1. No category

Chapter 15
Resource Planning
Lecture Outline
•
•
•
•
•
•
Material Requirements Planning (MRP)
Capacity Requirements Planning (CRP)
Enterprise Resource Planning (ERP)
Customer Relationship Management (CRM)
Supply Chain Management (SCM)
Product Lifecycle Management (PLM)
Copyright 2011 John Wiley & Sons, Inc.
15-2
Resource
Planning
for
Manufacturing
Copyright 2011 John Wiley & Sons, Inc.
15-3
Material Requirements Planning (MRP)
• Computerized inventory control and production
planning system
• When to use MRP?
•
•
•
•
•
Dependent demand items
Discrete demand items
Complex products
Job shop production
Assemble-to-order environments
Copyright 2011 John Wiley & Sons, Inc.
15-4
Demand Characteristics
Independent demand
Dependent demand
100 x 1 =
100 tabletops
100 x 4 = 400 table legs
100 tables
Continuous demand
Discrete demand
400 –
300 –
No. of tables
No. of tables
400 –
200 –
100 –
1
2
3
Week
Copyright 2011 John Wiley & Sons, Inc.
4
300 –
200 –
100 –
5
M T W Th F
M T W Th F
15-5
Material
Requirements
Planning
Product
structure
file
Master
production
schedule
Material
requirements
planning
Item
master
file
Planned
order
releases
Work
orders
Copyright 2011 John Wiley & Sons, Inc.
Purchase
orders
Rescheduling
notices
15-6
MRP Inputs and Outputs
• Inputs
– Master production
schedule
– Product structure file
– Item master file
Copyright 2011 John Wiley & Sons, Inc.
• Outputs
– Planned order
releases
• Work orders
• Purchase orders
• Rescheduling notices
15-7
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 and demand forecasts
• Quantities represent what needs to be
produced, not what can be produced
• Quantities represent end items that may or may
not be finished products
Copyright 2011 John Wiley & Sons, Inc.
15-8
Master Production Schedule
MPS ITEM
Pencil Case
Clipboard
Lapboard
Lapdesk
Copyright 2011 John Wiley & Sons, Inc.
1
125
85
75
0
PERIOD
2
3
4
125
95
120
50
125
120
47
0
125
100
20
50
5
125
100
17
0
15-9
Product Structure File
Copyright 2011 John Wiley & Sons, Inc.
15-10
Product Structure
Clipboard
Top clip (1)
Pivot (1)
Bottom clip (1)
Spring (1)
Rivets (2)
Finished clipboard
Copyright 2011 John Wiley & Sons, Inc.
Pressboard (1)
15-11
Product Structure Tree
Level 0
Clipboard
Pressboard
(1)
Top Clip
(1)
Clip Ass’y
(1)
Bottom Clip
(1)
Copyright 2011 John Wiley & Sons, Inc.
Rivets
(2)
Pivot
(1)
Level 1
Spring
(1)
Level 2
15-12
Multilevel Indented BOM
LEVEL
0----1----2---2---2---2--1---1---
ITEM
Clipboard
Clip Assembly
Top Clip
Bottom Clip
Pivot
Spring
Rivet
Press Board
Copyright 2011 John Wiley & Sons, Inc.
UNIT OF MEASURE
QUANTITY
ea
ea
ea
ea
ea
ea
ea
ea
1
1
1
1
1
1
2
1
15-13
Specialized BOMs
• Phantom bills
• Transient subassemblies
• Never stocked
• Immediately consumed in next stage
• K-bills
• Group small, loose parts under pseudo-item number
• Reduces paperwork, processing time, and file space
Copyright 2011 John Wiley & Sons, Inc.
15-14
Specialized BOMs
• Modular bills
• Product assembled from major subassemblies and
customer options
• Modular bill kept for each major subassembly
• Simplifies forecasting and planning
• X10 automobile example
• 3 x 8 x 3 x 8 x 4 = 2,304 configurations
• 3 + 8 + 3 + 8 + 4 = 26 modular bills
Copyright 2011 John Wiley & Sons, Inc.
15-15
Modular BOMs
X10
Automobile
Engines
(1 of 3)
Exterior color
(1 of 8)
Interior
(1 of 3)
Interior color
(1 of 8)
Body
(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)
Copyright 2011 John Wiley & Sons, Inc.
15-16
Time-phased Bills
• An assembly chart shown against a time scale
Copyright 2011 John Wiley & Sons, Inc.
