2010 Pearson Education

PowerPoint Slides PowerPoint Slides by Jeff Heylby Jeff Heyl

Resource PlanningResource Planning

At the heart of any organizationSt t ith l d ti l dStarts with sales and operations plans and plans the input requirementsA process relative to the firm’s competitive priorities and an important part of managing supply chains


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Enterprise Resource Planning Enterprise Resource Planning

What an ERP system doesIntegrating the firm’s functional areasUsed by many different types of organizationsUsed by many different types of organizations

How ERP systems are designedSingle comprehensive databaseManagers to monitor all of the company’s products at all locations and at all timesInformation is automatically updated in the all applications when transactions occur


ppStreamlines the data flows throughout the organizationRequires a careful analysis of major processesSignificant changes in ERP systems - interoperability

Back-Office Processes Front-Office Processes

HumanData Analysis

• Product costing

Enterprise Resource Planning Enterprise Resource Planning

Resources• Benefits• Payroll

• Job costsSales and Marketing• Sales orders• Pricing system

Manufacturing• Material requirements planning

• Scheduling

ERP System


Customer Service• Field service• QualitySupply-Chain

Management• Forecasting• Purchasing• Distribution

Accounting and Finance• Accounts payable and receivable

• General ledgers• Asset management

Figure 15.1 – ERP Application Modules

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MRP is a computerized information system to manage dependent demand inventory and schedule orders

Materials Requirements Planning Materials Requirements Planning

schedule ordersTranslates the master production schedule into requirements for all subassemblies, components, and raw materials through the MRP explosionDependent demand

Quantity required varies with the production plans of other items


other itemsComponentParent

Othersources

of demand

Authorizedmaster production

schedule

MRP InputsMRP Inputs

Inventorytransactions

Inventoryrecords

Bills ofmaterials

Engineeringand process

designs

Material

MRPexplosion


Materialrequirements

plan

Figure 15.2 – Material Requirements Plan Inputs

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Demand PatternsDemand Patterns

2000 –

Order Order

2000 –

1500 –

1000 –

500 –

Bic

ycle

s

Order1000 onday 3

Order1000 onday 8

1500 –

1000 –

500 –

Rim

s


| | | | | | | | | |1 5 10

Day

0

(a) Parent inventory

Reorder point

(b) Component demand

0 | | | | | | | | | |1 5 10

Day

Figure 15.3 – Lumpy Dependent Demand Resulting from Continuous Independent Demand

A record of all components of an itemShows the parent-component relationship

Bill of MaterialsBill of Materials

The usage quantities are derived from engineering and process designFive common terms

End itemsIntermediate itemsSubassemblies


SubassembliesPurchased items

Part commonality (sometimes called standardization of parts or modularity)

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Seat cushion

Seat-frame boards

Front A

Back

Leg supports

Back slats


legs A Ladder-back

chair

legs

Figure 15.4 – BOM for a Ladder-Back Chair


ALadder-back

chair

G (4)F (2) I (1)H (1)

C (1)Seat

subassembly

D (2)Front legs

B (1)Ladder-backsubassembly

E (4)Leg

supports


J (4)Seat-frame

boards

( )Back slats

( )Back legs

( )Seat cushion

( )Seat frame

Figure 15.4 – BOM for a Ladder-Back Chair

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Details how many end items will be produced within specified periods of time

It breaks the sales and operations plan into specific

Master Production Schedule (MPS)Master Production Schedule (MPS)

It breaks the sales and operations plan into specific product schedulesCreate a prospective MPS and test whether it meets the schedule with available resources

Sums of quantities must equal sales and operational planProduction must be allocated efficiently over


Production must be allocated efficiently over timeCapacity limitations and bottlenecks may be determined


April MayApril May

1 2 3 4 5 6 7 8

Ladder-back chair

Kitchen chair

Desk chair

150 150

120 120

200 200 200 200


Aggregate production plans for chair family

Figure 15.5 – MPS for a Family of Chairs

670 670

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No

Materialrequirements

Yes

Authorized masterproduction

Are resourcesavailable?

