w Material/Manufacturing Requirements

Planning (MRP I &II)

w Capacity Requirements Planning (CRP)
w Enterprise Resource Planning (ERP)
Resource
Planning for
Manufacturing

Brings functions,
resources and
processes
together to meet
customer needs
 Material/Manufacturing
Requirements
Planning (MRP I & II)
w Computerized inventory control and
production planning system
w When to use MRP?
n Dependent demand items
n Discrete demand items
n Complex products
n Job shop production
n Assemble-to-order environments
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 Master
production
schedule

Product Material Item

structure requirements master
file planning file

Planned
order
releases

Work Purchase Rescheduling

orders orders notices
w Quantities represent end items that may or
may not be finished products
 Product Structure
Clipboard

Top clip (1) Bottom clip (1)

Pivot (1) Spring (1)

Rivets (2)
Finished clipboard Pressboard (1)
 Clipboard

Pressboard Clip Ass’y Rivets

(1) (1) (2)

Top Clip Bottom Clip Pivot Spring

(1) (1) (1) (1)
w Time-phased bills
n an assembly chart shown against a time scale
 X10
Automobile

Engines Exterior color Interior Interior color Body

(1 of 3) (1 of 8) (1 of 3) (1 of 8) (1 of 4)
 Time-phased Bills

Forward scheduling: start at today‘s date and schedule forward to determine

the earliest date the job can be finished. If each item takes one period to
complete, the clipboards can be finished in three periods
Backward scheduling: start at the due date and schedule backwards to
determine when to begin work. If an order for clipboards is due by period three,
we should start production now
 Clipboard

Pressboard Clip Ass’y Rivets

(1) (1) (2)

Lapdesk

Pressboard Trim Beanbag Glue

(2) (3’) (1) (4 oz)
Lot Sizing in MRP Systems

w Lot-for-lot ordering policy

w Fixed-size lot ordering policy
n Minimum order quantities
n Maximum order quantities
n Multiple order quantities
n Economic order quantity
n Periodic order quantity
Advanced Lot Sizing Rules: L4L

Total cost of L4L = No. of time order placed X Co

+ on hand inventory during periods 1-5 X Cc
= (4 X $60) + (0 X $1) = $240
 Advanced Lot Sizing Rules: EOQ

2 d Co
EOQ 
Cc
2(30)(60
EO Q   60 minimum order quantity
1

Total cost of EOQ = (2 X $60) + [(10 + 50 + 40) X $1)] = $220

 Advanced Lot Sizing Rules: POQ

POQ  EOQ / d  60 / 30  2 periods worth of requirements

Total cost of POQ = (2 X $60) + (20 X $1) = $180

w Creates a load profile
w Identifies under-loads and over-loads
w Inputs
n Planned order releases
n Routing file
n Open orders file
 MRP planned
order
releases

Capacity Open
Routing
requirements orders
file
planning file

Load profile for

each machine center
1. Eliminating unnecessary requirements
2. Rerouting jobs to alternative machines,
workers, or work centers
3. Splitting lots between two or more machines
4. Increasing normal capacity
5. Subcontracting
6. Increasing efficiency of the operation
7. Pushing work back to later time periods
8. Revising master schedule
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– Work
an
– extra
– shift
Overtime
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Enterprise Resource Planning
(ERP) (Reading Assignment)
w Software that organizes and manages
a company’s business processes by
n sharing information across functional
areas
n integrating business processes
n facilitating customer interaction
n providing benefit to global companies
Modern ERP systems allow relaxation of some
assumptions in MRP systems e.g.
w Material is not always the most constraining resource
w Lead times can vary
w Not every transaction needs to be recorded
w Shop floor may require a more sophisticated
scheduling system
w Scheduling in advance may not be appropriate for on-
demand production.
 Organizational Data Flows

Source: Adapted from Joseph Brady, Ellen Monk, and Bret Wagner, Concepts in
Enterprise Resource Planning (Boston: Course Technology, 2001), pp. 7–12
Selected Enterprise
Software Vendors
 ERP Implementation

w Analyze business processes

w Choose modules to implement

w Align level of sophistication

w Finalize delivery and access
w Link with external partners
 Customer Relationship
Management (CRM)

w Software that
n Plans and executes business processes