MGMT302Chapter 13 Essay

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13

CHAPTER 13
MRP and ERP

McGraw-Hill/Irwin

Operations Management, Eighth Edition, by William J. Stevenson
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights

MRP


Material requirements planning
(MRP): Computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.

Independent and
Independent Demand
Dependent Demand
Dependent Demand

A

C(2)

B(4)

D(2)

E(1)

D(3)

F(2)

Independent demand is uncertain.
Dependent demand is certain.

Dependant Demand


Dependent demand: Demand for items that are subassemblies or component parts to be used in production of finished goods.



Once the independent demand is known, the dependent demand can be determined.

MRP Inputs

MRP Processing

MRP Outputs
Changes
Order releases

Master schedule Planned-order schedules Primary reports Bill of materials Inventory records MRP computer programs Secondary reports Exception reports

Planning reports
Performancecontrol
reports

Inventory transaction MPR Inputs





Master Production Schedule
Time-phased plan specifying timing and quantity of production for each end item.
Material Requirement Planning Process

c u d o Pr e e r
T

t

u r t
S

e r u ct a e L

i
T
d

s e m

Master Schedule
Master schedule: One of three primary inputs in MRP; states which end items are to be produced, when these are needed, and in what quantities.
Cumulative lead time: The sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly. Planning Horizon

Assembly
Subassembly

Fabrication
Procurement

1

2

3

4

5

6

7

8

9

10

Bill-of-Materials
Bill of materials (BOM): One of the

three primary inputs of MRP; a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product.

Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels.

Product Structure Tree
Level
0
1

Chair
Leg
Assembly

2 Legs (2)

3

Cross bar Seat

Back
Assembly

Side Cross
Back
Rails (2) bar Supports (3)

Inventory Records




One of the three primary inputs in
MRP
Includes information on the status of each item by time period







Gross requirements
Scheduled receipts
Amount on hand
Lead times
Lot sizes
And more …

Assembly Time Chart
Procurement of raw material D Fabrication of part E
Subassembly A
Procurement of raw material F
Procurement of part C

Final assembly and inspection

Procurement of part H
Fabrication
of part G

Procurement of raw material I

1

2

3

Subassembly B

4

5

6

7

8

9

10

11

MRP Processing


Gross requirements



Schedule receipts



Projected on hand



Net requirements



Planned-order receipts



Planned-order releases

MPR Processing


Gross requirements




Scheduled receipts




Total expected demand

Open orders scheduled to arrive

Planned on hand


Expected inventory on hand at the beginning of each time period

MPR Processing


Net requirements






Actual amount needed in each time period

Planned-order receipts


Quantity expected to received at the beginning of the period



Offset by lead time

Planned-order releases


Planned amount to order in each time period Updating the System


Regenerative system




Updates MRP records periodically

Net-change system


Updates MPR records continuously

MRP Outputs


Planned orders - schedule indicating the amount and timing of future orders.



Order releases - Authorization for the execution of planned orders.



Changes - revisions of due dates or order quantities, or cancellations of orders. MRP Secondary Reports


Performance-control reports



Planning reports

…