15-17
Time-phased Bills
• Forward scheduling
• start at today‘s date and schedule forward to
determine the earliest date the job can be finished. If
each item takes one period to complete, the
clipboards can be finished in three periods
• Backward scheduling
• start at the due date and schedule backwards to
determine when to begin work. If an order for
clipboards is due by period three, we should start
production now
Copyright 2011 John Wiley & Sons, Inc.
15-18
Item Master File
DESCRIPTION
Item
Pressboard
Item no.
7341
Item type
Purch
Product/sales class
Comp
Value class
B
Buyer/planner
RSR
Vendor/drawing
07142
Phantom code
N
Unit price/cost
1.25
Pegging
Y
LLC
1
Copyright 2011 John Wiley & Sons, Inc.
INVENTORY POLICY
Lead time
Annual demand
Holding cost
Ordering/setup cost
Safety stock
Reorder point
EOQ
Minimum order qty
Maximum order qty
Multiple order qty
Policy code
1
5000
1
50
0
39
316
100
500
1
3
15-19
Item Master File
PHYSICAL INVENTORY
On hand
150
Location
W142
On order
100
Allocated
75
Cycle
3
Last count
9/5
Difference
-2
USAGE/SALES
YTD usage/sales
MTD usage/sales
YTD receipts
MTD receipts
Last receipt
Last issue
1100
75
1200
0
8/25
10/5
CODES
Cost acct.
Routing
Engr
Copyright 2011 John Wiley & Sons, Inc.
00754
00326
07142
15-20
MRP Processes
• Exploding the bill of material
• Netting out the inventory
• Netting
• the process of subtracting on-hand quantities and
scheduled receipts from gross requirements to
produce net requirements
• Lot sizing
• determining the quantities in which items are usually
made or purchased
• Time-phasing requirements
Copyright 2011 John Wiley & Sons, Inc.
15-21
MRP Matrix
Copyright 2011 John Wiley & Sons, Inc.
15-22
MRP
Master Production Schedule
Clipboard
Lapdesk
1
2
3
4
5
85
0
95
60
120
0
100
60
100
0
Item Master File
On hand
On order
(sch receipt)
LLC
Lot size
Lead time
CLIPBOARD
25
175 (Period 1)
LAPDESK
20
0
PRESSBOARD
150
0
0
L4L
1
0
Mult 50
1
1
Min 100
1
Copyright 2011 John Wiley & Sons, Inc.
15-23
MRP
Product Structure Record
Clipboard
Level 0
Clip Ass’y
(1)
Pressboard
(1)
Rivets
(2)
Level 1
Lapdesk
Pressboard
(2)
Copyright 2011 John Wiley & Sons, Inc.
Trim
(3’)
Level 0
Beanbag
(1)
Glue
(4 oz)
Level 1
15-24
MRP - 1
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
1
2
3
4
5
Gross Requirements
85
95
120
100
100
Scheduled Receipts
175
Projected on Hand
LT: 1
PERIOD
25
Net Requirements
Planned Order Receipts
Planned Order Releases
Copyright 2011 John Wiley & Sons, Inc.
15-25
MRP - 2
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
1
2
3
4
5
Gross Requirements
85
95
120
100
100
Scheduled Receipts
175
Projected on Hand
Net Requirements
LT: 1
PERIOD
25
115
0
Planned Order Receipts
Planned Order Releases
(25 + 175) = 200 units available
(200 - 85) = 115 on hand at the end of Period 1
Copyright 2011 John Wiley & Sons, Inc.
15-26
MRP - 3
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
1
2
3
4
5
Gross Requirements
85
95
120
100
100
Scheduled Receipts
175
Projected on Hand
Net Requirements
LT: 1
PERIOD
25
115
20
0
0
Planned Order Receipts
Planned Order Releases
115 units available
(115 - 85) = 20 on hand at the end of Period 2
Copyright 2011 John Wiley & Sons, Inc.
15-27
MRP - 4
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
1
2
3
4
5
Gross Requirements
85
95
120
100
100
Scheduled Receipts
175
115
20
0
0
0
100
Projected on Hand
Net Requirements
LT: 1
PERIOD
25
Planned Order Receipts
Planned Order Releases
100
100
20 units available
(20 - 120) = -100 — 100 additional Clipboards are required
Order must be placed in Period 2 to be received in Period 3
Copyright 2011 John Wiley & Sons, Inc.
