resource requirements planning: mrp and...
TRANSCRIPT
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Islamic University of Gaza - Palestine
Chapter 15
Resource Requirements Planning:MRP and CRP
Islamic University of Gaza - Palestine
Chapter 15: Learning Outcomes
When you complete this chapter you should be ableto:
1. Develop a product structure2. Build a gross requirements plan3. Build a net requirements plan4. Determine lot sizes for lot-for-lot, Economic Order
Quantity (EOQ), and Periodic Order Quantity (POQ)5. Capacity Requirements Planning
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Contributors to MRP and theme of MRP
• Joseph Orlicky• George Plossl• Oliver Wight• American Production and Inventory Control SocietyThe theme of MRP is ”Getting the right amount of the right
materials to the right place at the right time”
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What is MRP?
• Computerized Inventory Control system• Production Planning System• Management Information System• Manufacturing Control System
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When to use MRP
• Job Shop Production (Other name is what?)• Complex Products• Assemble-to-Order Environments• Discrete and Dependent Demand Items
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What can MRP do?
• Reduce Inventory Levels• Reduce Component
Shortages• Improve Shipping
Performance• Improve Customer Service• Improve Productivity• Simplified and Accurate
Scheduling
• Reduce Purchasing Cost• Improve Production
Schedules• Reduce Manufacturing
Cost• Reduce Lead Times• Less Scrap and Rework• Higher Production Quality
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• Improve Communication• Improve Plant Efficiency• Reduce Freight (cargo)
Cost• Reduction in Excess
(extra) Inventory
• Reduce Overtime• Improve Supply
Schedules• Improve Calculation of
Material Requirements• Improve Competitive
Position
What can MRP do? (cont.)
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Three Basic Steps of MRP
• Identifying Requirements• Running MRP – Creating the Suggestions• Firming the Suggestions
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Step 1: Identifying the Requirements
• Quantity on Hand• Quantity on Open Purchase Order• Quantity in/or Planned for Manufacturing• Quantity Committed to Existing Orders• Quantity Forecasted
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Step 1: Important Information
MRP is…..• Company Sensitive• Location Sensitive• Date Sensitive
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Step 2: Running MRP – Creating the Suggestions
• Critical Items• Expedite Items (make the delivery of an items faster)• Delay Items
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Step 3: Firming the Suggestions
• Manufacturing Orders• Purchasing Orders• Various Reports
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Overview of the MRP System
Product StructureFile
Master ProductionSchedule
Inventory MasterFile
Material RequirementsPlanning
Manufacturing Orders Purchase Orders Various Reports
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MRP Inputs
• Product Structure File• Master Production Schedule• Inventory Master File
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Product Structure File
• Bill of Materials (This is the sequence of everything thatgoes into the final product).
• Other names are: Product structure tree, a schematic, aflow diagram
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Master Production Schedule
• Schedule of Finished Products• Represents Production, not Demand• Combination of Customer Orders and Demand Forecasts• What Needs to be Produced
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Inventory Master File
• On-Hand Quantities• On-Order Quantities• Lot Sizes• Safety Stock• Lead Time• Past-Usage Figures
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Resource Requirements Planning
Master ProductionScheduling (MPS)Master ProductionScheduling (MPS)
Material RequirementsPlanning (MRP)
Material RequirementsPlanning (MRP)
Capacity RequirementsPlanning (CRP)
Capacity RequirementsPlanning (CRP)
AggregatePlanning
AggregatePlanning
ResourceRequirements
Planning
Chapter 13
Chapter 15
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Material Requirements Planning (MRP)
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LocoMopeds is a manufacturer of off-road mopeds.The following product structure diagram represents thebill of materials for its dual-carburetor Model 442 moped.
