Enterprise Resource

Planning
Functioning
--Satish Chinchorkar

Historical Perspective
ERP- Enterprise
Resource Planning
MRP II Manufacturing
Resource Planning
MRP-I Material
Requirements
Planning

Hierarchy of Production Decisions

F o re c a s t o f d e m a n d

A g g r e g a t e P la n

M a s t e r P r o d u c t io n S c h e d u le

M a te r ia l R e q u ir e m e n t s P la n n in g S y s t e m

D e t a ile d J o b S h o p S c h e d u le

Strategies

Level production

Pure Strategies for the

Informal Approach

Matching Demand
Level Capacity

Buffering with inventory

Buffering with backlog
Buffering with overtime or subcontracting

Level production strategy

Period

Sales
Foreca
st (kg)

Production
plan (kg)

Inventory (kg)

Spring

80 000,00

100 000,00

20 000,00

Summer

50 000,00

100 000,00

100 000+20 000-50 000=70

000,00

Fall

120 000,00

100 000,00

100 000+70 000- 120 000=50

000,00

Winter

150 000,00

100 000,00

100 000 +50 000+150 000 =00

Hiring cost/worker

Firing cost/worker

100,00
500,00

Production cost/kg

2,00

Inventory carrying
cost /kg

0,50

Production
cost/kg/worker/quarte
r
Production capapcity of
one worker

Beginning
force
Russell work
& Taylor
(workers)
Operations Management

Sixth Edition , p.586-595

1000,00
100,00

400 000,00

140 000,00

Chase demand

The Planning Process

Production
Capacity
Inventory

Marketing
Customer
demand

Procurement
Supplier
performance

Management
Return on
investment
Capital

Finance
Cash flow

Human resources
Manpower
planning

Aggregate
productio
n plan

Master
production
schedule

Engineering
Design
completion

Change
productio
n plan?

The Planning Process

Change
requirements
?
Change
capacity?

Master
production
schedule

Change
master
productio
n
schedule
?

Material
requirements
plan
Capacity
requirements
plan

No

Realistic?
Yes
Execute
capacity plans
Execute
material plans

Is
capacity
plan
being
met?

Is
execution
meeting
the plan?

Aggregate Production Plan

Months
Aggregate Production Plan
(Shows the total
quantity of amplifiers)

January
1,500

February
1,200

Weeks
1
2
3
4
5
6
7
8
Master Production Schedule
(Shows the specific type and
quantity of amplifier to be
produced
240-watt amplifier
100
100
100
100
150-watt amplifier
500
500
450
450
75-watt amplifier
300
100

Independent and Dependent

Demand
Independent Demand
Dependent Demand

C(2)

B(4)

D(2)

E(1)

D(3)

F(2)

Independent demand is uncertain.

Dependent demand is certain.

MRP Inputs

MRP Processing

MRP Outputs
Changes
Order releases

Master
schedule

Planned-order
schedules
Primary
reports

Bill of
materials

Inventory
records

Exception reports

MRP computer Secondary

programs
reports

Planning reports
Performancecontrol
reports

Inventory
transaction

Product tree vs. indented parts

list

Product tree
Shutter

Frame(2)
D(1)

E(3)

Level 0

Wood-Section(4)
D(2)

Level 1

F(1) G(3)Level 2

Example MRP

MRP Predictions

For 100 numbers of shutters in 4th Week

Total 320 number of frames need to load in
1st week
Total 350 numbers of wood-sections need to
load in 2nd week
and so on.

MPS As a Basis
of Communication
Master production schedule linkages

Example: Rough-Cut
Capacity Planning
Texprint Company makes a line of
computer printers on a produce-to-stock
basis for other computer manufacturers.
Each printer requires an average of 24
labor-hours. The plant uses a backlog of
orders to allow a level-capacity aggregate
plan. This plan provides a weekly capacity
of 5,000 labor-hours.
Texprints rough-draft of an MPS for its
printers is shown on the next slide. Does
enough capacity exist to execute the MPS?
If not, what changes do you recommend?

Example: Rough-Cut
Capacity Planning
WEEK
1
PRODUCTION

100 200 200 250 280

TOTAL
1030

LOAD

240048004800 6000 6720 24720

CAPACITY

500050005000 5000 5000 25000

UNDER or OVER LOAD

2600 200 200 1000 1720

280

Capacity Management

Forward and Backward

Scheduling

Forward Scheduling starts processing

immediately when a job is received
Backward Scheduling begin scheduling the jobs
last activity so that the job is finished on due date

Summary: How does MRP

work?
Material Requirements Planning
Production
Assembly
Customer

Production
Assembly
Production

Units are PUSHED forward according to the

plan!

What about JIT/Lean

Production?
Production
Assembly
Production

Customer
Assembly

Production

Units are PULLED forward only when

needed!

Push/Pull Decoupling Point

Material Requirements Planning

Hamburg
er Patties
Forecast
Chicken
Patties

Cheeseburg
er
Hamburg
er
Chicken
Sandwich

Units are PUSHED forward to a certain point.

Final configuration (PULL) occurs only when
the actual customer demand occurs.

Q&

THANK YOU
For Participation in
Enterprise Resource Planning Functioning
By
Satish Chinchorkar
chinchorkar@gmail.com 98224 06187