15-28
MRP - 5
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
1
2
3
4
5
Gross Requirements
85
95
120
100
100
Scheduled Receipts
175
115
20
0
0
0
0
0
100
100
100
100
100
100
100
100
Projected on Hand
Net Requirements
LT: 1
PERIOD
25
Planned Order Receipts
Planned Order Releases
100
Following the same logic Gross Requirements in Periods 4 and 5
develop Net Requirements, Planned Order Receipts, and Planned
Order Releases
Copyright 2011 John Wiley & Sons, Inc.
15-29
MRP - 6
ITEM: LAPDESK
LLC: 0
LOT SIZE: MULT 50
LT: 1
Gross Requirements
PERIOD
1
2
0
60
3
4
0
60
5
0
Scheduled Receipts
Projected on Hand
20
Net Requirements
Planned Order Receipts
Planned Order Releases
Copyright 2011 John Wiley & Sons, Inc.
15-30
MRP - 7
ITEM: LAPDESK
LLC: 0
LOT SIZE: MULT 50
LT: 1
Gross Requirements
PERIOD
1
2
3
4
5
0
60
0
60
0
20
10
10
0
0
0
40
50
50
50
Scheduled Receipts
Projected on Hand
Net Requirements
20
Planned Order Receipts
Planned Order Releases
50
50
Following the same logic, the Lapdesk MRP matrix is
completed as shown
Copyright 2011 John Wiley & Sons, Inc.
15-31
MRP - 8
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
LT: 1
Planned Order Releases
ITEM: LAPDESK
LOT SIZE: MULT 50
LLC: 0
LT: 1
Planned Order Releases
Copyright 2011 John Wiley & Sons, Inc.
1
2
50
ITEM: PRESSBOARD LLC: 0
LOT SIZE: MIN 100
LT: 1
Gross Requirements
Scheduled Receipts
Projected on Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
1
PERIOD
2
3
4
100
100
100
1
PERIOD
3
5
4
5
4
5
50
2
PERIOD
3
150
15-32
MRP – 9
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
LT: 1
Planned Order Releases
ITEM: LAPDESK
LOT SIZE: MULT 50
LLC: 0
LT: 1
1
x1
1
Planned Order Releases
Copyright 2011 John Wiley & Sons, Inc.
2
50
ITEM: PRESSBOARD LLC: 0
LOT SIZE: MIN 100
LT: 1
Gross Requirements
Scheduled Receipts
Projected on Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
PERIOD
2
3
4
100
100
100
x2
PERIOD
3
5
x1
x1
4
5
4
5
100
50
x2
1
2
PERIOD
3
100
100
200
0
150
15-33
MRP – 10
ITEM: CLIPBOARD
LLC: 0
LOT SIZE: L4L
LT: 1
Planned Order Releases
ITEM: LAPDESK
LOT SIZE: MULT 50
LLC: 0
LT: 1
1
x1
1
Planned Order Releases
Copyright 2011 John Wiley & Sons, Inc.
2
50
ITEM: PRESSBOARD LLC: 0
LOT SIZE: MIN 100
LT: 1
Gross Requirements
Scheduled Receipts
Projected on Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
PERIOD
2
3
4
100
100
100
150
x1
x1
4
5
4
5
50
x2
x2
PERIOD
3
1
2
PERIOD
3
100
100
200
100
50
50
50
100
150
0
150
150
100
0
100
100
100
5
0
15-34
MRP - 11
Planned Order Report
ITEM
Clipboard
Lapdesk
Pressboard
Copyright 2011 John Wiley & Sons, Inc.
PERIOD
1
50
100
2
3
4
100
100
50
100
100
150
5
15-35
Lot Sizing in MRP Systems
• Lot-for-lot ordering policy
• Fixed-size lot ordering policy
•
•
•
•
•
Minimum order quantities
Maximum order quantities
Multiple order quantities
Economic order quantity
Periodic order quantity
Copyright 2011 John Wiley & Sons, Inc.
15-36
Advanced Lot Sizing Rules: L4L
Total cost of L4L = (4 X $60) + (0 X $1) = $240
Copyright 2011 John Wiley & Sons, Inc.
15-37
Advanced Lot Sizing Rules: EOQ
EOQ 
2(30)(60
 60 minimum order quantity
1
Total cost of EOQ = (2 X $60) + [(10 + 50 + 40) X $1)] = $220
Copyright 2011 John Wiley & Sons, Inc.
