To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Chapter.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Chapter 16: Resource Planning Some Important things to get out of this chapter:Some Important things to get out of this chapter: –Understand MRP systems – Material Requirements Planning and their role in managing company operations Morphed into Manufacturing Resource Planning (MRP) as part of ERP systemsMorphed into Manufacturing Resource Planning (MRP) as part of ERP systems –MRP is a planning tool that you need to know as most companies use some form of this process to run their business

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bills of materials Engineering and process designs Material Requirements Plan Inputs Figure 16.2 Inventory transactions Inventory records Other sources of demand Authorized master production schedule Material requirements plan MRPexplosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Materials Figure 16.3 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, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Materials – “BOM” Record of the parent-component relationships that make up a total productRecord of the parent-component relationships that make up a total product The BOM also calls out how many components (or sub-components) are requiredThe BOM also calls out how many components (or sub-components) are required Some “BOM” terms:Some “BOM” terms: –Intermediate item: an item that has at least one parent and at least one component –Sub-assembly: an intermediate item that is assembled from more that one component –Purchased item: an item that has one or more parents but no component because it comes directly from a supplier –Part commonality: the degree to which a component has more than 1 intermediate parent

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Materials – Visual format J (4) Seat-frame boards I (1) Seat cushion H (1) Seat frame G (4) Back slats F (2) Back legs C (1) Seat subassembly D (2) Front legs B (1) Ladder-back subassembly E (4) Leg supports ALadder-backchair Figure 16.3

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. BOM – Printout Format Widget #1 Sub-Assembly #1 Component 1-1 Component 1-2 Component 1-3 Sub-Assembly #2 Component 2-1 Component 2-2 Component 2-3 Component 2-4 Sub-Assembly 2a Component 2a-1 Component 2a-2 Component 2a-3 Sub-Assembly #2 Component 3-1 Component 3-2

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Master Production Schedule Ladder-back chair Kitchen chair Desk chair 12 AprilMay 345678 Aggregate production plan for chair family Figure 16.4 200 670 150 120 200 150 200 120 670

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Master Production Schedule Details how many items will be produced within a specified period of time.Details how many items will be produced within a specified period of time. Shows how aggregate plan is put together with daily/weekly/hourly schedule of when components (and quantity of them) need to be at the manufacturing siteShows how aggregate plan is put together with daily/weekly/hourly schedule of when components (and quantity of them) need to be at the manufacturing site

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Record Terms Inventory Record: a record that shows an items lot-size policy, lead-time and various time-phased dataInventory Record: a record that shows an items lot-size policy, lead-time and various time-phased data Gross Requirements: the total demand derived from all parent production plansGross Requirements: the total demand derived from all parent production plans Scheduled Receipts: aka “open orders” – orders that have been placed but not yet completed and in “finished goods”Scheduled Receipts: aka “open orders” – orders that have been placed but not yet completed and in “finished goods” –in the manufacturing process –being transported –on the dock being inspection;

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Record Terms Projected on-hand inventory: estimate of ‘on-hand’ inventory available after the gross requirements have been satisfiedProjected on-hand inventory: estimate of ‘on-hand’ inventory available after the gross requirements have been satisfied Planned Receipts: orders that are not yet released to the shop or the supplierPlanned Receipts: orders that are not yet released to the shop or the supplier Planned Order Releases: indicates when and how much product should be ordered. Assumes that the inventory flows for scheduled receipted, planned receipts and gross requirements happen AT THE SAME TIMEPlanned Order Releases: indicates when and how much product should be ordered. Assumes that the inventory flows for scheduled receipted, planned receipts and gross requirements happen AT THE SAME TIME Planning lead-time: time between placement of order and receipt at your companyPlanning lead-time: time between placement of order and receipt at your company

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 12345678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week 150230000012000150012000 3700

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 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 37 + 230 – 150

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 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 37 + 230 – 150 = 117 units. Figure 16.5