MOPEDMOPED
ENGINEASSEMBLY
ENGINEASSEMBLY
MOTORMOTOR CARBURETOR(2)
CARBURETOR(2)
GASTANKGASTANK
WHEELASSEMBLY
(2)
WHEELASSEMBLY
(2)
HUBASSEMBLY
HUBASSEMBLY TIRETIRE
FRAMEFRAME
Level 0
Level 1
Level 2
Example: MRP Schedule
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• Bill of MaterialParent Component Level Compon.Code Code Code Description Req’d
442 0 #442 Moped442 EA 1 Engine Assem. 1
GT 1 Gas Tank 1WA 1 Wheel Assem. 2F 1 Frame 1
EA M 2 Motor 1C 2 Carburetor 2
WA HA 2 Hub Assem. 1T 2 Tire 1
Example: MRP Schedule
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• Inventory Status ReportItemCode
On-Hand
SafetyStock
LotSize
LeadTime
Sched. ReceiptsQnty. Week
442 500 200 LFL 1 -- --EA 300 100 500 1 1000 10GT 600 200 LFL 2 900 10
WA 500 400 500 1 2000 10F 600 0 2000 3 2000 10M 250 0 LFL 1 -- --C 150 100 2000+ 2 -- --
HA 100 0 LFL 1 2400 11T 500 500 1000 3 3000,2000 11,12
Example: MRP Schedule
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The company is currently planning production forweeks 10 through 16. Based on existing orders anddemand forecasts, the master production schedule is asfollows:
Master Production Schedule: #442 Moped
Determine the MRP schedule required to support themaster production schedule for the Model 442 moped inweeks 10-16.
11
1300 800 1200 1400
10 1615141312
0 1000 0
WEEK
QUANTITY
Example: MRP Schedule
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• MRP Schedule for #442 Mopeds for Weeks 10 - 16,considering that:– Gross Requirements come from the moped MPS– There is an On-Hand balance of 500 mopeds at the end of
week 9– There are no Scheduled Receipts for mopeds– A lot-for-lot rule is used for ordering mopeds– Safety stock of 200 mopeds is desired– Lead time for mopeds is one week
Example: MRP Schedule
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• MRP Schedule for #442 Mopeds . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 500)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: 442 MOPED LT: 1LOT SIZE: LFL SS: 200
0
10
1000 0
11 12 13
1300 800
1514
14001200
16
WEEK
Example: MRP Schedule
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• MRP Schedule for #442 Mopeds . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 500)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: 442 MOPED LT: 1LOT SIZE: LFL SS: 200
0
300
1000
10
1000
1000
300
1300
1300
0
0
11 12 13
1300
1200800
1200800
14001200
1300
1300
800
000 0
1400
800
15
1400
14
14001200
16
WEEK
Example: MRP Schedule
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• MRP Schedule for Gas Tanks for Weeks 10 - 16,considering that:– Gross Requirements come from moped Planned-Order-
Releases– There is an On-Hand balance of 600 gas tanks at the end of
week 9– There is a Scheduled Receipt for 900 tanks in week 10– A lot-for-lot rule is used for ordering gas tanks– Safety stock of 200 gas tanks is desired– Lead time for gas tanks is two weeks
Example: MRP Schedule
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• MRP Schedule for Gas Tanks . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 600)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: GAS TANK LT: 2LOT SIZE: LFL SS: 200
1000
900
10
0 1300
11 12 13
800 1200
1514
01400
16
WEEK
Example: MRP Schedule
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• MRP Schedule for Gas Tanks . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 600)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: GAS TANK LT: 2LOT SIZE: LFL SS: 200
1000
900
1300
1000
10
800
0
1200
300
1300
11 12 13
800
1200
1400
1200
1514
01400
16
WEEK
300 000
1000
1000 800
800
1400
14001200
0
Example: MRP Schedule
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• MRP Schedule for Frames for Weeks 10 - 16, consideringthat:– Gross Requirements come from moped Planned-Order-
Releases– There is an On-Hand balance of 600 frames at the end of
week 9– There is a Scheduled Receipt for 2000 frames in week 10– The firm uses a Lot Size (multiple) of 2000 for ordering
frames– No safety stock of frames is desired– Lead time for frames is 3 weeks
Example: MRP Schedule
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• MRP Schedule for Frames . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: FRAME LT: 3LOT SIZE: 2000 SS: 0
1000
2000
10
0 1300
11 12 13
800 1200
1514
01400
16
WEEK
600
Example: MRP Schedule