15-38
Advanced Lot Sizing Rules: POQ
POQ  Q / d  60 / 30  2 periods worth of requirements
Total cost of POQ = (2 X $60) + [(20 + 40) X $1] = $180
Copyright 2011 John Wiley & Sons, Inc.
15-39
Planned Order Report
Item
On hand
On order
Allocated
DATE
9-26
9-30
10-01
10-08
10-10
10-15
10-23
10-27
Key:
#2740
100
200
50
ORDER NO.
Date
Lead time
Lot size
Safety stock
SCHEDULED
GROSS REQS.
RECEIPTS
AL 4416
AL 4174
GR 6470
SR 7542
CO 4471
GR 6471
GR 6471
GR 6473
AL = allocated
CO = customer order
PO = purchase order
Copyright 2011 John Wiley & Sons, Inc.
25
25
50
200
75
50
25
50
PROJECTED
ON HAND
50
25
0
- 50
150
75
25
0
- 50
9 - 25 - 05
2 weeks
200
50
ACTION
Expedite SR 10-01
Release PO 10-13
WO = work order
SR = scheduled receipt
GR = gross requirement
15-40
MRP Action Report
Current date 9-25-08
ITEM
DATE
#2740
#3616
#2412
#3427
#2516
#2740
#3666
10-08
10-09
10-10
10-15
10-20
10-27
10-31
ORDER NO. QTY.
7542
200
7648
100
200
50
Copyright 2011 John Wiley & Sons, Inc.
ACTION
Expedite
Move forward
Move forward
Move backward
De-expedite
Release
Release
SR
PO
PO
PO
SR
PO
WO
10-01
10-07
10-05
10-25
10-30
10-13
10-24
15-41
Capacity Requirements
Planning (CRP)
• Creates a load profile
• Identifies under-loads and over-loads
• Inputs
• Planned order releases
• Routing file
• Open orders file
Copyright 2011 John Wiley & Sons, Inc.
15-42
CRP
MRP planned
order
releases
Routing
file
Capacity
requirements
planning
Open
orders
file
Load profile for
each process
Copyright 2011 John Wiley & Sons, Inc.
15-43
Calculating Capacity
• Maximum capability to produce
• Rated Capacity
• Theoretical output that could be attained if a process were
operating at full speed without interruption, exceptions, or
downtime
• Effective Capacity
• Takes into account the efficiency with which a particular
product or customer can be processed and the utilization of
the scheduled hours or work
Effective Daily Capacity = (no. of machines or workers) x
(hours per shift) x (no. of shifts) x (utilization) x ( efficiency)
Copyright 2011 John Wiley & Sons, Inc.
15-44
Calculating Capacity
• Utilization
• Percent of available time spent working
• Efficiency
• How well a machine or worker performs compared
to a standard output level
• Load
• Standard hours of work assigned to a facility
• Load Percent
• Ratio of load to capacity
Copyright 2011 John Wiley & Sons, Inc.
Load Percent =
load
x 100%
capacity
15-45
Load Profiles
• Graphical comparison of load versus capacity
• Leveling underloaded conditions:
• Acquire more work
• Pull work ahead that is scheduled for later time
periods
• Reduce normal capacity
• Load leveling
• Process of balancing underloads and overloads
Copyright 2011 John Wiley & Sons, Inc.
15-46
Reducing Over-load Conditions
•
•
•
•
•
•
•
•
Eliminate unnecessary requirements
Reroute jobs to alternative machines, workers,
or work centers
Split lots between two or more machines
Increase normal capacity
Subcontract
Increase efficiency of the operation
Push work back to later time periods
Revise master schedule
Copyright 2011 John Wiley & Sons, Inc.
15-47
Copy Courier
• Two high-speed copiers that can be operated by
one operator.
• 2 shifts per day
• 8 hours/shift , 5 days/week.
• No breaks during the day
• 30 minutes for lunch or dinner
• Machine service time = 30 minutes at the beginning
of each shift
• Machine efficiency = 90%.
• Capacity
• 2 copiers * 2 shifts * 8 hrs/day * 7/8 utilization * .90
efficiency = 1512 minutes/day
Copyright 2011 John Wiley & Sons, Inc.
15-48
Copy Courier
Job
10
20
30
40
50
No. of
Copies
500
1000
5000
4500
2000
Copyright 2011 John Wiley & Sons, Inc.