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Figure 16.5 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 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, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Inventory Record Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 – 3 –153–273–273 Figure 16.5 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, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot Sizing Rules Fixed-Order-Quantity – FOQFixed-Order-Quantity – FOQ Periodic-Order-Quantity – POQPeriodic-Order-Quantity – POQ Lot for Lot – L4LLot for Lot – L4L

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot Sizing Rules Fixed-Order-Quantity – FOQFixed-Order-Quantity – FOQ –Maintains the same number of parts ordered when PO is issues –Order size may be fixed due to limitations in machine capacity, truckload capacity, warehouse capacity, etc…

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot Sizing Rules Period-Order-Quantity – POQPeriod-Order-Quantity – POQ –Allows for different quantities to be ordered, but orders are on regular basis, e.g. every 2 weeks or 2 months –Order size covers “P weeks” of requirements

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot Sizing Rules Lot-for-Lot: L4LLot-for-Lot: L4L –Special case of POQ (P=1) –Lot size ordered is for single time interval, e.g. 1 week or 1 month

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Comparing Lot Size Rules Lot size rules affect inventory costs, setup costs and ordering costsLot size rules affect inventory costs, setup costs and ordering costs Generally…Generally… –FOQ rule generates more inventory due to generation of ‘remnants’ – extra stock that is not entirely consumed –POQ limits inventory build and can reduce remnants to zero –L4L minimizes inventory, but at price of additional placement of orders. Best for expensive items and low-volume ‘made- to-order’ products

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Comparing Lot Sizing Rules POQ and L4L may have problems if demand is unstable (i.e. demand changes within lead-times of sourcing raw materials)– may promote shortages in manufacturing line due to minimum inventory levels with little to no remnantsPOQ and L4L may have problems if demand is unstable (i.e. demand changes within lead-times of sourcing raw materials)– may promote shortages in manufacturing line due to minimum inventory levels with little to no remnants

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117–3 – 3 –153 – 273 Fixed-Order-Quantity Technique Figure 16.6 Explanation: Without a new order in week 4, there will be a shortage of three units: 117 + 0 + 0 – 120 = – 3 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 FOQ Figure 16.6

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 227 230 FOQ Figure 16.6 Explanation: Adding the planned receipt brings the balance to 230 117 + 0 + 230 – 120 = 227 units.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 227 230 230 FOQ Figure 16.6 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, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 227 230 230 227 77 –43 FOQ Figure 16.6 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, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 227 230 230 227 77 230 FOQ Figure 16.6 Explanation: 230 Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 227 230 230 227 77 230 FOQ Figure 16.6 Explanation: 230 Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187. 187

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 227 230 230 227 77 230 187 230 FOQ Figure 16.6 Explanation: The corresponding planned order release is for week 5.

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. FOQ Figure 16.6 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Gross requirements 150 1 230 117 0 2 0 0 3 0 120 4 0 5 0 150 6 0 120 7 0 8 0 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 00 117117 227 230 230 227 77 230 187 230 187

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 12345678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week 150230 117120150120 37 117 117

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 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, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 (120 + 0 + 150)

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 (120 + 0 + 150) – 117

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 (120 + 0 + 150) – 117 = 153 units 153

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 (120 + 0 + 150) – 117 = 153 units 153 150

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 (120 + 0 + 150) – 117 = 153 units 153 150 153

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 (120 + 0) – 0 = 120 units 153 150 153 150000 120 120

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – POQ Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 153 150 153 150000 120 120

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 12345678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases Week 150230 117120150120 37 117 117

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 L4L lot size Gross requirements in week 4 Inventory balance at end of week 3 = –

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 3 = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 3 3 0 = 120 – 117 = 3 L4L lot size

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 3 3 0 00

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 3 3 0 150 00

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 3 3 0 150 00 0 120

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Lot-Sizing Rules – L4L Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 3 3 0 150 00 0 120 0

