Chapter 13

Question 1

Resource Management

Answer 1

deals with the planning, execution, and control of all the resources that are used to produce goods or provide services in a value chain.

Question 2

Resources Include

Answer 2

materials, equipment, facilities, information, technical knowledge and skills, and of course, people.

Question 3

Resources Objectives

Answer 3

1. Maximize profits and customer satisfaction,
2. Minimize costs, or
3. Maximize benefits to stakeholders.

Question 4

Aggregate Planning

Answer 4

is the development of a long-term output and resource plan in aggregate units of measure.

Question 5

Disaggregation

Answer 5

is the process of translating aggregate plans into short-term operational plans that provide the basis for weekly and daily schedules and detailed resource requirements.

Question 6

Execution

Answer 6

refers to moving work from one workstation to another, assigning people to tasks, setting priorities for jobs, scheduling equipment, and controlling processes.

Question 7

Resource Planning Framework for Goods and Services

Answer 7

Most service organizations do not require as many levels of intermediate planning (Level 2) as goods-producing firms.

Level 1 and 2 planning are often combined in service businesses.

Question 8

Aggregate Planning Options

Answer 8

• Demand management
• Production-rate changes
• Workforce changes
• Inventory smoothing
• Facilities, equipment, and transportation

Question 9

Level Production Strategy

Answer 9

plans for the same production rate in each time period.

Question 10

Chase Demand Strategy

Answer 10

sets the production rate equal to the demand in each time period.

Question 11

Disaggregation in Manufacturing

Answer 11

• Master production scheduling (MPS)
• Materials requirements planning (MRP)
• Capacity requirements planning (CRP)

Question 12

Master Production Schedule (MPS)

Answer 12

is a statement of how many finished items are to be produced and when they are to be produced.

Typically developed for weekly time periods over a 6- to 12-month horizon.

Question 13

Materials Requirements Planning (MRP)

Answer 13

is a forward-looking, demand-based approach for planning the production of manufactured goods and ordering materials and components to minimize unnecessary inventories and reduce costs.

The output of an MRP system is a schedule for obtaining raw materials and purchased parts, a detailed schedule for manufacturing and controlling inventories, and financial information that drives cash flow, budget, and financial needs.

Question 14

MRP depends on understanding three basic concepts:

Answer 14

1. dependent demand
2. time-phasing
3. lot sizing

Question 15

Dependent Demand

Answer 15

is demand that is directly related to the demand of other SKUs and can be calculated without needing to be forecasted.

Question 16

Bill of Labor (BOL)

Answer 16

is a hierarchical record analogous to a BOM that defines labor inputs necessary to create a good or service.

Question 17

End Items

Answer 17

are finished goods scheduled in the MPS or FAS that must be forecasted.

Question 18

Parent Item

Answer 18

is manufactured from one or more components.

Question 19

Components

Answer 19

are any item (raw materials, manufactured parts, purchased parts) other than an end item that goes into a higher-level parent item(s).

Question 20

Subassembly

Answer 20

always has at least one immediate parent and also has at least one immediate component

Question 21

Time Phasing and Lot Sizing in MRP

Answer 21

Dependent demand requirements do not need to be ordered at the same time, but are time-phased as needed.

Orders may be consolidated to take advantage of ordering economies of scale; this is called lot sizing.

Question 22

MRP Explosion

Answer 22

is the process of using the logic of dependent demand to calculate the quantity and timing of orders for all subassemblies and components that go into and support the production of finished goods.

Question 23

Time buckets

Answer 23

are the time period size used in the MRP explosion process and usually are one week in length.

Question 24

Gross Requirements (GR)

Answer 24

are the total demand for an item derived from all of its parents. Scheduled or planned receipts (S/PR) are orders that are due or planned to be delivered.

Question 25

Planned Order Receipt (PORec)

Answer 25

specifies the quantity and time an order is to be received.

Question 26

Planned order release (PORel)

Answer 26

specifies the planned quantity and time an order is to be released to the factory or a supplier

Question 27

Projected on-hand inventory (POH)

Answer 27

is the expected amount of inventory on-hand at the beginning of the time period considering on-hand inventory from the previous period plus scheduled receipts or planned order receipts minus the gross requirements

Question 28

Lot Sizing

Answer 28

is the process of determining the appropriate amount and timing of ordering to reduce costs.

Question 29

Three common lot-sizing methods for MRP

Answer 29

1. Lot-for-lot (LFL)
2. Fixed order quantity (FOQ)
3. Periodic order quantity (POQ)

Question 30

Lot-for-lot (LFL)

Answer 30

An ordering schedule that covers the gross requirements for each week

Question 31

Fixed Order Quantity Rule (FOQ)

Answer 31

uses a fixed order size for every order or production run.

Question 32

Periodic Order Quantity (POQ)

Answer 32

orders a quantity equal to the gross requirement quantity in one or more predetermined time periods minus the projected on-hand quantity of the previous time period.

Question 33

Capacity Requirements Planning (CRP)

Answer 33

is the process of determining the amount of labor and machine resources required to accomplish the tasks of production on a more detailed level, taking into account all component parts and end items in the materials plan.

Question 34

Capacity Requirements Planning (CRP)

Answer 34

Capacity required (Ci) 
          = 
Setup time (Si) 
	  \+ [Processing time (Pi) 
         X 
Order size (Qi)]