Setup Time
(min)
5.2
10.6
3.4
11.2
15.3
Run Time
(min/unit)
0.08
0.10
0.12
0.14
0.10
15-49
Load Calculations
Job
10
20
30
40
50
Setup + Run x No. Copies
5.2 + (500 X 0.08)
10.6 + (1000 X 0.10)
3.4 + (5000 X 0.12)
11.2 + (4500 X 0.14)
15.3 + (2000 X 0.10)
Copyright 2011 John Wiley & Sons, Inc.
Job Time
= 45.20
= 110.60
= 603.40
= 641.20
= 215.30
1,615.70 min
15-50
Loading
Capacity
2 copiers * 2 shifts * 8 hrs/day * 7/8 utilization * .90 efficiency
= 1512 minutes/day
Load percent = 1615.70/1512 = 1.068 X 100% = 106.8%
Overloaded by 6.8%.
Extends working day by approximately 36 minutes
Load percent = 99%.
Increase efficiency to 97%.
Copyright 2011 John Wiley & Sons, Inc.
15-51
Hours of capacity
Initial Load Profile
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0–
Normal
capacity
1
2
3
4
5
6
Time (weeks)
Copyright 2011 John Wiley & Sons, Inc.
15-52
Hours of capacity
Adjusted Load Profile
120 –
110 –
100 –
90 –
80 –
70 –
60 –
50 –
40 –
30 –
20 –
10 –
0–
Pull ahead
Overtime
1
2
Work
an
extra
shift
3
Push back
Push back
4
Normal
capacity
5
6
Time (weeks)
Copyright 2011 John Wiley & Sons, Inc.
15-53
Relaxing MRP Assumptions
• Material is not always the most constraining
resource
• Lead times can vary
• Not every transaction needs to be recorded
• Shop floor may require a more sophisticated
scheduling system
• Scheduling in advance may not be appropriate
for on-demand production.
Copyright 2011 John Wiley & Sons, Inc.
15-54
Enterprise Resource Planning (ERP)
• Software that organizes and manages a
company’s business processes by
•
•
•
•
sharing information across functional areas
integrating business processes
facilitating customer interaction
providing benefit to global companies
Copyright 2011 John Wiley & Sons, Inc.
15-55
Organizational Data Flows
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15-56
ERP’s Central Database
Copyright 2011
John Wiley
Sons,
Inc.& Sons, Inc.
Copyright
2011 &
John
Wiley
15-57
Selected Enterprise Software Vendors
Copyright 2011 John Wiley & Sons, Inc.
15-58
ERP Implementation
• Analyze business processes
• Choose modules to implement
• Which processes have the biggest impact on
customer relations?
• Which process would benefit the most from
integration?
• Which processes should be standardized?
• Align level of sophistication
• Finalize delivery and access
• Link with external partners
Copyright 2011 John Wiley & Sons, Inc.
15-59
Customer Relationship Management
(CRM)
• Software that
• Plans and executes business processes
• Involves customer interaction
• Changes focus from managing products to managing
customers
• Analyzes point-of-sale data for patterns used to
predict future behavior
Copyright 2011 John Wiley & Sons, Inc.
15-60
Supply Chain Management
• Software that plans and executes business
processes related to supply chains
• Includes
• Supply chain planning
• Supply chain execution
• Supplier relationship management
• Distinctions between ERP and SCM are becoming
increasingly blurred
Copyright 2011 John Wiley & Sons, Inc.
15-61
Product Lifecycle Management (PLM)
• Software that
• Incorporates new product design and development
and product life cycle management
• Integrates customers and suppliers in the design
process though the entire product life cycle
Copyright 2011 John Wiley & Sons, Inc.
15-62
ERP and Software Systems
Copyright 2011 John Wiley & Sons, Inc.
15-63
Connectivity
• Application programming interfaces (APIs)
• give other programs well-defined ways of speaking to
them
• Enterprise Application Integration (EAI) solutions
• EDI is being replaced by XML, business language
of Internet
• Service-oriented architecture (SOA)
• collection of “services” that communicate with each other
within software or between software
Copyright 2011 John Wiley & Sons, Inc.
15-64
Copyright 2011 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this
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Department, John Wiley & Sons, Inc. The purchaser
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by the use of these programs or from the use of the
information herein.
Copyright 2011 John Wiley & Sons, Inc.
15-65