MGMT302Chapter 13 Essay

MGMT302Chapter 13 Essay MGMT302Chapter 13 Essay 13 CHAPTER 13 MRP and ERP McGraw-Hill/Irwin Operations Management, Eighth Edition, by William J. Stevenson Copyright  © 2005 by The McGraw-Hill Companies, Inc. All rights MRP ï  ® Material requirements planning (MRP): Computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials. Independent and Independent Demand Dependent Demand Dependent Demand A C(2) B(4) D(2) E(1) D(3) F(2) Independent demand is uncertain. Dependent demand is certain. Dependant Demand ï  ® Dependent demand: Demand for items that are subassemblies or component parts to be used in production of finished goods. ï  ® Once the independent demand is known, the dependent demand can be determined. MRP Inputs MRP Processing MRP Outputs Changes Order releases Master schedule Planned-order schedules Primary reports Bill of materials Inventory records MRP computer programs Secondary reports Exception reports Planning reports Performancecontrol reports Inventory transaction MPR Inputs ï  ® ï  ® ï  ® Master Production Schedule Time-phased plan specifying timing and quantity of production for each end item. Material Requirement Planning Process c u d o Pr e e r T t u r t S e r u ct a e L i T d s e m Master Schedule Master schedule: One of three primary inputs in MRP; states which end items are to be produced, when these are needed, and in what quantities. Cumulative lead time: The sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly. Planning Horizon Assembly Subassembly Fabrication Procurement 1 2 3 4 5 6 7 8 9 10 Bill-of-Materials Bill of materials (BOM): One of the three primary inputs of MRP; a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product. Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels. Product Structure Tree Level 0 1 Chair Leg Assembly 2 Legs (2) 3 Cross bar Seat Back Assembly Side Cross Back Rails (2) bar Supports (3) Inventory Records ï  ® ï  ® One of the three primary inputs in MRP Includes information on the status of each item by time period ï  ® ï  ® ï  ® ï  ® ï  ® ï  ® Gross requirements Scheduled receipts Amount on hand Lead times Lot sizes And more †¦ Assembly Time Chart Procurement of raw material D Fabrication of part E Subassembly A Procurement of raw material F Procurement of part C Final assembly and inspection Procurement of part H Fabrication of part G Procurement of raw material I 1 2 3 Subassembly B 4 5 6 7 8 9 10 11 MRP Processing ï  ® Gross requirements ï  ® Schedule receipts ï  ® Projected on hand ï  ® Net requirements ï  ® Planned-order receipts ï  ® Planned-order releases MPR Processing ï  ® Gross requirements ï  ® ï  ® Scheduled receipts ï  ® ï  ® Total expected demand Open orders scheduled to arrive Planned on hand ï  ® Expected inventory on hand at the beginning of each time period MPR Processing ï  ® Net requirements ï  ® ï  ® ï  ® Actual amount needed in each time period Planned-order receipts ï  ® Quantity expected to received at the beginning of the period ï  ® Offset by lead time Planned-order releases ï  ® Planned amount to order in each time period Updating the System ï  ® Regenerative system ï  ® ï  ® Updates MRP records periodically Net-change system ï  ® Updates MPR records continuously MRP Outputs ï  ® Planned orders - schedule indicating the amount and timing of future orders. ï  ® Order releases - Authorization for the execution of planned orders. ï  ® Changes - revisions of due dates or order quantities, or cancellations of orders. MRP Secondary Reports ï  ® Performance-control reports ï  ® Planning reports ï  ®