Prospective masterproductionschedule

Authorizedproduction

plan


requirementsplanning

productionschedule

Figure 15.6 – Master Production Scheduling Process

Developing a MPSDeveloping a MPS

Step 1: Calculate projected on-hand inventories

P j t d h d O h d MPS tit P j t d= + –

Projected on-handinventory at end

of this week

On-handinventory at

end of last week

MPS quantitydue at startof this week

Projectedrequirements

this week

where:Projected requirements = max(Forecast, Customer orders booked)


=Inventory +55 chairscurrentlyin stock

–MPS quantity(0 for week 1)

38 chairs alreadypromised for

delivery in week 1

= 17 chairs

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Item: Ladder-back chair

QuantityApril


E planationQuantity on Hand:

Forecast

Customer orders (booked)

Projected on-hand

1 255

30 30

38 27

17 –13

Explanation:Forecast is less than booked orders in week 1; projected on-hand inventory balance = 55 + 0 – 38 = 17.

Explanation:Forecast exceeds booked orders in week 2; projected on-hand inventory


inventory

MPS quantity

MPS start

0 0

p j ybalance = 17 + 0 – 30 = –13. The shortage signals a need to schedule an MPS quantity for completion in week 2.

Figure 15.7 – Master Production Schedule for Weeks 1 and 2


Step 2: Determine the timing and size of MPS quantities

The goal is to maintain a nonnegative projected on-hand inventory balanceAs shortages are detected, MPS quantities should be scheduled to cover them

=Inventory17 chairs in

inventory at the + MPS quantityof 150 chairs – Forecast of

30 chairs


y yend of week 1 of 150 chairs 30 chairs

= 137 chairs

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Application 15.1Application 15.1

Determine the MPS for Product A that has a 50-unit policy and 5 units on hand. The demand forecast and booked orders are shown in the partially completed plan given in the Student N t Th l d ti i k H i th l t d lNotes. The lead time is one week. Here is the completed plan. You might want to ask a question or two on how they would respond to a customer request for a specific week and order quantity.



Item: Product A Order Policy: 50 unitsLead Time: 1 week

SOLUTION

Lead Time: 1 week

Quantity on Hand 5 1 2 3 4 5 6 7 8 9 10

Forecast 20 10 40 10 0 0 30 20 40 20

Customer orders (booked) 30 20 5 8 0 2 0 0 0 0

Projected on-hand inventory


MPS quantity

MPS start

Available-to-promise (ATP) inventory

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Item: Product A Order Policy: 50 unitsLead Time: 1 week

SOLUTION

Lead Time: 1 week

Quantity on Hand 5 1 2 3 4 5 6 7 8 9 10

Forecast 20 10 40 10 0 0 30 20 40 20

Customer orders (booked) 30 20 5 8 0 2 0 0 0 0

Projected on-hand inventory 25 5 5 5 3 23 3 13 4315


MPS quantity

MPS start


50

5

50 50 50 50

50 50 50

35 50 50 50

50


Available-to-promise (ATP) inventoryThe quantity of an end item that marketing can promise q y g pto deliver on specific datesIt is the difference between customer orders already booked and the quantity that operations is planning to produce

Freezing the MPSReconciling the MPS with sales and operations plans


plans

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Item: Ladder-back chair Order Policy: 150 unitsLead Time: 1 week

1 2 3 4 5 6 7 8

AprilQuantityon Hand: 55

May


Forecast

Customerorders booked


MPS quantity

MPS t t

30

38

30

27

30

24

30

8 0

35

0

35

0 0

3535

17 137 107 77 42 7 122 87

0 150 0 0 0 0 150 0

150 0 0 0 0 150 0 0


Figure 15.8 – Master Production Schedule for Weeks 1–8

MPS start 150 0 0 0 0 150 0 0

Explanation:On-hand inventory balance = 17 + 150 – 30 = 137. The MPS quantity is needed to avoid a shortage of 30 – 17 = 13 chairs in week 2.