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• MRP Schedule for Frames . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 600)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: FRAME LT: 3LOT SIZE: 2000 SS: 0
1000
2000
2600
0
2000
10
1600
0
2000
1600
1300
11 12 13
800
2000
500
2000
300300 900
0
1200
1514
01400
16
WEEK
0 0
1500
0 1100
Example: MRP Schedule
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• MRP Schedule for Engine Assemblies for Weeks 10 - 16,considering that:– Gross Requirements come from moped Planned-Order-
Releases– There is an On-Hand balance of 300 engine assemblies at
the end of week 9– There is a Scheduled Receipt for 1000 engine assemblies in
week 10– The firm uses a Lot Size (multiple) of 500 for ordering
engine assemblies– Safety Stock of 100 engine assemblies is desired– Lead time for engine assemblies is 1 week
Example: MRP Schedule
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• MRP Schedule for Engine Assemblies . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 300)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: ENGINE ASSEM. LT: 1LOT SIZE: 500 SS: 100
1000
1000
10
0 1300
11 12 13
800 1200
1514
01400
16
WEEK
Example: MRP Schedule
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• MRP Schedule for Engine Assemblies . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 300)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: ENGINE ASSEM. LT: 1LOT SIZE: 500 SS: 100
1000
1000
1200
10
1500
200
0
500
1500
1100
200
1300
11 12 13
800
10001100
10001500
1000
400
500
1500
400100400 0
1200
1514
01400
16
WEEK
Example: MRP Schedule
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• MRP Schedule for Motors for Weeks 10 - 16, consideringthat:– Gross Requirements come from engine assembly Planned-
Order-Releases– There is an On-Hand balance of 250 motors at the end of
week 9– There are no Scheduled Receipts for motors– A lot-for-lot rule is used for ordering motors– No Safety Stock of motors is desired– Lead time for motors is 1 week
Example: MRP Schedule
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• MRP Schedule for Motors . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 250)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: MOTOR LT: 1LOT SIZE: LFL SS: 0 10
1500 500
11 12 13
1500 1000
1514 16
WEEK
Example: MRP Schedule
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• MRP Schedule for Motors . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 250)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: MOTOR LT: 1LOT SIZE: LFL SS: 0
250
1250
10
1250
500
1250
250
1500
1500
500
500
0
500
11 12 13
1500
1000
1000
1500
1500
1000
000 0
1000
1514 16
WEEK
Example: MRP Schedule
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• MRP Schedule for Carburetors for Weeks 10 - 16,considering that:– Gross Requirements come from engine assembly Planned-
Order-Releases (times 2)– There is an On-Hand balance of 150 carburetors at the end
of week 9– There are no Scheduled Receipts for carburetors– A Lot Size of 200+ is used for ordering carburetors– Safety Stock of 100 carburetors is desired– Lead time for carburetors is 2 weeks
Example: MRP Schedule
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• MRP Schedule for Carburetors . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 150)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: CARBURETOR LT: 2LOT SIZE: 2000+ SS: 100 10
3000 1000
11 12 13
3000 2000
1514 16
WEEK
Example: MRP Schedule
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• MRP Schedule for Carburetors . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 150)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: CARBURETOR LT: 2LOT SIZE: 2500+ SS: 100
50
2500
10
2500
3050
3000
3000
2500
2500
950
50
1000
11 12 13
3000
950
2500
1450
2500
155010501550 1550
2000
1514 16
WEEK
Example: MRP Schedule
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• MRP Schedule for Wheel Assemblies for Weeks 10 - 16,considering that:– Gross Requirements come from moped Planned-Order-
Releases (times 2)– There is an On-Hand balance of 500 wheel assemblies at the
end of week 9– There is a Scheduled Receipt for 2000 wheel assemblies in
week 10– A Lot Size (multiple) of 500 is used for ordering wheel
assemblies– Safety Stock of 400 wheel assemblies is desired– Lead time for wheel assemblies is 1 week
Example: MRP Schedule
