To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Chapter 15 - Resource Planning

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Demand Patterns

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Demand Patterns |||||||||| 1510 Day 2000 — 1500 — 1000 — 500 — 0 Bicycles Rims 2000 — 1500 — 1000 — 500 — 0 |||||||||| 1510 Day Figure 15.1 (a) (b)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Demand Patterns |||||||||| 1510 Day 2000 — 1500 — 1000 — 500 — 0 Bicycles Reorder point Figure 15.1 Rims 2000 — 1500 — 1000 — 500 — 0 |||||||||| 1510 Day (a) (b)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Demand Patterns 2000 — 1500 — 1000 — 500 — 0 Rims 2000 — 1500 — 1000 — 500 — 0 |||||||||| 1510 Day |||||||||| 1510 Day Order 1000 on day 3 Bicycles Reorder point Figure 15.1 (a) (b)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Demand Patterns 2000 — 1500 — 1000 — 500 — 0 |||||||||| 1510 Day Order 1000 on day 3 Bicycles Reorder point Figure 15.1 (a) (b) Rims 2000 — 1500 — 1000 — 500 — 0 |||||||||| 1510 Day

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP - history Prior to MRP and before computers dominated the industry, reorder- point/reorder-quantity (ROP/ROQ) type methods like EOQ had been used in manufacturing and inventory management. In the 1960s, Joseph Orlicky, a former IBM employee developed Material Requirements Planning (MRP). By 1975, MRP was implemented in 150 companies. This number had grown to about 8,000 by In the 1980s, Orlicky's MRP evolved into Oliver Wight's Manufacturing Resource Planning (MRP II), which brings Master Scheduling, Capacity Requirements Planning and other concepts to classical MRP. In the 80´s the American Production and Inventory Control Society (APICS) helped to spread the MRP/MRPII concepts. By 1989, about one third of the software industry was MRP II software sold to American industry ($1.2 billion worth of software).

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Material Requirements Plan Inputs Figure 15.2 Bills of materials Engineering and process designs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Material Requirements Plan Inputs Figure 15.2 Inventory transactions Inventory records Bills of materials Engineering and process designs Other sources of demand Authorized master production schedule

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Material Requirements Plan Explosion Figure 15.2 Inventory transactions Inventory records Bills of materials Engineering and process designs MRPexplosion Other sources of demand Authorized master production schedule

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Material Requirements Plan Output Figure 15.2 Inventory transactions Inventory records Bills of materials Engineering and process designs Material requirements plan MRPexplosion Other sources of demand Authorized master production schedule

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Bill of Materials Figure 15.3 Seat cushion Seat-frame boards Front legs A Ladder-back chair Back legs Leg supports Back slats

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Bill of Materials Figure 15.3 Back slatsSeat cushion Seat-frame boards Leg supports Front legs Back legs A Ladder-back chair J (4) Seat-frame boards C (1) Seat subassembly D (2) Front legs B (1) Ladder-back subassembly E (4) Leg supports ALadder-backchair I (1) Seat cushion H (1) Seat frame G (4) Back slats F (2) Back legs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Master Production Schedule 200 Ladder-back chair Kitchen chair Desk chair 12 AprilMay Aggregate production plan for chair family 670 Figure 15.4

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 15.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 15.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is – 150

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 15.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is – 150 = 117 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 15.6 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 15.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t Scheduled or planned receipts in week t =+–

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Inventory Record Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week – 3 –153–273–273 Figure 15.5 Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t Scheduled or planned receipts in week t =+–

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week –3 – 3 –153 – 273 Planned Orders Figure 15.6 Explanation: Without a new order in week 4, there will be a shortage of three units: – 120 = – 3 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6 Explanation: Adding the planned receipt brings the balance to – 120 = 227 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6 Explanation: Adding the planned receipt brings the balance to – 120 = 227 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6 Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6 Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week –43 Planned Orders Figure 15.6 Explanation: The first planned order lasts until week 7, when projected inventory would drop to – 43.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6 Explanation: 230 Adding the second planned receipt brings the balance to – 120 = 187.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6 Explanation: 230 Adding the second planned receipt brings the balance to – 120 =

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Planned Orders Figure 15.6 Explanation: The corresponding planned order release is for week 5.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Planned Orders Figure 15.6 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week POQ lot size Gross requirements for weeks 4, 5, and 6 Inventory at end of week 3 = –