Explanation:The time needed to assemble 150 chairs is 1 week. The assembly department must start assembling chairs in week 1 to have them ready by week 2.

Item: Ladder-back chair Order Policy: 150 unitsLead Time: 1 week

1 2 3 4 5 6 7 8

AprilQuantityon Hand: 55

May


Forecast

Customerorders booked


MPS quantity

MPS t t

30

38

30

27

30

24

30

8 0

35

0

35

0 0

3535

17 137 107 77 42 7 122 87

0 150 0 0 0 0 150 0

150 0 0 0 0 150 0 0


Figure 15.9 –MPS Record with an ATP Row

MPS start 150 0 0 0 0 150 0 0

Available-to-promise (ATP)inventory

17 91 150

Explanation:The total of customer orders booked until the next MPS receipt is 38 units. The ATP = 55 (on-hand) + 0 (MPS quantity) – 38 = 17.

Explanation:The total of customer orders booked until the next MPS receipt is 27 + 24 + 8 = 59 units. The ATP = 150 (MPS quantity) – 59 = 91 units..

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Inventory RecordInventory Record

Inventory transactions are the basic building blocks of up-to-date recordsT ti i l d l i dTransactions include releasing new orders, receiving scheduled receipts, adjusting due dates for scheduled receipts, withdrawing inventory, canceling orders, correcting inventory errors, rejecting shipments, and verifying losses and stock returnsInventory records divide the future into time


Inventory records divide the future into time periods called time bucketsKeep track of inventory levels and component replenishment needs


The time-phase information contained in the inventory record consists of:

Gross requirementsGross requirementsScheduled receipts Projected on-hand inventoryPlanned receipts Planned order releases


= + –Projected on-handinventory balanceat end of week t

Inventory onhand at end of

week t–1

Scheduledor plannedreceipts in

week t

Grossrequirements

in week t

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The on-hand inventory calculations for each week in Figure 15.10 are as follows

Weeks 2 and 3: 117 + 0 – 0 = 117Week 4: 117 + 0 – 120 = –3Week 5: –3 + 0 – 0 = –3Week 6: –3 + 0 – 150 = –153

Week 1: 37 + 230 – 150 = 117


Week 6: 3 + 0 150 = 153Week 7: –153 + 0 – 120 = –273Week 8: –273 + 0 – 0 = –273

Inventory RecordInventory RecordItem: CDescription: Seat subassembly

Lot Size: 230 unitsLead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross 0 0 0 0120 120150Grossrequirements 0 0 0 0

Scheduledreceipts 0 0 0 0 0 0 0

Projectedon-handinventory

117 117 –3 –3 –153 –273 –273

Planned receipts

37

120 120150150

117

230


Planned order releases

Explanation:Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150 = 117 units.

Figure 15.10 – MRP Record for the Seat Subassembly

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Inventory RecordInventory RecordItem: CDescription: Seat subassembly

Lot Size: 230 unitsLead Time: 2 weeks

Week

1 2 3 4 5 6 7 8

Gross 150 0 0 120 1200 150 0

Figure 15.11 – Completed Inventory Record for the Seat Subassembly

Grossrequirements 150 0 0

Scheduledreceipts 230 0 0


117 117 117

Planned receipts

37

120

0

227

230 230

187

120

0

77

0 150

0 0

227

0

0

187



Without a planned receipt in week 4, a shortage of 3 units will occur: 117 + 0 + 0 – 120 = –3 units. Adding the planned receipt brings the balance to 117 + 0 + 230 – 120 = 227 units. Offsetting for a 2-week lead time puts the corresponding planned order release back to week 2.

The first planned receipt lasts until week 7, when projected inventory would drop to 77 + 0 + 0 – 120 = –43 units. Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187 units. The corresponding planned order release is for week 5 (or week 7 minus 2 weeks).

