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F O U R T H E D I T I O N Inventory Systems for Dependent Demand © The McGraw-Hill Companies, Inc., 2003 chapter 17 DAVIS AQUILANO CHASE PowerPoint Presentation.

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Presentation on theme: "F O U R T H E D I T I O N Inventory Systems for Dependent Demand © The McGraw-Hill Companies, Inc., 2003 chapter 17 DAVIS AQUILANO CHASE PowerPoint Presentation."— Presentation transcript:

1 F O U R T H E D I T I O N Inventory Systems for Dependent Demand © The McGraw-Hill Companies, Inc., 2003 chapter 17 DAVIS AQUILANO CHASE PowerPoint Presentation by Charlie Cook

2 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –2 Chapter Objectives 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. Define the various elements that make up an MRP system. Demonstrate how MRP-related systems are used in service operations.

3 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –3 Chapter Objectives (contd) Recognize that MRP and JIT can be used together within an organization.

4 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –4 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.

5 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –5 The Role of MRP within the Manufacturing Function Exhibit 17.1

6 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –6 The Role of MRP within an ERP System Exhibit 17.2

7 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –7 Master Production Schedule Time Fences –Periods of time with each period having some specified level of opportunity for the customer to make changes. –Frozen Make no or only insignificant changes to products. –Moderately firm Allow some changes in specific products. –Flexible Allow almost any variation in products.

8 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –8 Integrating MRP and JIT into the Supply Chain Exhibit 17.3

9 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –9 Master Production Schedule Time Fences Exhibit 17.4

10 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –10 Material Requirements Planning (MRP) Systems 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.

11 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –11 Purposes, Objectives, and Philosophy of MRP Inventory Control –Order the right part in the right quantity at the right time. 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.

12 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –12 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.

13 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –13 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

14 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –14 Industry Application and Expected Results Exhibit 17.5

15 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –15 MRP System Structure Demand for Products –Available-to-promise –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

16 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –16 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

17 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –17 Overall View of the Inputs to a Standard MRP Program and the Reports Generated by the Program Exhibit 17.6

18 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –18 Product Structure Tree for Product A Exhibit 17.7

19 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –19 Subassemblies and Parts List in an Indented Format and in a Single-Level List Exhibit 17.8

20 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –20 Part L Hierarchy in (a) Expanded to the Lowest Level of Each Item in (b) Exhibit 17.9

21 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –21 The Inventory Status Record for an Item in Inventory Exhibit 17.10

22 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –22 MRP Computer Program Output Reports –Primary reports Planned orders Order release notices Changes in due dates Cancellations or suspensions of open orders Inventory status data –Secondary reports Planning reports Performance reports Exceptions reports

23 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –23 Product Structure Tree for Product T Exhibit 17.11

24 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –24 Materials Requirements Plan for Completing 100 units of Product T in Period 8 Exhibit 17.12

25 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –25 The Environment of the Master Scheduler Exhibit 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.

26 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –26 The Aggregate Plan and the Master Production Schedule for Mattresses Exhibit 17.14

27 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –27 CRP: Workload for Work Center Exhibit 17.15

28 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –28 Scheduled Workload for Work Center A Exhibit 17.16

29 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –29 Manufacturing Resource Planning (MRP II) MRP II –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.

30 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –30 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

31 Fundamentals of Operations Management 4e© The McGraw-Hill Companies, Inc., –31 Lot-for-Lot Method of Determining Production Quantities Exhibit 17.17


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