Resource Planning

Chapter 14

MGMT 326

Foundations

of Operatio

nsIntroductio

n

Strategy

ManagingProjects

QualityAssuran

ce

Facilities

& WorkDesign

Products &

Processes

ProductDesign

ProcessDesign

ManagingQuality

Statistical

ProcessControl

Just-in-Time & Lean Systems

FacilityLayout

Capacity

and Locatio

n

LinearProgram-ming

WorkSystemDesign

ManagingInventory

Planning& Control

ResourcePlanning

Aggregate

Planning

Presentation Outline

Resource Planning: Material Requirement Planning (MRP) Objective and definition Terminology Basic MRP computations MRP process and databases

Enterprise resource planning (ERP) ERP systems ERP II systems

Ch 13 - 2© 1998 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e

Material Requirement Planning (MRP)

Objective: To ensure that customer demand will be met in a cost-effective way

MRP is a computerized inventory control and production planning system for dependent demand

Schedules component items and subassemblies when they are needed - no earlier and no later Specifies planned orders for internal

production and external purchase

Ch 13 - 17© 1998 by Prentice-Hall IncRussell/Taylor Oper Mgt 2/e

MRP Terminology

Lot size: amount of an item to order. Lead time (LT): elapsed time from order

placement to order receipt. LT is assumed to be fixed and known.

Planning periods may be days, weeks or months. Must be consistent. Current period = period 1.

MRP Terminology (2)

Planned order receipt: order quantity which must be received on a specific date. May be a work order or a purchase order.

Planned order release: order quantity which will be released on a specific date.

Available to promise: amount of inventory and planned production which is available to fill new customer orders.

Step Stool Assembly

Step Stool Assembly (2)

MRP Process

MRP requires data accuracy in all files.

(Planned order report)

Databases Used in MRP Calculation

Bill of material file: list of parts, raw materials, and subassemblies for each finished good

Quantity required for each item Order of assembly (how product is put together) Contains the same information as a parts tree, but in

a form that can be used for computerized data processing

Inventory records file: amount of each finished good, part, raw material, and subassembly in inventory, plus amounts already ordered and expected dates of receipt

Why Enterprise Resource Planning (ERP)

was Needed

Marketing, Operations, Accounting and Finance, and Human Resources Management need to share a common database (First generation ERP)

Companies need to communicate rapidly with suppliers and

customers share selected data with suppliers and

customers systems that meet this need are called

second generation ERP, extended ERP, or ERP II systems

Business Information Flowto and from Operations

First Generation ERP System

A management information system that uses a common database (data warehouse) and integrates information from all functional areas of business (company departments) In Figure 14.1, first-generation ERP is

shown in the brown oval. In manufacturing, MRP is one part of the

ERP system

Figure 14. 1Enterprise Resource Planning

ERP II Systems

Include first-generation ERP system functions, plus links with suppliers and customers

Everything in Figure 14.1

ERP II System Advantages

Lower operating costs Shorter cycle times for manufacturing and

delivery faster customer service Better product availability

Faster replenishment of popular items Fewer unwanted items

PC-based systems are affordable for mid-size firms