Dr Ron Lembke Historical Perspective mrp material requirements planning MRP II Manufacturing Resource Planning ERP Enterprise Resource Planning MRP Crusade 1975 Material Requirements Planning ID: 503532
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Slide1
Material Requirements Planning and Enterprise Resource Planning
Dr. Ron LembkeSlide2
Historical Perspective
mrp – material
requirements
planning
MRP II – Manufacturing
Resource Planning
ERP- Enterprise Resource PlanningSlide3
MRP Crusade (1975)
Material Requirements Planning
Make sure you have enough parts when you need them
Take future demands, factor in lead times (time phase), compare to on hand, orderDetermine order size and timingControl and plan purchasing vs. OSWO inventory managementSlide4
Closed-Loop MRP
Capacity Consideration:
Part routings
Calculate loads on each work stationSee if scheduled load exceeds capacityLead-time long enough to allow some shuffling to make plan feasibleSlide5
MRP II -- Manufacturing Resource Planning
“A method for the effective planning of all resources of a manufacturing company”
(APICS def.)
Financial accounting incorporatedSalesOperations PlanningSimulate capacity requirements of different possible Master Production Schedules
1989, $1.2B MRPII sales in U.S., one third of total software salesSlide6
Success?
MRP Crusade
BeginsSlide7
ERP differences
Material planning
Capacity planning
Product designInformation warehousingAll functions in the entire company operate off of one common set of data
Instantaneous updating, visibility
Slide8
ERP Sales
Y2K: Worldwide sales of top 10 vendors
1995 $2.8 B
1996 $4.2 B1997 $5.8 B $3.2 B SAPFortune survey: 44% reported spending at least 4 times as much on implementation as on softwareSlide9
ERP Challenges
Modules assume “best practices:”
Change software to reflect company ($)
Change company to follow software (?)Accuracy of dataDrives entire systemOwnership of / responsibility for
Ability to follow structureSlide10
ERP Novel?
“Goal-like” novel
Hero learns more about ERP, deciding if it is right for his company
Company rushes through installationGeneral introduction to ERP systems, what they do, how different from MRP
SAP R/3 screen shotsSlide11
The Heart of the Matter - mrp
System for organizing WIP releases
Work in Process – work that has been started, but not yet finished
Consider Lead Time (LT)for each itemLook at BOM to see what parts neededBill of Materials – what goes into what
Release so they will arrive just as neededSlide12
Bike Production
Due
Mar
1
7
14
21
28
4
Apr
11
18
Assemble
Parts
Arrive
Frame
Wheels
Drivetrain
Seat, Bars
OCLV CarbonSlide13
Snow Shovels
Example – Snow Shovel
Order quantity is 50 units
LT is one weekSimple Bill of Materials - BOMSlide14
MRP Table
6 units shortSlide15
MRP Table
Order 50 units week earlierSlide16
Ending Inventory
Ending inventorySlide17
Terminology
Projected Available balance
Not on-hand (that may be greater)
Tells how many will be available Available to Promise – the units aren’t spoken for yet, we can assign them to a customerPlanned order releases
≠ scheduled receiptsOnly when material has been committed to their productionMove to scheduled receipts as late as possible
Preserves flexibilitySlide18
1605 Snow Shovel
1605
Snow Shovel
048
Scoop-shaft
connector
13122
Top Handle
Assy
314 scoop assembly
118 Shaft (wood)
062 Nail (4)
14127
Rivet (4)Slide19
314 scoop assembly
314 scoop assembly
14127 Rivet (6)
019 Blade (steel)
2142 Scoop (aluminum) Slide20
13122 Top Handle Assembly
1118
Top handle
Coupling (steel)
11495 Welded
Top handle bracket
Assembly
13122 Top Handle Assembly
457 Top handle
(wood)
129 Top Handle
Bracket (steel)
082 Nail (2)Slide21
BOM Explosion
Process of translating net requirements into components part requirements
Take into account existing inventories
Consider also scheduled receiptsSlide22
BOM Explosion Example
Need to make 100 shovels
We are responsible for handle assemblies.Slide23
13122 Top Handle Assembly
1118
Top handle
Coupling (steel)
11495 Welded
Top handle bracket
Assembly
13122 Top Handle Assembly
457 Top handle
(wood)
129 Top Handle
Bracket (steel)
082 Nail (2)Slide24
Net Requirements
Sch Gross Net
Part Description Inv Rec Req Req
Top handle assy 25 -- 100 75
Top handle 22 25
Nail (2 required) 4 50
Bracket Assy 27 -- Top bracket 15 --
Top coupling 39 15Slide25
Net Requirements
Sch Gross Net
Part Description Inv Rec Req Req
Top handle assy 25 -- 100 75
Top handle 22 25 75 28
Nail (2 required) 4 50 150 96
Bracket Assy 27 -- 75 48 Top bracket 15 --
Top coupling 39 15Slide26
13122 Top Handle Assembly
1118
Top handle
Coupling (steel)
11495 Welded
Top handle bracket
Assembly
13122 Top Handle Assembly
457 Top handle
(wood)
129 Top Handle
Bracket (steel)
082 Nail (2)Slide27
Net Requirements
Sch Gross Net
Part Description Inv Rec Req Req
Top handle assy 25 -- 100 75
Top handle 22 25 75 28
Nail (2 required) 4 50 150 96
Bracket Assy 27 -- 75 48 Top bracket 15 -- 48 33
Top coupling 39 15 48 --Slide28
Timing of Production
This tells us how many of each we need
Doesn’t tell when to start
Start as soon as possible?Dependent events (oh no, not that!)Slide29
13122 Top Handle Assy
Order policy: Lot-for-lotSlide30
13122 Top Handle Assy-2
Order policy: Lot-for-lotSlide31
457 Top Handle
One handle for
Each assemblySlide32
457 Top Handle
Order policy: Lot-for-lotSlide33
457 Top Handle
Order policy: Lot-for-lotSlide34
082 Nail (2 required)
Two
nails for
Each assemblySlide35
082 Nail (2 required)Slide36
082 Nail (2 required)Slide37
11495 Bracket Assembly
One
bracket for
Each assemblySlide38
11495 Bracket Assembly
Order policy: Lot-for-lotSlide39
129 Top BracketSlide40
129 Top handle bracket
Order policy: Lot-for-lotSlide41
1118 Top handle couplingSlide42
1118 Top handle coupling
Order policy: Lot-for-lotSlide43
1118 Top handle couplingSlide44
Other considerations
Safety stock if uncertainty in demand or supply quantity
Don’t let available go down to 0
Safety LT if uncertainty in arrival time
Place order earlier than necessaryOrder quantities
EOQ – Economic Order Quantity, Fixed SizeIf that’s not enough, order what you need, OR order two or more of the Fixed SizeLot-For-Lot, Periodic Order quantity, othersSlide45
Summary
Demand for final products
Compute needs for it and
Dependent Demand for componentsLook at all parts of the Bill of MaterialsComplete the Table for each
Bottom row (Pl Order Releases) becomes top row (Gross Requirements) of input components (also called children)Multiplied by # needed for each parent