material requirement planning Flashcards
basic concepts of material requirement planning (MRP)
Example: preparing a dinner party
- master production schedule -> planned menu for dinner. To determine the needed materials, you had to know what to prepare
- bills of material -> recipe of each meal. Helps determine how much of each component is needed
- inventory records -> check inventory to see what you already have and what to buy
- backward scheduling -> make sure the menu is ready in time. the date of the dinner party and works backward to determine the start date of each activity
enterprise resource planning
- software designed for organizing and managing business processes (core and administrative) by sharing information across functional areas
- core processes: production planning and control, inventory management, purchasing, distribution
- administrative processes: accounting, human resource management
- primary objective: sharing information across functional areas
integrating internal and external members of the supply chain
- integrated 4 modules using a common database and unified interface: finance and accountin sales and marketing production and materials management human resources
- can be implemented either individually or as a fully integrated system -> ERP uses a common database to ensure the same information is used throughout the company to improve decisions making across functional areas
Evolution of ERP
1990s: manage and automize routine activities in a manufacturing context
Nowadays: focus on improving the decision making in the supply chain -> requires SC intelligence: ability to collect and exploit data along the SC
tradeoff of ERP
TCO = software + services (consulting, raining) + maiintenance cost
a holistic view of the company from single information and IT architecture
-> improved information flow
-> better managerial control and decision making
One benefit of ERP is that it integrates the complete range of an organization’s opera- tions in order to present a holistic view of the business functions from a single informa- tion and IT architecture. This single information source improves the organizational information flow. Because of improved information flow, an organization increases its ability to incorporate best practices that facilitate better managerial control, speedier decision making, and cost reductions throughout the organization.
MRP systems
MRP systems translate an approved master production schedule into time-phased net requirements for
-subassemblies to be manufactured
- components and raw materials to be purchased
The initial MRP system evolved into a closed-loop MRP
Closed-loop MRP
MRP system that includes sales and operations planning, master production scheduling, and capacity requirements planning
Closed-loop means that each function is included in the overall system and that feedback mechanisms are in place to make sure that the plan remains valid
MRP
information system that uses backward scheduling.
- enables companies that produce items in batches to have the right materials in the right amount at the right time
- Companies use capacity requirements planning (CRP) to check that enough work is scheduled for operations and that the amount of work is feasible. CPR reveals potential problems
types of demand
- Independent demand -> demand for finished products (any item sold directly to a consumer)
doesn’t depend on the demand for other products (Ex: CD cabinet)
needs to forecasted - Dependent demand -> derived from finished products. (Ex: feet, doors, door hinges, screws)
not forecasted, but calculates the material needs based on the final products to be produced
objectives of MRP
Determine the quantity and timing of material requirements -> what to order, how much, when to order, what material, when to schedule delivery
Maintain priorities -> MRP system responds to changes in the daily environment, reorganizes priorities and keeps plans current and viable
3 MRP inputs
- Authorized MPS -> statement of what and when your company expects to build in each period
- BOM -> product structure: list of all subassemblies, cmponents and raw materials needed to manufacture one final product
- Individual item inventory records -> inventory status and planning factors of each item -> check if theres enough inventory or needs replenishment
projected available and planned orders
scheduled receipts
projected available: the inventory balance projected into the future
period by period projection of how much inventory should be available
equals the beginning inventory + replenishment orders due - gross requirements for that period
planned orders: suggested order quantities release dates, and due dates created by an MRP system
needed when we do not have enough inventory to cover the gross requirements for a period
gross requirements for a component or child is determined in th eplanned order of the parent of child
scheduled receipts: replensihment orders that have been placed but not yet received
Bill of materials
Product structure tree
End item
BOM - lists the subassemblies, intermediate assemblies, component parts, raw materials and quantities of each needed to produce one final product -> parent child structure
- manufacturers follow the BOM precisely
Product structure tree - visually represents the BOM for a product, clearly defines parent child
End item-> product sold as a completed item or repair part to customer
Parent item
any end item made from one or more components
Ex: CD cabinet
parent item: CD cabinet
components: cabinet door, shelves, cabinet left side
time-phased
gross requirements
- expressing future demand, supply and inventories by time period
- the total-period demand for an item
lot size rules
Fixed order quantity -> ordee same quantiy each time
Lot for lot -> order jus enough for next period , minimizes company’s inventory investment and maximizes ordering cost
Period order quantity -> order enough tto satisfy requirements for the next n period