230 230

Planning lead timeFor purchased items planning lead time is

Planning FactorsPlanning Factors

p p gthe time allowed for receiving a shipment from the supplierFor manufactured the planning lead time consists of estimates for

Setup time


Processing timeMaterials handling time between operationsWaiting time

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Lot-sizing rulesFixed order quantity (FQO) rule maintains


q y ( Q )the same order quantity each time an order is issuedCould be determined by quantity discounts, truckload capacity, minimum purchases, or EOQ


Periodic order quantity (POQ) rule allows a different order quantity for each order issue but tends to issue the order at predetermined time


tends to issue the order at predetermined time intervals

= –POQ lot size to arrive in

week t

Total gross requirementsfor P week, including

week t

Projected on-hand inventory balance at

end of week t–1


Figure 15.12 shows the application of the POQ rule for P = 3

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The first order using P = 3 is

= –(POQ lot size)Gross requirements

for weeks 4, 5, and 6

Inventory at end of week 3

(POQ lot size) = (120 + 0 + 150) – 117 = 153 units




Figure 15.12 – The POQ (P = 3) Rule for the Seat Subassembly

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Lot-for-lot (L4L) rule where the lot size covers the gross requirements of a single week


= –L4L lot size to arrive in

week tGross requirements

for week tProjected on-hand

inventory balance at end of week t–1

Figure 15.13 shows the application of the L4L

G i t I t b l


= –(L4L lot size) Gross requirementsin week 4

Inventory balance at end of week 3

(L4L lot size) = 120 – 117 = 3 units



Figure 15.13 – The L4L Rule for the Seat Subassembly

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Item H10-A is a produced item (not purchased) with an order quantity of 80 units. Complete the rest of its MRP record using the fixed order quantity (FOQ) rule

SOLUTION

Item: H10-ADescription: Chair seat assembly

Lot Size: FOQ = 80 unitsLead Time: 4 weeks

Week31 32 33 34 35 36 37 38 39 40

Grossrequirements 60 35 45 60Scheduled


Scheduledreceipts 80Projectedon-handinventoryPlanned receiptsPlanned order releases

20


Item H10-A is a produced item (not purchased) with an order quantity of 80 units. Complete the rest of its MRP record using the fixed order quantity (FOQ) rule

SOLUTION



Week31 32 33 34 35 36 37 38 39 40

Grossrequirements 60 35 45 60Scheduled


Scheduledreceipts 80Projectedon-handinventoryPlanned receiptsPlanned order releases

20

80

80

40 60

80

80

20 40 40 40 40 5 5 40

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Now complete the H10-A record using a POQ rule. The P should give an average lot size of 80 units. Assume the average weeklygive an average lot size of 80 units. Assume the average weekly requirements are 20 units.

P = = 4 weeks8020



SOLUTION

Item: H10-A Lot Size: POQ = 4Item: H10 ADescription: Chair seat assembly

Lot Size: POQ = 4Lead Time: 4 weeks

Week31 32 33 34 35 36 37 38 39 40

Grossrequirements 60 35 45 60Scheduledreceipts 80Projectedon-handinventory

20


Planned receiptsPlanned order releases

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SOLUTION

Item: H10-A Lot Size: POQ = 4Item: H10 ADescription: Chair seat assembly

Lot Size: POQ = 4Lead Time: 4 weeks

Week31 32 33 34 35 36 37 38 39 40

Grossrequirements 60 35 45 60Scheduledreceipts 80Projectedon-handinventory

20 20 40 40 40 40 5 5 60 60 0


Planned receiptsPlanned order releases

100

100


Revise the H10-A record using the lot-for-lot (L4L) Rule. (Complete the highlighted section)

SOLUTIONSOLUTION



Week31 32 33 34 35 36 37 38 39 40

Grossrequirements 60 35 45 60Scheduledreceipts 80


receipts 80Projectedon-handinventoryPlanned receiptsPlanned order releases

20

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Revise the H10-A record using the lot-for-lot (L4L) Rule. (Complete the highlighted section)