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Safety Stock In many cases with uncertain demand companies put safety stock in place using any of the techniques described earlier (FOQ, POQ, L4L)In many cases with uncertain demand companies put safety stock in place using any of the techniques described earlier (FOQ, POQ, L4L) However, with “Lean Manufacturing” principles – ZERO stock is the goal with JIT at all process steps inside operationsHowever, with “Lean Manufacturing” principles – ZERO stock is the goal with JIT at all process steps inside operations

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. MRP Outputs Figure 16.10 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 Manufacturing resources plan Performance reports Cost and price data Routings and time standards MRP explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Bill of Materials Figure 16.11 J (4) Seat-frame boards H (1) Seat frame I (1) Seat cushion C (1) Seat subassembly

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. MRP Explosion Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 1 230 117 23 120 45 150 6 120 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 37 Week 117 117 0000 000 0000 227 77187 230 Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Figure 16.12 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 123 120 45 150 6 120 78 Planned receipts Planned order releases Week 0000 230 MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 123 120 45 150 6 120 78 Planned receipts Planned order releases Week 0000 230 MRP Explosion Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 1 0 2345678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week 000 300000 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 1 0 2345678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week 000 0000 Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 123 120 45 150 6 120 78 Planned receipts Planned order releases Week 0000 230 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 0 1 0 2345678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week 230 000 300000 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 0 1 0 2345678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week 230 000 0000 Usage quantity: 1 MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 123 120 45 150 6 120 78 Planned receipts Planned order releases Week 0000 230 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 0 1 0 23 0 45678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week 230 0 000 300000 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 0 1 0 23 0 45678 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week 230 0 000 0000 Usage quantity: 1 MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements 150 123 120 45 150 6 120 78 Planned receipts Planned order releases Week 0000 230 Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 0 1 0 40 23 0 45 0 6 0 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 40 Week 110110 230 00 000 300000 110180 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 0 1 0 0 23 0 45 0 6 0 78 Scheduled receipts Projected on-hand inventory Planned receipts Planned order releases 0 Week 00 230 00 000 0000 00000 MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 230 0000 00 0000 00 MRP Explosion Figure 16.12

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 230 0000 00 0000 00 Gross requirements 1 0 2345678 Scheduled receipts Planned receipts Planned order releases 200 Week 000 0000 Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure 16.12 MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 230 0000 00 0000 00 Gross requirements 0 1 0 23 1200 45 0 6 0 78 Scheduled receipts Planned receipts Planned order releases 200 Week 0000 000 0000 Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Usage quantity: 4 Figure 16.12 MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Item: Seat frames Lot size: 300 units Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 300 Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements 12345678 Planned receipts Planned order releases Week 230 0000 00 0000 00 Gross requirements 0 1 0 200 23 1200 45 0 6 0 78 Scheduled receipts Planned receipts Planned order releases 200 Week 200200 0000 000 0000 500 1500 Projected on-hand inventory Item: Seat-frame boards Lot size: 1500 units Lead time: 1 week Figure 16.12 MRP Explosion

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. “MRP-II” – Son of MRP MRP targeted at batch manufacturing using discrete components making assemblies/products.MRP targeted at batch manufacturing using discrete components making assemblies/products. Next-generation MRP ties corporate functional data into one MRP-II system (“ERP-like”) to tie sales, marketing, manufacturing, purchasing, QRA, etc… closer togetherNext-generation MRP ties corporate functional data into one MRP-II system (“ERP-like”) to tie sales, marketing, manufacturing, purchasing, QRA, etc… closer together

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. MRP II Figure 16.15 Manufacturing resource plan Cost and financial data Purchasing reports Financial/ accounting reports Sales and marketing reports Human resource reports Manufacturing reports Inventory records Inventory transactions Bills of materials Routings Time standards MRPexplosion Master production schedule Customer ordersForecasts Material requirements plan

To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Chapter.

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To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Chapter.

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Presentation on theme: "To Accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Seventh Edition © 2004 Prentice Hall, Inc. All rights reserved. Chapter."— Presentation transcript:

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