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• MRP Schedule for Wheel Assemblies . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 500)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: WHEEL ASSEM. LT: 1LOT SIZE: 500 SS: 400
2000
2000
10
0 2600
11 12 13
1600 2400
1514
02800
16
WEEK
Example: MRP Schedule
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• MRP Schedule for Wheel Assemblies . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 500)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: WHEEL ASSEM. LT: 1LOT SIZE: 500 SS: 400
2000
2000
2100
10
2500
100
0
2000
2500
2500
100
2600
11 12 13
1600
28002000
30002000
3000
1600
2000
2000
04000 200
2400
1514
02800
16
WEEK
Example: MRP Schedule
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• MRP Schedule for Hub Assemblies for Weeks 10 - 16,considering that:– Gross Requirements come from wheel assembly Planned-
Order-Releases– There is an On-Hand balance of 100 hub assemblies at the
end of week 9– There is a Scheduled Receipt of 2400 hub assemblies in week
11– A lot-for-lot rule is used for ordering hub assemblies– No Safety Stock of hub assemblies is desired– Lead time for hub assemblies is 1 week
Example: MRP Schedule
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• MRP Schedule for Hub Assemblies . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 100)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: HUB ASSEM. LT: 1LOT SIZE: LFL SS: 0
0
10
2400
2500 2000
11 12 13
2000 3000
1514
00
16
WEEK
Example: MRP Schedule
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Example: MRP Schedule
• MRP Schedule for Hub Assemblies . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 100)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: HUB ASSEM. LT: 1LOT SIZE: LFL SS: 0
0
100
10
2000
2500
2400
2500
2000
2000
2000
0
2000
11 12 13
2000
3000
3000
2000
2000
3000
000 0
3000
1514
00
16
WEEK
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Example: MRP Schedule
• MRP Schedule for Tires for Weeks 10 - 16, consideringthat:– Gross Requirements come from wheel assembly Planned-
Order-Releases– There is an On-Hand balance of 500 tires at the end of week
9– There are Scheduled Receipts for 3000 and 2000 tires weeks
11 and 12, respectively– A Lot Size (multiple) of 1000 is used for ordering tires– Safety Stock of 500 tires is desired– Lead time for tires is 3 weeks
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Example: MRP Schedule
• MRP Schedule for Tires . . . Initially
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 500)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: TIRE LT: 3LOT SIZE: 1000 SS: 500
0
10
3000
2500 2000
2000
11 12 13
2000 3000
1514
00
16
WEEK
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Example: MRP Schedule
• MRP Schedule for Tires . . . Completed
GROSS REQUIREMENTS
SCHEDULED RECEIPTS
AVAILABLE (ON-HAND = 500)
NET REQUIREMENTS
PLANNED ORDER RECEIPTS
PLANNED ORDER RELEASES
ITEM: TIRE LT: 3LOT SIZE: 1000 SS: 500
0
0
2000
10
3000
3000
3000
2500
2500
2000
2000
11 12 13
2000
2500
3000
1500
2000
500500500 500
3000
1514
00
16
WEEK
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• Lot-size is the quantity ordered/produced at one time• Large lots are preferred because:
– Changeovers cost less and capacity greater– Annual cost of purchase orders less– Price breaks and transportation breaks can be utilized
• Small lots are preferred because:– Lower inventory carrying cost– Reduced risk of obsolescence– Shorter cycle time to produce customer order
Lot-Sizing IN MRP
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The best method, resulting in least cost,depends on cost and demand patterns.
Lot-Sizing Methods
• Economic Order Quantity (EOQ)– does not consider quantity discounts– does not always provide the most economical approach
with lumpy demand• Lot-for-Lot (LFL)
– accommodates lumpy demand• Period Order Quantity (POQ)
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Example: Lot-Sizing DecisionThe net requirements for a material from an MRP
schedule are:
It costs $400 to change over the machines for this materialin the affected work center. It costs $0.40 per unit whenone unit of this material must be carried in inventory fromone week to the next.
Identify the lot-sizing method that results in the leastcarrying and changeover costs for the 8-week schedule.