SOLUTIONSOLUTION



Week31 32 33 34 35 36 37 38 39 40

Grossrequirements 60 35 45 60Scheduledreceipts 80


receipts 80Projectedon-handinventoryPlanned receiptsPlanned order releases

20 20 40 40 40 40 5 5 0 0 0

60

60

40

40

Comparing lot-sizing rules


FOQ: = 181 units227 + 227 + 77 + 187 + 187

5

POQ: = 60 units150 + 150 + 0 + 0 + 0

5


L4L: = 0 units0 + 0 + 0 + 0 + 0

5

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Lot sizes affect inventory costs and setup and ordering costs


The FOQ rule generates a high level of average inventory because it creates inventory remnantsThe POQ rule reduces the amount of average on-hand inventory because it does a better job of matching order quantity to requirementsThe L4L rule minimizes inventory investment, but


y ,it also maximizes the number of orders placed


Safety stock for dependent demand items with lumpy demand (gross requirements) is helpful

l h f t i t th ti ionly when future gross requirements, the timing or size of scheduled receipts, and the amount of scrap that will be produced are certainSafety stock is used for end items and purchased items to protect against fluctuating customer orders and unreliable suppliers


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Figure 15.14 – Inventory Record for the Seat Subassembly Showing the Application of a Safety Stock

Outputs from MRPOutputs from MRP

MRP explosion

Material requirements planAction notices• Releasing new orders• Adjusting due dates

Priority reports• Dispatch lists• Supplier schedules

Capacity reports• Capacity requirements planning• Finite capacity scheduling• Input-output control

Routings and time

standards


Manufacturing resources plan

Performance reportsCost and price data

Figure 15.15 – MRP Outputs

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MRP ExplosionMRP Explosion

Translates the MPS and other sources of demand into the requirements needed for all of the subassemblies components and raw materialssubassemblies, components, and raw materials the firm needs to produce parent itemsAn item’s gross requirements are derived from three sources

The MPS for immediate parents that are end itemsThe planned order releases for parents below the MPS level


Any other requirements not originating in the MPS, such as the demand for replacement parts


C(1)Seat

b blsubassembly

H(1)Seat

frame

I(1)Seat

cushion


J(4)Seat-frame

boardsFigure 15.16 – BOM for the Seat

Subassembly

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Item: Seat subassemblyLot size: 230 units

LeadWeek


Lead time: 2 weeks

Gross requirements 150

1

230

117

2 3

120

4 5

150

6

120

7 8

Scheduled receipts

Projected on-hand 37 117 117

0 00 0

0 0 00 00 0

227 227 77 187 187


inventory

Planned receipts


230230

230230

Figure 15.17 – MRP Explosion of Seat Assembly Components

Item: Seat subassemblyLot size: 230 units

Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned

Week

0 00 0

230230


receipts


230

230

230

230



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MRP ExplosionMRP ExplosionItem: Seat subassemblyLot size: 230 units

Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned

Week

0 00 0

230230

Item: Seat framesLot size: 300 units

Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week

Item: Seat cushionLot size: L4L

Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week

receipts


230

230

230

230


requirements

00Scheduled receipts


Planned receipts


40

00 00 00300 00 0

requirements



Planned receipts


0

00 00 000 00 0



Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned

Week

0 00 0

230230


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week

receipts


230

230

230

230

Usage quantity: 1 Usage quantity: 1

0 230 0 230


requirements



Planned receipts


40

00 00 00300 00 0

requirements



Planned receipts


0

00 00 000 00 0


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Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned

Week

0 00 0

230230


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week

receipts


230

230

230

230

Usage quantity: 1 Usage quantity: 1

0 230 0 230 00 230000 2300


requirements



Planned receipts


40

00 00 00300 00 0

requirements



Planned receipts


0

00 00 000 00 0



Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned

Week

0 00 0

230230receipts


230

230

230

230


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Week

0 230 0 230 00 230000 2300 00 00 0 00 00 0


requirements



Planned receipts


40

00 00 00300 00 0

requirements



Planned receipts


0

00 00 000 00 0

4040 110110 110110 110 180 180 180 180

300

300

00 00 00 0 0 0 0 0

230

230

230

230


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MRP ExplosionMRP ExplosionItem: Seat framesLot size: 300 units

Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned

Week

300


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned

Week

230230

00 00 00 00230 2300 000 00 00 00230 2300 0

receipts


300

300

receipts


230

230

230

230

Gross requirements

1 2 3 4 5 6 7 8

Week

Item: Seat-frame boardsLot size: 1500 units

Lead time: 1 week


requirements


Planned receipts


200

00 00 000 00 0




Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned

Week

300


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned

Week

230230

00 00 00 00230 2300 000 00 00 00230 2300 0

Gross requirements

1 2 3 4 5 6 7 8

Week


Lead time: 1 week

00 1200 00 000 00 0

receipts


300

300

receipts


230

230

230

230

Usage quantity: 4


requirements


Planned receipts


200

00 00 000 00 0



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Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned

Week

300


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned

Week

230230

00 00 00 00230 2300 000 00 00 00230 2300 0

receipts


300

300

receipts


230

230

230

230

Gross requirements

1 2 3 4 5 6 7 8

Week


Lead time: 1 week

00 1200 00 000 00 0


requirements


Planned receipts


200

00 00 000 00 0


200 200 200 500 500 500 500 500

1500

1500


Other Important ReportsOther Important Reports

Action noticeCapacity requirements planning (CRP)p y q p g ( )Theory of constraints principles can be applied to keep bottleneck operations fed by adjusting some lot sizing rules or occasionally overriding planned order releases


Priority reportsManufacturing resource planning (MRP II)

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MRP and the EnvironmentMRP and the Environment

Consumer and government concern about the deterioration of the naturalthe deterioration of the natural environment has driven manufacturers to reengineer their processes to become more environmentally friendlyCompanies can modify their MRP systems to help track these waste and plans for th i di l


their disposal


A firm makes a product (Item A) from three components (intermediate Items B and D, and purchased item C). The latest MPS for product A calls for completion of a 250-unit order in

k 8 d it l d ti i 2 k Th t h d l dweek 8, and its lead time is 2 weeks. The master schedule and bill of material for Product A are given below.

Item: End Item A Lead Time: 2 wks

Week

1 2 3 4 5 6 7 8

MPS quantity 250


MPS start 250

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Develop a material requirements plan for items B, C, and D, given the following inventory data. Blank MRP d id d i th

A

C(2)

C(2) B(1)

MRP records are provided in the Student Notes, and the completed records are shown on the next slide.

B(1) C(1) D(2)

Data CategoryItem

B C D


Data Category B C DLot-sizing rule POQ (P = 5) FOQ = 1000 L4LLead time 2 weeks 1 week 3 weeksScheduled receipts None 1000 (week 1) None

Beginning inventory 0 800 0


SOLUTIONAn item’s gross requirements cannot be derived until all of its immediate parents are processed. Thus we must begin withimmediate parents are processed. Thus we must begin with Item D. Its only immediate parent is item A, and its planned “production plan” is shown by the MPS start row. Note the 2-for-1 usage quantity when deriving D’s gross requirements.

Item: D Lot Size: L4LDescription: Lead Time: 3 weeks

Week1 2 3 4 5 6 7 8


1 2 3 4 5 6 7 8


Scheduled receipts


Planned receipts 500

Planned order releases 500

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We can do item B next, because the planned “production quantities” for its two immediate parents (A and D) are known. Item C cannot be done yet, because one of its parents is item B d it POR till kB, and its PORs are still unknown.

Item: B Lot Size: POQ = 5Description: Lead Time: 3 weeks

Week1 2 3 4 5 6 7 8

Gross requirements


Gross requirements

Scheduled receipts

Projected on-hand inventory 0 0 0 0 0 0 0 0

Planned receipts



We can do item B next, because the planned “production quantities” for its two immediate parents (A and D) are known. Item C cannot be done yet, because one of its parents is item B d it POR till kB, and its PORs are still unknown.