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( )

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units 153

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units 153

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 117 = 153 units

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week ( ) – 0 = 120 units

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules — POQ Figure 15.7

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week L4L lot size Gross requirements in week 4 Inventory balance at end of week 3 = –

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules—L4L Figure 15.8

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rule Comparison  The FOQ rule generates high average inventory because it creates remnants.  The POQ rule reduces average on-hand inventory because it does a better job of matching order quantity to requirements.  The L4L rule minimizes inventory investment but maximizes the number of orders placed.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP Outputs Figure MRP explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP Outputs Figure Material requirements plan Action notices  Releasing new orders  Adjusting due dates Priority reports  Dispatch lists  Supplier schedules Capacity reports  Capacity requirements planning  Finite capacity scheduling  Input-output control MRP explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP Outputs Figure Material requirements plan Action notices  Releasing new orders  Adjusting due dates Priority reports  Dispatch lists  Supplier schedules Capacity reports  Capacity requirements planning  Finite capacity scheduling  Input-output control MRP explosion Routings and time standards

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP Outputs Material requirements plan Action notices  Releasing new orders  Adjusting due dates Priority reports  Dispatch lists  Supplier schedules Capacity reports  Capacity requirements planning  Finite capacity scheduling  Input-output control Figure MRP explosion Manufacturing resources plan Performance reports Routings and time standards

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP Outputs Material requirements plan Action notices  Releasing new orders  Adjusting due dates Priority reports  Dispatch lists  Supplier schedules Capacity reports  Capacity requirements planning  Finite capacity scheduling  Input-output control Figure MRP explosion Manufacturing resources plan Performance reports Cost and price data Routings and time standards

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Bill of Materials Figure C (1) Seat subassembly H (1) Seat frame J (4) Seat-frame boards I (1) Seat cushion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP Explosion Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week Figure 15.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Figure Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week MRP Explosion Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Figure 15.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Usage quantity: 1 MRP Explosion Figure 15.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Usage quantity: 1 MRP Explosion Figure 15.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Planned receipts Planned order releases Week Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week MRP Explosion Figure 15.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week MRP Explosion Figure 15.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week Gross requirements Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week Gross requirements Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Usage quantity: 4 Figure MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Planned receipts Planned order releases Week Gross requirements Scheduled receipts Planned receipts Planned order releases 200 Week Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Solved Problem 1 Figure LT = 2LT = 3 A B (3) C (1) LT = 1 G (1) LT = 3LT = 6 LT = 3 LT = 1 D (1) E (2)F (1) If there is no existing inventory, how many units of G, E and D must be purchased to produce 5 units of item A?

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Figure A B (1)C (2) D (1) LT = 2 LT = 1LT = 2 LT = 3 Inventory Record Data ITEM DATA CATEGORYBCD Lot-sizing rulePOQ (P=3)L4LFOQ = 500 units Lead time1 week2 weeks3 weeks Scheduled receiptsNone200 (week 1)None Beginning (on-hand) inventory The MPS for product A calls for the assembly dept to begin final assembly according to the following schedule: 100 units in week 2; 200 in week 4; 120 in week 6; 180 in week 7; and 60 units in week 8. develop a MRP for the next 8 weeks for items B, C and D, identifying any action notices that would be provided. The BOM for A is shown in Figure 15.20, and data for the inventory records are shown in the below Table.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Item: B Lot size: POQ (P = 3) Description:Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 20 Week Figure

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Item: C Lot size: L4L Description:Lead time: 2 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week Figure 15.21

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Solved Problem 2 Figure Item: D Lot size: FOQ = 500 units Description:Lead time: 3 weeks Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 425 Week

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Action Notice

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Action Notice Item: Seat frame Lot size: 230 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Figure 15.13

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Action Notice Item: Seat frame Lot size: 230 units Lead time: 1 week Gross requirements Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week Action to be taken: Stockout projected for week 1. Reschedule open order in week 2 to week 1. Figure 15.13

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved.