NET REQUIREMENTS 1000
1
0 1300
2 3 4
800 1200
65
01300
7
WEEK
800
8
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Example: Lot-Sizing Decision
• Lot-for-Lot Method
Carrying Cost = 0($.40) = $0Changeover Cost = 6($400) = $2,400
Total = $2,400
NET REQUIREMENTS
BEGINNING INVENTORY
PRODUCTION LOTS
ENDING INVENTORY
1000
0
1000
0
1
0
0
0
0
0
1300
1300
0
2 3 4
800
000
00
13001200800 0
0
1200
65
01300
00
7
WEEK
800
0
800
0
8
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Example: Lot-Sizing Decision
• Economic Order Quantity (EOQ) Method
S = $400.00D = [(Net Req. for 8 wks)/8 weeks)](50 weeks/year)
= (6400/8)(50) = 40,000C = ($0.40 per week)(50 weeks/year)
= $20.00
2DS 2(40,000)(400)EOQ = = = 1265C 20
2DS 2(40,000)(400)EOQ = = = 1265C 20
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Example: Lot-Sizing Decision
• Economic Order Quantity (EOQ) Method
Carrying Cost = 4855($.40) = $1,942Changeover Cost = 6($400) = $2,400
Total = $4,342
NET REQUIREMENTS
BEGINNING INVENTORY
PRODUCTION LOTS
ENDING INVENTORY
1000
0
1265
265
1
265
0
265
0
230
1265
1300
265
2 3 4
800
725760695
695230
126512651265 0
725
1200
65
01300
725760
7
WEEK
1265
1190
800
725
8
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Example: Lot-Sizing Decision
• Period Order Quantity (POQ) Method
POQ = (# Weeks/year)/(# Orders/year)= 50/(D/EOQ)= 50/(40,000/1,265)= 1.58 or 2 weeks
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Example: Lot-Sizing Decision
• Period Order Quantity (POQ) Method
Carrying Cost = 2900($.40) = $1,160Changeover Cost = 4($400) = $1,600
Total = $2,760
NET REQUIREMENTS
BEGINNING INVENTORY
PRODUCTION LOTS
ENDING INVENTORY
1000
0
1000
0
1
0
0
0
0
800
2100
1300
0
2 3 4
800
013000
0800
025000 800
800
1200
65
01300
01300
7
WEEK
0
0
800
800
8
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Example: Lot-Sizing Decision
• SummaryCarrying Chg.Ovr. Total
Method Cost Cost CostLFL 0 2,400 2,400EOQ 1,942 2,400 4,342POQ 1,160 1,600 2,760
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Issues in MRP
• Lot-Sizing– Useful at lower levels but may drive excess inventory when
applied at higher levels• Net Change versus Regenerative MRP
– Net change may generate too many action notices– Regenerative more costly to run but appears to be easier to
manage• . . . more
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Issues in MRP
• Safety Stock– Use depends on uncertainty of demand..... more uncertain
the greater the need for safety stock• Assemble-to-Order Firms
– MPS and MRP treated separately from Final AssemblySchedule(FAS)
– Use Modular Bill of Material
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MRP I to MRP II
• MRP I simply exploded demand (MPS) into requiredmaterials
• MRP II became Manufacturing Resource Planning whichprovides a closed-loop business management system– Financial management– Shop floor control– Operations management– Simulation capability
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Evaluation of MRP
• Most beneficial to process-focused systems that havelong processing times and complex multistageproduction steps
• Lead times must be reliable• Must freeze MPS for some time before actual
production... certain demand• Difficult to implement
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Capacity Requirements Planning (CRP)
• Tests MPS for feasibility• Utilizes routings to determine labor/machine loads• If schedule feasible, recommends freezing• If schedule overloads resources, points out processes
that are overscheduled
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Load Schedules
• Compares actual labor and machine hours againstavailable hours
• Offsets schedules between successive stages ofproduction by lead times
• Provides feasible MPS and economically loaded workcenters
• Promotes system operating efficiency ... lowers costs!
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Wrap-Up: World-Class Practice
• Lead times respond to conditions• Product development as levels of product structure tree• Lead times that adjust to load• MRP reports shared with customers and suppliers• All of the above results in bias towards smaller batches
and shorter lead times
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End of Chapter 15End of Chapter 15