Item: B Lot Size: POQ = 5Description: Lead Time: 3 weeks

Week1 2 3 4 5 6 7 8

Gross requirements 500 250



Scheduled receipts




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Finally we can do Item C, because we now know the planned “production quantities” of both of its immediate parents (A and B). Note that the usage quantity for its parent B is 2-for-1.

Item: C Lot Size: 1000Description: Lead Time: 1 week

Week1 2 3 4 5 6 7 8




Scheduled receipts 1000




Resource Planning for Service Providers

Dependent demand for servicesRestaurantsAirlinesHospitalsHotels


Bill of resources (BOR)

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Level 1Discharge

Level 2Intermediate care

Bill of ResourcesBill of Resources

Level 6Preoperative care

(Angiogram)

Level 3Postoperative care

(Step down)

Level 4Postoperative care

(Intensive)

Level 5Surgery

(b)

Nurse(6 hr)

MD(1 hr)

Therapy(1 hr)

Bed(24 hr)

Lab(3 tests)

Kitchen(1 meal)

Pharmacy(10

medicines)

(Angiogram)


(a)


(Testing)


(Angiogram)

Figure 15.18 – BOR for Treating an Aneurysm

Solved Problem 1Solved Problem 1

Refer to the bill of materials for product A shown in Figure 15.19. If there is no existing inventory and no scheduled receipts, how many units of items G, E, and D must be

h d t d 5 it f d it A?purchased to produce 5 units of end item A?

LT = 2 LT = 3

B (3) C (1)

LT = 1

A


G (1)

LT = 3

LT = 3

D (1)

LT = 3

D (1)

LT = 6

E (2)

LT = 1

F (1)

Figure 15.19 – BOM for Product A

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SOLUTIONFive units of item G, 30 units of item E, and 20 units of item D must be purchased to make 5 units of A. The usage quantitiesmust be purchased to make 5 units of A. The usage quantities shown in Figure 15.21 indicate that 2 units of E are needed to make 1 unit of B and that 3 units of B are needed to make 1 unit of A; therefore, 5 units of A require 30 units of E(2 × 3 × 5 = 30). One unit of D is consumed to make 1 unit of B, and 3 units of B per unit of A result in 15 units of D(1 × 3 × 5 = 15); 1 unit of D in each unit of C and 1 unit of C per unit of A result in another 5 units of D(1 × 1 × 5 = 5). The total requirements to make 5 units of A are 20 units of D(15 + 5). The calculation of requirements


for G is simply 1 × 1 × 1 × 5 = 5 units.


The order policy is to produce end item A in lots of 50 units. Using the data shown in Figure 15.20 and the FOQ lot-sizing rule, complete the projected on-hand inventory and MPS

tit Th l t th MPS t t b ff ttiquantity rows. Then complete the MPS start row by offsetting the MPS quantities for the final assembly lead time. Finally, compute the available-to-promise inventory for item A. If in week 1 a customer requests a new order for 30 units of item A, when is the earliest date the entire order could be shipped?


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Item: A Order Policy: 50 unitsLead Time: 1 week

Week1 2 3 4 5 6 7 8 9 101 2 3 4 5 6 7 8 9 10

Forecast 20 10 40 10 0 0 30 20 40 20

Customer orders (booked)

30 20 5 8 0 2 0 0 0 0


25

MPS quantity 50


MPS start


Figure 15.20 – MPS Record for End Item A


SOLUTIONThe projected on-hand inventory for the second week is

= + –Projected on-handinventory at end

of week 2

On-handinventory in

week 1MPS quantitydue in week 2

Requirementsin week 2

= 25 + 0 – 20 = 5 units

where requirements are the larger of the forecast or actual customer orders booked for shipment during this period No


customer orders booked for shipment during this period. No MPS quantity is required. Without an MPS quantity in the third period, a shortage of item A will occur: 5 + 0 – 40 = –35. Therefore, an MPS quantity equal to the lot size of 50 must be scheduled for completion in the third period. Then the projected on-hand inventory for the third week will be 5 + 50 – 40 = 15.

