Lecture Fundamentals of operations management (4/e): Chapter 22 - Davis, Aquilano, Chase

Chapter 17 Inventory systems for dependent demand, after studying this chapter you will be able to: Explain the changing role of materials requirements planning (MRP) within a manufacturing organization, discuss the role of MRP within an enterprise resource planning (ERP) system, introduce the fundamental concepts and calculations that drive an MRP system,...

Inventory Systems for Dependent Demand

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chapter 17

DAVIS AQUILANO CHASE

PowerPoint Presentation by Charlie Cook

Management 4e 

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Management 4e 

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17–4

Master Production Schedule

Master Production Schedule

• Master Production Schedule (MPS)

–A time-phased production plan that specifies

how many of, and when to build, each end item.

• Material Requirements Planning

–Determines the number of subassemblies,

components, and raw materials required and their build dates to complete a given number of end products by a specific date.

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17–5

The Role of MRP within the Manufacturing Function

The Role of MRP within the Manufacturing Function

Exhibit 17.1

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17–6

The Role of MRP within an ERP System

The Role of MRP within an ERP System

Exhibit 17.2

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17–7

Master Production Schedule

Master Production Schedule

• Time Fences

–Periods of time with each period having some

specified level of opportunity for the customer

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17–8

Integrating MRP and JIT into the Supply Chain

Integrating MRP and JIT into the Supply Chain

Exhibit 17.3

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Master Production Schedule Time Fences

Master Production Schedule Time Fences

Exhibit 17.4

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• Materials Requirements Planning System

–Creates requirements and schedules identifying

the parts, components, and materials necessary

to produce the end products specified in the

MPS.

–Links inventory and scheduling systems.

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• Assign Operating Priorities

–Order with the right due date and keep the due

date valid.

• Capacity

–Plan for a complete and accurate load.

–Plan for an adequate time to view future load.

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Inventory Management Under MRP

Inventory Management Under MRP

• Theme

–Getting the right materials to the right place at

the right time.

• Objectives

–Improve customer service.

–Minimize inventory investment.

–Maximize production operating efficiency.

• Philosophy

–Expedite materials if overall production

schedule will be delayed.

–De-expedite materials if schedule falls behind.

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Benefits of an MRP System

Benefits of an MRP System

• More competitive pricing

• Lower selling price

• Lower inventory levels

• Improved customer service

• Faster response to market demands

• Increased flexibility to change the master

schedule

• Reduced setup and tear-down costs

• Reduced idle time

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Industry Application and Expected Results

Industry Application and Expected Results

Exhibit 17.5

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–Demand for spare parts and supplies

• Bill of Material (BOM) File

–A list of subassemblies, components, and raw

materials, and their respective quantities

required to produce specific end items

–Also, product structure or product tree file

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17–16

MRP System Structure

MRP System Structure

• Inventory Records File

–Computerized record-keeping system for the

inventory status of all subassemblies,

components, and raw materials.

–Peg record file (also “where-used file”)

–Inventory transaction file

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Product Structure Tree for Product A

Product Structure Tree for Product A

Exhibit 17.7

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Subassemblies and Parts List in an Indented Format and in a Single­Level List

Subassemblies and Parts List in an Indented Format and in a Single­Level List

Exhibit 17.8

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Part L Hierarchy in (a) Expanded to the Lowest Level of Each Item in (b)

Part L Hierarchy in (a) Expanded to the Lowest Level of Each Item in (b)

Exhibit 17.9

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• Order release notices

• Changes in due dates

• Cancellations or suspensions of open orders

• Inventory status data

–Secondary reports

• Planning reports

• Performance reports

• Exceptions reports

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Product Structure Tree for Product T

Product Structure Tree for Product T

Exhibit 17.11

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The Environment of the Master Scheduler

The Environment of the Master Scheduler

Exhibit 17.13

Source: Romeyn C Everdell and Woodrow W Chamberlain, “Master

Scheduling in a Multi-Plant Environment,” Proceedings of the American

Production and Inventory Control Society (1980), p 421.

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The Aggregate Plan and the Master Production Schedule for Mattresses

The Aggregate Plan and the Master Production Schedule for Mattresses

Exhibit 17.14

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CRP: Workload for Work Center

CRP: Workload for Work Center

Exhibit 17.15

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Scheduled Workload for Work Center A

Scheduled Workload for Work Center A

Exhibit 17.16

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–Advanced MRP system that takes into

consideration the equipment capacities and

other resources associated with a

manufacturing facility.

• Sales and Operations Planning (S&OP)

–Extends MRP by aligning customer demand with

both in-house and supplier resources.

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Lot Sizing in MRP Systems

Lot Sizing in MRP Systems

• Lot Sizing

–Lot sizes are the part quantities issued in the

planned order receipt and the planned order release sections of an MRP schedule.

• Lot-Sizing Techniques

–Lot-for-lot

–Economic order quantity (EOQ)

–Least total costs

–Least unit cost

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