Operations ManagementMaterial Requirements Planning (MRP)

Operations ManagementMaterial Requirements Planning (MRP)

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  Global Company Profile: Collins Industries Dependent Inventory Model Requirements Master Production Schedule Bills of Materials Accurate Inventory records Purchase Orders Outstanding Lead Times for Each Component MRP Structure
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  MRP Management MRPDynamics MRP and JIT Lot-Sizing Techniques Extensions in MRP Closed-Loop MRP Capacity Planning Material Requirements Planning II (MRP II) Enterprise Resource Planning (ERP)
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  MRP In ServicesDistribution Resource Planning (DRP) DRP Structure Allocation
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  When you completethis chapter, you should be able to : Identify or Define : Planning bills and kits Phantom bills Low-level coding Lot sizing
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  When you completethis chapter, you should be able to : Describe or Explain : Material requirements planning Distribution requirements planning Enterprise resource planning
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  Largest manufacturer ofambulances in the world International competitor 12 major ambulance designs 18,000 different inventory items 6,000 manufactured parts 12,000 purchased parts MRP: IBM’s MAPICS
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  Collins requires: Materialplan must meet both the requirements of the master schedule and the capabilities of the production facility Plan must be executed as designed Effective “time-phased” deliveries, consignments, and constant review of purchase methods Maintenance of record integrity
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  Inventory Process stageDemand Type Number & Value Other Raw Material WIP Finished Goods Independent Dependent A Items B Items C Items Maintenance Dependent Operating
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  Item Materials WithIndependent Demand Materials With Dependent Demand Demand Source Company Customers Parent Items Material Type Finished Goods WIP & Raw Materials Method of Estimating Demand Forecast & Booked Customer Orders Calculated Planning Method EOQ & ROP MRP
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  Aggregate Production PlanMarketing Customer Demand Engineering Design Completion Management Return on Investment Capital Human Resources Manpower Planning Procurement Supplier Performance Finance Cash Flow Production Capacity Inventory
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  Effective use ofdependent demand inventory models requires that the operations manager know the: master production schedule specifications or bills-of-material inventory availability purchase orders outstanding lead times
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  Production Plan ExecuteMaterial Plans Master Production Schedule Material Requirements Plan Capacity Requirements Plan Execute Capacity Plans Realistic?? No Yes
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  Make to Order(Process Focus) Assemble to Order or Forecast (Repetitive) Stock to Forecast (Product Focus) Schedule finished product Steel, Beer, Bread Light bulbs, Paper Print shop Machine shop Fine dining restaurant Examples: Number of end items Number of inputs Typical focus of the master production schedule Schedule orders Schedule modules Motorcycles, autos, TVs, fast-food restaurant
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  List of components& quantities needed to make product Provides product structure (tree) Parents: Items above given level Children: Items below given level Shows low-level coding Lowest level in structure item occurs Top level is 0; next level is 1 etc.
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  Modular bills Modulesare final components used to make assemble-to-stock end items Planning bills Used to assign artificial parent Reduces number of items scheduled Phantom bills Used for subassemblies that exist temporarily
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  Bicycle(1) P/N 1000Handle Bars (1) P/N 1001 Frame Assembly (1) P/N 1002 Wheels (2) P/N 1003 Frame (1) P/N 1004
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  1 2 34 5 6 7 8 D G 2 weeks 1 week F E 3 weeks 2 weeks A 1 week C 1 week B 2 weeks to produce E D Must have D and E completed here so production can begin on B 2 weeks 1 week Start production of D
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  Manufacturing computer informationsystem Determines quantity & timing of dependent demand items © 1995 Corel Corp.
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  Computer system Mainlydiscrete products Accurate bill-of-material Accurate inventory status 99% inventory accuracy Stable lead times © 1984-1994 T/Maker Co.
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  Increased customer satisfactiondue to meeting delivery schedules Faster response to market changes Improved labor & equipment utilization Better inventory planning & scheduling Reduced inventory levels without reduced customer service
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  MRP by periodreport MRP by date report Planned orders report Purchase requirements Exception reports MRP Programs Master Production Schedule BOM Lead Times (Item Master File) (Bill-of-Material) Inventory Data Purchasing data
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  Forecast & FirmOrders Material Requirements Planning Aggregate Production Planning Resource Availability Master Production Scheduling Shop Floor Schedules Capacity Requirements Planning Realistic? No, modify CRP, MRP, or MPS Yes
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  Master Production ScheduleBill of Materials Material Requirements Planning System Inventory Status Planned Order & Other Reports Item Master Purchasing Data
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  Shows items tobe produced End item, customer order, module Derived from aggregate plan
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  Shows items tobe produced End item, customer order, module Derived from aggregate plan Example Item/Week Oct 3 Oct 10 Oct 17 Oct 24 Drills 300 200 310 300 Saws 300 450 310 330
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  Therefore, these arethe gross requirements for B 10 40+10 = 50 40 50 20 15+30 = 45 1 2 3 4 5 6 7 8 Periods Gross requirements: B Periods 10 10 1 2 3 Master schedule for S sold directly 40 50 15 A C B 5 6 7 8 9 10 11 Lead time = 4 for A Master schedule for A 40 20 30 S B C 8 9 10 12 11 13 Lead time = 6 for S Master schedule for S
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  Supports “preplanning” Problemwith system “nervousness” “ Time fence” - allows a segment of the master schedule to be designated as “not to be rescheduled” “ Pegging” - tracing upward in the bill-of-materials from the component to the parent item That a manager can react to changes, doesn’t mean he/she should
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  MRP -a planning and scheduling technique with fixed lead times JIT - a way to move material expeditiously Integrating the two: Small bucket approach and back flushing Balanced flow approach
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  Lot-for-lot Economic OrderQuantity Part Period Balancing Wagner-Whitin Algorithm
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  Closed loop MRPCapacity planning - load reports MRP II - Material Resource Planning Enterprise Resource Planning
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  Tactics for smoothingthe load and minimizing the impact of changed lead time include: Overlapping - reduces the lead time, entails sending pieces to the second operation before the entire lot has completed the first operation Operations splitting - sends the lot to two different machines for the same operation Lot splitting - breaking up the order and running part of it ahead of the schedule
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  MRP II withties to customers and suppliers
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  Can be usedwhen demand for service or service items is directly related to or derived from demand for other services restaurant - rolls required for each meal hospitals - implements for surgery etc.
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  DRP requires: Grossrequirements, which are the same as expected demand or sales forecasts Minimum levels of inventory to meet customer service levels Accurate lead times Definition of the distribution structure