1. Chapter 15 - Material & Capacity Requirements Planning(MRP/CRP)

2. Planning Objectives Satisfy customer demand
Ensure availability and efficient use of resources
Material
Capacity
KEY - Balance demand and resources

3. 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

4. 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.

5. MRP’s Objectives What to Order How Much to Order When to Order
When to Schedule Delivery

6. MRP Overview MRP Inputs MRP Processing MRP Outputs Changes
Order releases
Master
schedule
Planned-order
schedules
Primary
reports
Exception reports
Planning reports
Performance-
control
reports
Bill of
materials
file
MRP computer
programs
Secondary
reports
Inventory
records
file
Inventory
transaction

7. 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

8. 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, it’s necessary to do capacity requirements planning (CRP)

9. 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

10. Capacity Requirements Planning
MRP planned
order
releases
Capacity
requirements
planning
Open
orders
file
Routing
file
Load profile for
each machine center
© 1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e Ch

11. Capacity Requirements Planning - Initial Load Profile
Hours of
capacity
Normal
capacity
Time (weeks)
© 1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e Ch

12. Capacity Requirements Planning - Adjusted Profile
Work an
extra shift
Hours of
capacity
Overtime
Push back
Pull ahead
Push back
Time (weeks)
© 1998 by Prentice-Hall Inc
Russell/Taylor Oper Mgt 2/e Ch

13. 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.

14. 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.

15. 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

16. Chapter 16 - Just-In-Time

17. 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”

18. 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

19. JIT vs. MRP/ERP Similar goals MRP II JIT
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

20. JIT Characteristics A Fixed, Steady Rate of Production Low Inventories
Uniform flow
Linear production
Low Inventories
Less space, investment
Uncover defects
Small Lot Sizes
Less WIP
Flexibility/Velocity
Fast feedback

21. JIT Characteristics Quick, Low Cost Setups Layout
Flexibility/Velocity
Small lot sizes
Layout
U-shaped
Cellular
Preventive Maintenance & Repair
Worker pride/ownership

22. 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

23. JIT Characteristics Reliable Vendors A Pull System of Moving Goods
Dock-to-stock
Much smaller number
Long-term relationships
A Pull System of Moving Goods
Request-based
Kanban signal
Problem Solving/Continuous Improvement