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Figure 15.21 shows the projected on-hand inventories and MPS quantities that would result from completing the MPS calculations. The MPS start row is completed by simply shifting

f th MPS tit t th l ft b l ta copy of the MPS quantity row to the left by one column to account for the 1-week final assembly lead time. Also shown are the available-to-promise quantities. In week 1, the ATP is

= + –Available-to-promise in

week 1

On-handquantity in

week 1MPS quantity

in week 1Orders booked upto week 3 when thenext MPS arrives


= 5 + 50 – (30 + 20) = 5 units


The ATP for the MPS quantity in week 3 is

=Available-to-promise in MPS quantity Orders booked up

to week 7 when the= –promise inweek 3

q yin week 3 to week 7 when the

next MPS arrives

= 50 – (5 + 8 + 0 + 2) = 35 units

The other ATPs equal their respective MPS quantities because no orders are booked for those weeks. As for the new order for 30 units in week 1, the earliest it can be shipped is week 3 because the ATP for week 1 is insufficient. If the customer


accepts the delivery date of week 3, the ATP for week 1 will stay at 5 units and the ATP for week 3 will be reduced to 5 units. This acceptance allows the firm the flexibility to immediately satisfy an order for 5 units or less, if one comes in. When the MPS is updated next, the customer orders booked for week 3 would be increased to 35 to reflect the new order’s shipping date.

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Figure 15.21 – Completed MPS Record for End Item A

A


The MPS start quantities for product A calls for the assembly department to begin final assembly

di t th f ll i

B (1) C (2)

LT = 2

LT = 1 LT = 2

according to the following schedule: 100 units in week 2; 200 units in week 4; 120 units in week 6; 180 units in week 7; and 60 units in week 8. Develop a material requirements plan for the next 8 weeks for items B, C, and D. The BOM for A is shown in Figure 15.22, and data from the inventory records


D (1)

LT = 3

and data from the inventory records are shown in Table 15.1.

Figure 15.21 – BOM for Product A

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TABLE 15.1 | INVENTORY RECORD DATA

ItemData Category B C DLot-sizing rule POQ (P=3) L4L FOQ = 500 unitsLead time 1 week 2 weeks 3 weeksScheduled receipts None 200 (week 1) NoneBeginning (on-hand) inventory 20 0 425

SOLUTION


We begin with items B and C and develop their inventory records, as shown in Figure 15.23. The MPS for product A must be multiplied by 2 to derive the gross requirements for item C because of the usage quantity. Once the planned order releases for item C are found, the gross requirements for item D can be calculated.


Item: B Lot Size: POQ (P = 3)Lead Time: 1 week

Week1 2 3 4 5 6 7 8 9 101 2 3 4 5 6 7 8 9 10

Gross requirements 100 200 120 180 60

Scheduled receipts


20 200 200 0 0 240 60 0 0 0

Planned receipts 280 360

20


Planned order releases 280 360

Figure 15.23 – Inventory Records for Items B, C, and D

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Item: C Lot Size: L4LLead Time: 2 weeks

Week1 2 3 4 5 6 7 8 9 101 2 3 4 5 6 7 8 9 10

Gross requirements 200 400 240 360 120

Scheduled receipts 200


200 0 0 0 0 0 0 0 0 0

Planned receipts 400 240 360 120

0


Planned order releases 400 240 360 120



Item: D Lot Size: FOQ =500 unitsLead Time: 1 week

Week1 2 3 4 5 6 7 8 9 101 2 3 4 5 6 7 8 9 10

Gross requirements 400 240 360 120

Scheduled receipts


425 25 25 285 425 305 305 305 305 305

Planned receipts 500 500

425


Planned order releases 500 500


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krajewski om9 ppt 15.ppt€¦ · 7/14/2010 2 Enterprise Resource Planning zWhat an ERP system does Integrating the firm’s functional areas UsedbymanydifferenttypesoforganizationsUsed

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