Chapter 15 - Material & Capacity

Requirements Planning(MRP/CRP)

Planning Objectives
Satisfy customer demand
Ensure availability and efficient use of
resources
Material
Capacity

KEY - Balance demand and resources
Planning and Control System
Questions
What are we going to make, and when?
What does it take to make it?
What do we already have?
What must we get, and when?

Successful answers result in right:
goods, quantity, quality, time, cost
Types of Resource Planning
Systems
Material Requirements Planning (MRP) -
A set of techniques that uses bill of material
data, inventory data, and the master production
schedule to calculate time-phased requirements
for materials. Recommends release of
replenishment orders and rescheduling of open
orders as conditions (priorities) change.
APICS Dictionary - 9th Ed.
MRPs Objectives
What to Order
How Much to Order
When to Order
When to Schedule Delivery
MRP Overview
MRP Inputs MRP Processing MRP Outputs
Master
schedule
Bill of
materials
file
Inventory
records
file
MRP computer
programs
Changes
Order releases
Planned-order
schedules
Exception reports
Planning reports
Performance-
control
reports
Inventory
transaction
Primary
reports
Secondary
reports
Material Requirements Planning
Inputs
Master schedule: States which end items to produce,
when, and in what quantities.
Bill of materials: Raw materials, parts, subassemblies,
and assemblies needed to produce one unit of a product
(Single vs. multiple level).
Product structure tree: Visual depiction of a bill of
materials, with all components listed by levels
Inventory status/transactions: Location, quantity,
ins, outs, picks, changes.
Planning Factors: Lead time, scrap allowance, yield
factors, lot sizes, safety stock/safety lead time
Material Requirements Planning
A Final Point
MRP focuses on materials ONLY and
DOES NOT guarantee that the plan
can be implemented from a
capacity/resource perspective. To
close the loop, its necessary to do
capacity requirements planning (CRP)

Capacity Requirements Planning
The process of determining short-
range capacity requirements from
MRP outputs
Load reports/profiles show known and
expected future capacity requirements
vs. expected capacity availability

Ch 13 - 28
1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e
Capacity Requirements Planning
MRP planned
order
releases
Routing
file
Capacity
requirements
planning
Open
orders
file
Load profile for
each machine center
Ch 13 - 31
1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e
Capacity Requirements
Planning - Initial Load Profile
1 2 3 4 5 6
Time (weeks)
Normal
capacity
Hours of
capacity
Ch 13 - 32
1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e
Capacity Requirements Planning
- Adjusted Profile
1 2 3 4 5 6
Time (weeks)
Work an
extra shift
Push back
Push back
Pull ahead
Overtime
Hours of
capacity
Types of Resource Planning
Systems
Manufacturing Resource Planning (MRP II)
A method for the effective planning of all
resources of a manufacturing company.
Provides simulation capability to answer what-
if capability and is made up of a variety of
planning functions, each linked together.
Output from these functions is linked with other
business functions and financial reports. An
extension of MRP.
Modified from APICS Dictionary - 9th Ed.
Types of Resource Planning
Systems
Enterprise Resource Planning (ERP)
A method for the effective planning and control
of all resources needed to take, make, ship, and
account for customer orders. Differs from
typical MRP II in technical requirements such
as graphical user interface, relational database,
4GL languages, client-server architecture and
open-system portability (Example SAP R/3)
Modified from APICS Dictionary - 9th Ed.
Trends in Resource Planning
Systems
More powerful/sophisticated
More encompassing
More integrated/flexible
More options
More user-friendly/robust
More data-base focused
More data-intense


Chapter 16 - Just-In-Time

JIT/Lean Production
Just-in-time: Repetitive production system
in which processing and movement of
materials and goods occur just as they are
needed, usually in small batches
JIT is characteristic of lean
production systems
JIT operates with very little fat
Just-In-Time Concepts
jit - Inventory/production control system
JIT - Philosophy of continuous improvement
Simplification/Execution
Elimination of Waste
Reduced transaction processing
Multi-pronged approach
High quality, Quick response, Flexibility
JIT vs. MRP/ERP
Similar goals
Right products, right place, right time
MRP II
Computer-based, manages complexity
JIT
Manual systems, simplicity/execution
The Super Bowl of Planning & Control
Choice? - play to strengths
MRP Planning; JIT - execution
JIT Characteristics
A Fixed, Steady Rate of Production
Uniform flow
Linear production
Low Inventories
Less space, investment
Uncover defects
Small Lot Sizes
Less WIP
Flexibility/Velocity
Fast feedback
JIT Characteristics
Quick, Low Cost Setups
Flexibility/Velocity
Small lot sizes
Layout
U-shaped
Cellular
Preventive Maintenance & Repair
Worker pride/ownership
JIT Characteristics
Multifunctional/Cooperative Workers
Guerilla squad
Flexible capacity
High Quality Levels
On-going production
Small/frequent deliveries
Product simplification
Standardization
Fewer part numbers/drawings
JIT Characteristics
Reliable Vendors
Dock-to-stock
Much smaller number
Long-term relationships
A Pull System of Moving Goods
Request-based
Kanban signal
Problem Solving/Continuous Improvement