Capacity Requirements

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Capacity Requirements Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure 15.14

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Capacity Requirements Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure 15.14

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Capacity Requirements Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure lathes, 2 shifts per day Actual hours of the scheduled receipts

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Capacity Requirements Explanation: Projected capacity requirements exceed weekly hours of capacity. Date:Week: 32 Plant 01 Dept. 03: Lathe Station Capacity: 320 hours per week Week Planned hours Actual hours Total hours Figure 15.14

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation Planned Actual Cumulative deviation Inputs Outputs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation– 15– 10– Planned Actual Cumulative deviation– 5–- 10– 20– 32 Inputs Outputs

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation– 15– 10– Planned Actual Cumulative deviation– 5– 10– 20– 32 Inputs Outputs Explanation: Cumulative deviations between – 25 hours and + 25 hours are allowed.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Input-Output Report Figure Workstation: Rough MillWeek: 32 Tolerance:  25 hours Week Ending Planned Actual Cumulative deviation– 15– 10– Planned Actual Cumulative deviation– 5– 10– 20– 32 Inputs Outputs Explanation: Cumulative deviation exceeds lower tolerance limit, indicating actual hours of output have fallen too far below planned hours of output and some action is required. Explanation: Cumulative deviations between – 25 hours and + 25 hours are allowed. Insufficient input or capacity

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP II Inventory records Inventory transactions Bills of materials Routings Time standards MRPexplosion Master production schedule Customer ordersForecasts Figure 15.16

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP II Figure Material requirements plan Inventory records Inventory transactions Bills of materials Routings Time standards MRPexplosion Master production schedule Customer ordersForecasts

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP II Figure Material requirements plan Inventory records Inventory transactions Bills of materials Routings Time standards MRPexplosion Master production schedule Manufacturing resource plan Cost and financial data Customer ordersForecasts

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. MRP II Figure Material requirements plan Inventory records Inventory transactions Bills of materials Routings Time standards MRPexplosion Master production schedule Manufacturing resource plan Cost and financial data Purchasing reports Financial/ accounting reports Sales and marketing reports Human resource reports Manufacturing reports Customer ordersForecasts

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Distribution Requirements Planning Retail stores Figure 15.17

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Distribution Requirements Planning Retail stores Distribution centers Figure 15.17

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Distribution Requirements Planning Retail stores Distribution centers Plants Figure 15.17

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. DC 1 DC 2 DC 3 Direct sale PLANT requests goods

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved.... DRP Nationwide Warehouses MPS A C E D(2) E(2)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Sales & Operations Management MPSMPS MRPMRP Supplier Management DRPDRP SupplierSupplier Demand management DRPDRP ClientsClients Front end Engine Back end

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved.

Purchase Orders MRP MPS DRP Sales/Marketing Plan

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Raw material Producer Wholesaler Distributor Wholesaler Distributor Retailer / Distributor Final Customer MRP/MRP II DRP Logístic DRP in the Supplying Chain

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Warehouse and Materials Management Shipments to clients Plants and Suppliers Internal Transport ExternalTransportExternalTransport VendorsVendors DemandDemand Shipments to Distribution center DRPDRP

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. DRP EXAMPLE A plant located in Itajubá (MG) supplies three major regions, Rio, São Paulo and Minas Gerais. In order to accomplish taht the plant has warehouses in the cities of Rio de Janeiro, Belo Horizonte and São Paulo. The tables below provides their demands, with the outlet Itajubá plant demand.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved.

Bill of Resources Figure (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Postoperative care (Testing) Level 5 Surgery Level 6 Postoperative care (Angiogram)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Bill of Resources Level 6 Postoperative care (Angiogram) Figure (b) (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Postoperative care (Testing) Level 5 Surgery Level 6 Postoperative care (Angiogram)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Bill of Resources Level 6 Postoperative care (Angiogram) Figure (b) (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Postoperative care (Testing) Level 5 Surgery Level 6 Postoperative care (Angiogram)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Sixth Edition © 2002 Prentice Hall, Inc. All rights reserved. Bill of Resources Figure (a) Level 1 Discharge Level 2 Intermediate care Level 3 Postoperative care (Step down) Level 4 Postoperative care (Intensive) Level 7 Preoperative care (Testing) Level 5 Surgery Level 6 Preoperative care (Angiogram) Nurse (6 hr) MD (1 hr) Therapy (1 hr) Bed (24 hr) Lab (3 tests) Kitchen (1 meal) Pharmacy (10 medicines) (b) Level 6 Preoperative care (Angiogram)