Presentation Transcript
Operations ManagementMaterial Requirements Planning (MRP) & ERP Chapter 14: Operations Management Material Requirements Planning (MRP) & ERP Chapter 14
Outline: Outline 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
Outline - Continued: Outline - Continued MRP MANAGEMENT
MRP Dynamics
MRP and JIT
LOT-SIZING TECHNIQUES
EXTENSIONS IN MRP
Closed-Loop MRP
Capacity Planning
Material Requirements Planning II (MRP II)
MRP IN SERVICES
Outline - Continued: Outline - Continued DISTRIBUTION RESOURCE PLANNING (DRP)
ENTERPRISE RESOURCE PLANNING (ERP)
Advantages and Disadvantages of ERP System
ERP in the Service Sector
Learning Objectives: Learning Objectives When you complete this chapter, you should be able to :
Identify or Define:
Planning bills and kits
Phantom bills
Low-level coding
Lot sizing
Learning Objectives - Continued: Learning Objectives - Continued When you complete this chapter, you should be able to :
Describe or Explain:
Material requirements planning
Distribution requirements planning
Enterprise resource planning
How ERP works
Advantages and disadvantages of ERP systems
Collins Industries: Collins Industries Largest manufacturer of ambulances 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
Collins Industries: Collins Industries Collins requires:
Material plan 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
Requirements for Effective Use of Dependent Demand Inventory Models: Requirements for Effective Use of Dependent Demand Inventory Models Effective use of dependent demand inventory models requires that the operations manager know the:
master production schedule (what is to be made and when)
specifications or bills-of-material (amount of materials and parts required to make the product)
inventory availability
purchase orders outstanding (what is on order)
lead times (time it takes to get various components)
Inputs to the Aggregate Production Plan: Inputs to the Aggregate Production Plan
The Planning Process: The Planning Process
Aggregate Production Plan: Aggregate Production Plan
Typical Focus of the Master Production Schedule: Typical Focus of the Master Production Schedule
Bill-of-Material: 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
A part gets the lowest level code in item structure.
Top level is 0; next level is 1 etc. Bill-of-Material
Product Structure for “Awesome” A: Product Structure for “Awesome” A
Ex: Calculate the Part Requirements: Ex: Calculate the Part Requirements For an order size of 50 A items:
#Part B=2(#A)=(2)(50)=100
#Part C=3(#A)=(3)(50)=150
#Part E=2(#B)+2(#C)=(2)(100)+2(150)=500
#Part F=2(#C)=(2)(150)=300
#Part D=2(#B)+2(#F)=(2)(100)+2(300)=800
#Part G=1(#F)=300
Issues in MRP:Accurate Inventory Records: Issues in MRP: Accurate Inventory Records Good inventory management is an absolute necessity for an MRP system to work, i.e., one needs to know what is in stock.
If the firm has not yet received at least 99% record accuracy, then MRP will not work.
Issues in MRP:Purchase Orders Outstanding: Issues in MRP: Purchase Orders Outstanding When purchase orders are executed, records of those orders and their scheduled delivery dates must be available to production personnel.
Issues in MRP:Lead Times: Issues in MRP: Lead Times The time required to acquire an item is the lead time
Lead time of a manufactured item consists of move, setup, assembly or run times.
Lead time of a purchased item includes the time between order release and its retreival.
Time-Phased Product Structure for Awesome Speakers: Time-Phased Product Structure for Awesome Speakers
Material Requirements Planning (MRP): Manufacturing computer information system
Determines quantity & timing of dependent demand items © 1995 Corel Corp. Material Requirements Planning (MRP)
MRP Requirements:
Computer system
Mainly discrete products
Accurate bill-of-material
Accurate inventory status
99% inventory accuracy
Stable lead times © 1984-1994 T/Maker Co. MRP Requirements
MRP Benefits: Increased customer satisfaction due to meeting delivery schedules
Faster response to market changes
Improved labor & equipment utilization
Better inventory planning & scheduling
Reduced inventory levels without reduced customer service MRP Benefits
Structure of the MRP System: Structure of the MRP System
Time-Phased Product Structure for Awesome Speakers: Time-Phased Product Structure for Awesome Speakers
Gross Material Requirements Plan for 50 “Awesome A” Speaker Kits: Gross Material Requirements Plan for 50 “Awesome A” Speaker Kits
Net Material Requirements Plan: Net Material Requirements Plan Item Onhand
A 10
B 15
C 20
D 10
E 10
F 5
G 0
Net Requirements Plan: Net Requirements Plan
Net Requirements Plan: Net Requirements Plan
Derivation of Master Schedule: Derivation of Master Schedule Therefore, these are the gross requirements for B Periods
MRP Dynamics: MRP Dynamics Supports “replanning”
Problem with 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
MRP and JIT: MRP and JIT 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
Lot-Sizing Techniques: Lot-Sizing Techniques Lot-for-lot
Economic Order Quantity
Part Period Balancing
Wagner-Whitin Algorithm
MRP Lot-Sizing Problem: Lot-for-Lot Techniques: MRP Lot-Sizing Problem: Lot-for-Lot Techniques
MRP Lot-Sizing Problem: EOQ Technique: MRP Lot-Sizing Problem: EOQ Technique
MRP Lot-Sizing Problem: PPB Technique (omitted): MRP Lot-Sizing Problem: PPB Technique (omitted)
Extensions of MRP: Extensions of MRP Closed loop MRP
Capacity planning - load reports
MRP II - Material Resource Planning
Enterprise Resource Planning
Closed Loop MRP: Closed Loop MRP
Extensions of MRPCapacity Planning: Extensions of MRP Capacity Planning Tactics for smoothing the 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
Initial Resource Requirements/Smoothed Resource Requirements: Initial Resource Requirements/Smoothed Resource Requirements
Extensions to MRPEnterprise Resource Planning: Extensions to MRP Enterprise Resource Planning MRP II with ties to customers and suppliers
MRP and ERP Information Flows, Integrated with Other Systems: MRP and ERP Information Flows, Integrated with Other Systems
MRP in Services: MRP in Services Can be used when 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.
Product Structure, Bill of Materials, Bill of Labor for Veal Picante: Product Structure, Bill of Materials, Bill of Labor for Veal Picante