1. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Chapter 12 Enterprise Resource Planning MRP Video Lecture (MRP A)

2. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 2 MRP Computerized inventory control & production planning system Schedules component items when they are needed - no earlier and no later

3. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 3 When to Use MRP Dependent and discrete items Complex products Job shop production Assemble-to-order environments

4. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 4 MRP Inputs & Outputs Master Production Schedule Material Requirements Planning Planned Order Releases Work OrdersPurchase Orders Rescheduling Notices Product Structure File Inventory Master File

5. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 5 MRP Inputs Master production schedule Product structure file Inventory master file

6. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 6 Master Production Schedule Drives MRP process with a schedule of finished products Quantities represent production not demand Quantities may consist of a combination of customer orders & demand forecasts Quantities represent what needs to be produced, not what can be produced

7. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 7 Master Production Schedule

8. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 8 Clipboard Rivet (2) Iron Rod (3 in.) Spring (1) Spring Steel (10 in.) Level 0 Level 1 Level 2 Level 3 Bottom Clip (1) Top Clip (1) Pivot (1) Sheet Metal (8 in 2 ) Clip Assembly (10) Sheet Metal (8 in 2 ) Product Structure Tree Board (1) Pressboard (1)Finish (2oz.)

9. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 9 Indented Bill of Material LEVELITEMUnit of MeasureQuantity 0 - - - -ClipboardEa1 - 1 - - -Clip AssemblyEa1 - - 2 - -Top ClipEa1 - - - 3 -Sheet MetalIn 2 8 - - 2 - -Bottom ClipEa1 - - - 3 -Sheet MetalIn 2 8 - - 2 - -PivotEa1 - - - 3 -Iron RodIn3 - - 2 - -SpringEa1 - - - 3 -Spring SteelIn10 - 1 - - -RivetEa2 - 1 - - - BoardEa1 - - 2 - - Press BoardEa1 - - 2 - - FinishOz2

10. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Phantom bills –transient subassemblies –never stocked –immediately consumed in next stage K-bills –group small, loose parts under pseudo item # –reduces paperwork 10 Specialized BOMS

11. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 11 Specialized BOMS Modular bills – product assembled from major subassemblies & customer options – modular bill kept for each major subassembly – simplifies forecasting & planning – X10 Automobile example 3 x 8 x 3 x 8 x 4 = 2,304 configurations 3 + 8 + 3 + 8 + 4 = 26 modular bills

12. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. X10 Automobile EnginesExteriorInteriorInterior Body (1 of 3)Color (1 of 8)(1 of 3)Color (1 of 8) (1 of 4) 4-Cylinder (.40)Bright Red (.10) Leather (.20)Grey (.10)Sports Coupe (.20) 6-Cylinder (.50)White Linen (.10)Tweed (.40)Light Blue (.10)Two-Door (.20) 8-Cylinder (.10)Sulphur Yellow (.10)Plush (.40)Rose (.10)Four-Door (.30) Neon Orange (.10)Off-white (.20)Station Wagon (.30) Metallic Blue (.10)Cool Green (.10) Emerald Green (.10)Black (.20) Jet Black (.20)Brown (.10) Champagne (.20)B/W Checked (.10) 12 Modular Bill Of Material

13. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 13 Inventory Master File DescriptionInventory Policy ItemBoardLead time2 Item no.7341Annual demand5,000 Item typeManuf.Holding cost1 Product/sales classAss’yOrdering/setup cost50 Value classBSafety stock 25 Buyer/plannerRSRReorder point39 Vendor/drawing07142EOQ316 Phantom codeNMinimum order qty100 Unit price/cost1.25Maximum order qty500 PeggingYMultiple order qty100 LLC3Policy code3

14. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 14 Inventory Master File, Con’t. Physical InventoryUsage/Sales On hand100YTD usage/sales1,100 LocationW142MTD usage/sales75 On order50YTD receipts1,200 Allocated75MTD receipts0 Cycle3Last receipt8/25 Difference-2Last issue10/5 Codes Cost acct.00754 Routing00326 Engr07142

15. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 15 Inventory Accuracy 1. Maintain orderly stockrooms 2. Control access to stockrooms 3. Establish & enforce procedures for inventory withdrawal 4. Ensure prompt and accurate entry of inventory transactions 5. Take physical inventory count on a regular basis 6. Reconcile inventory discrepancies in a timely manner (use cycle counting)

16. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 16 The MRP Matrix Item –name or number identifying scheduled item LLC –low-level-code; lowest level at which item appears in a product structure

17. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 17 Parts Of MRP Matrix Lot size –order multiples of this qty; can be min/max qty LT ( lead time) –time from order placement to receipt PD ( past-due) –orders behind schedule Gross requirements –demand for item by time period

18. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 18 Scheduled receipts –quantity already on order & receipt date –released orders become scheduled receipts Projected on hand –expected on-hand inventory at end of period Net requirements –net amount needed after on-hand adjustments Planned order receipts –net requirements adjusted for lot-sizing Planned order releases –planned order receipts offset by lead time

19. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 A company produces two products: Product A and Product Q. The owner has received an order from a customer of 103 units of product A for week 8 and 200 units of product Q for week 7. The product structures and other pertinent information are given below in the table as well as on top of each MRP table. Develop a materials requirements plan that will provide the customer the two products. 19

20. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 20

21. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Product Structure Item A 21

22. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Product Structure Item Q 22

23. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 - Solution 23

24. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 24

25. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 25

26. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 26

27. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 27

28. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 28

29. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 29

30. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 30

31. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 31

32. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 32

33. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 33

34. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 34

35. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 35

36. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 36

37. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 37

38. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 38

39. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 39

40. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 40

41. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 41

42. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 42

43. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 43

44. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 44

45. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 45

46. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. MRP: Problem 1 – Solution (cont.) 46

47. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. Chapter 12 Enterprise Resource Planning MRP Video Lecture (MRP B)

48. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 47 Item#2740Date9-25-02 On hand100Lead Time 2 weeks On order200Lot size200 Allocated50Safety Stock 50 50 9-26AL 44162525 9-30AL 417425 0 10-01GR 647050-50 10-08SR 7542200150Expedite SR 10-1 10-10CO 44717575 10-15GR 64715025 10-23GR 6471250 10-27GR 647350-50Release PO 10-13 Date Order No. Gross Reqs. Scheduled Receipts Projected On Hand Action Key:AL = allocatedCO = customer order PO = purchase orderWO = work order SR = scheduled receiptGR = gross requirements Planned Order Report

49. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 48 MRP Action Report Current date: 9-25-02 #274010-087542200ExpediteSR 10-1 #361610-09Move forwardPO 10-7 #241210-10Move forwardPO 10-5 #342710-15Move backwardPO 10-25 #251610-207648100De-expediteSR 10-30 #274010-27200ReleasePO 10-13 #366610-3150ReleaseWO 10-24 DateItemOrder No.Qty.Action

50. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 49 Capacity Requirements Planning (CRP) Computerized system that projects load from material plan Creates load profile Identifies underloads and overloads

51. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 50 Capacity Terms Load profile –compares released and planned orders with work center capacity Capacity –productive capability; includes utilization and efficiency Utilization –% of available working time spent working

52. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 51 More Capacity Terms Efficiency Load –the standard hours of work assigned to a facility Load percent –the ratio of load to capacity

53. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 52 Capacity Requirements Planning MRP planned order releases Routing file Capacity requirements planning Open orders file Load profile for each machine center

54. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 53 Initial Load Profile 1 2 3 4 5 6 Time (weeks) Normal capacity Hours of capacity

55. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 54 Adjusted Load Profile 1 2 3 4 5 6 Time (weeks) Work an extra shift Push back Pull ahead Overtime Hours of capacity

56. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 55 Remedies for Underloads 1. Acquire more work 2. Pull work ahead that is scheduled for later time periods 3. Reduce normal capacity

57. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 56 Remedies for Overloads 1. Eliminate unnecessary requirements 2. Reroute jobs to alternative machines or work centers 3. Split lots between two or more machines 4. Increase normal capacity 5. Subcontract 6. Increase the efficiency of the operation 7. Push work back to later time periods 8. Revise master schedule

58. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 57 Manufacturing Resource Planning (MRP II) Extension of MRP Plans all resources needed for running a business Variations include –Service Requirements Planning (SRP) –Business Requirements Planning (BRP) –Distribution Requirements Planning (DRP)

59. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 58 MRP II Modules Forecasting Customer order entry Production planning / master production scheduling Product structure / bill-of-material processor Inventory control Material requirements planning Capacity planning Shop floor control Purchasing Accounting Financial analysis

60. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 59 MRP II Flowchart Feasible? Marketing Plan Financial Plan Business Plan Production Plan No more Yes

61. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 60 Master production schedule Material requirements planning Capacity requirements planning Manufacture Inventory Shop floor control Purchase orders Work orders Feasible? No Yes Feedback

62. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 61 Problems with MRP Material requirements plan is first; capacity is an afterthought MRP assumes fixed lead times Excessive reporting requirements

63. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 62 Prospects for MRP/MRP II Coordinates company strategy among different functional areas Responds quickly to what-if? questions at various levels of detail BOM processors, purchase modules, & customer order entry are standard requirements for Manufacturing Information Systems Monitors design & vendor quality, & customer service Builds trust, teamwork, & better decisions Cash-flow planning & profit/cost projections

64. To Accompany Russell and Taylor, Operations Management, 4th Edition,  2003 Prentice-Hall, Inc. All rights reserved. 63 SAP’s ERP Modules