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Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Operations Management

Material Requirements Planning (MRP) & ERP Chapter 14

2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458

Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Collins IndustriesLargest manufacturer of ambulances in the worldInternational competitor12 major ambulance designs18,000 different inventory items6,000 manufactured parts12,000 purchased partsMRP: IBMs MAPICS


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Collins IndustriesCollins requires:Material plan must meet both the requirements of the master schedule and the capabilities of the production facilityPlan must be executed as designedEffective time-phased deliveries, consignments, and constant review of purchase methodsMaintenance of record integrity


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Inventory Classifications


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Dependent versus Independent Demand


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Requirements for Effective Use of Dependent Demand Inventory ModelsEffective use of dependent demand inventory models requires that the operations manager know the:master production schedulespecifications or bills-of-materialinventory availabilitypurchase orders outstandinglead times


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Inputs to the Production Plan


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*The Planning Process


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Aggregate Production Plan


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Typical Focus of the Master Production Schedule


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*List of components & quantities needed to make product Provides product structure (tree)Parents: Items above given levelChildren: Items below given levelShows low-level codingLowest level in structure item occursTop level is 0; next level is 1 etc.Bill-of-Material


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Product Structure for Awesome A


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Modular billsModules are final components used to make assemble-to-stock end itemsPlanning billsUsed to assign artificial parentReduces number of items scheduledPhantom billsUsed for subassemblies that exist temporarilySpecial Bills-of-Material


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Bill-of-Material Product Structure Tree


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Time-Phased Product Structure


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Manufacturing computer information system Determines quantity & timing of dependent demand items 1995 Corel Corp.Material Requirements Planning (MRP)


1

2

3

4

5

Gross Requirements

2

20

25

15

Scheduled Receipts

5

30

Available

25

23

33

33

8

Net Requirements

7

Planned Order Receipts

7

Planned Order Releases

7

Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*

Computer systemMainly discrete productsAccurate bill-of-materialAccurate inventory status99% inventory accuracyStable lead times 1984-1994 T/Maker Co.MRP Requirements


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Increased customer satisfaction due to meeting delivery schedules Faster response to market changesImproved labor & equipment utilizationBetter inventory planning & schedulingReduced inventory levels without reduced customer serviceMRP Benefits


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Structure of the MRP System


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Gross Material Requirements Plan for 50 Awesome A Speaker Kits


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Shows items to be producedEnd item, customer order, moduleDerived from aggregate planMaster Production ScheduleExample


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Derivation of Master ScheduleTherefore, these are the gross requirements for BPeriods


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*MRP DynamicsSupports replanningProblem with system nervousnessTime fence - allows a segment of the master schedule to be designated as not to be rescheduledPegging - tracing upward in the bill-of-materials from the component to the parent itemThat a manager can react to changes, doesnt mean he/she should


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*MRP and JITMRP - a planning and scheduling technique with fixed lead timesJIT - a way to move material expeditiouslyIntegrating the two:Small bucket approach and back flushingBalanced flow approach


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Lot-Sizing TechniquesLot-for-lotEconomic Order QuantityPart Period BalancingWagner-Whitin Algorithm


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*MRP Lot-Sizing Problem: Lot-for-Lot Techniques


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*MRP Lot-Sizing Problem: EOQ Technique


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*MRP Lot-Sizing Problem: PPB Technique


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Extensions of MRPClosed loop MRPCapacity planning - load reportsMRP II - Material Resource PlanningEnterprise Resource Planning


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Closed Loop MRP


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Extensions of MRPCapacity PlanningTactics for smoothing the load and minimizing the impact of changed lead time include:Overlapping - reduces the lead time, entails sending pieces to the second operation before the entire lot has completed the first operationOperations splitting - sends the lot to two different machines for the same operationLot splitting - breaking up the order and running part of it ahead of the schedule


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Initial Resource Requirements/Smoothed Resource Requirements


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Extensions to MRPEnterprise Resource PlanningMRP II with ties to customers and suppliers


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*MRP and ERP Information Flows, Integrated with Other Systems


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*MRP in ServicesCan be used when demand for service or service items is directly related to or derived from demand for other servicesrestaurant - rolls required for each mealhospitals - implements for surgeryetc.


Transparency Masters to accompany Heizer/Render Principles of Operations Management, 5e, and Operations Management, 7e 2004 by Prentice Hall, Inc. Upper Saddle River, N.J. 0745814-*Product Structure, Bill of Materials, Bill of Labor for Veal Picante


***One thought to be remembered from Collins is the emphasis on maintenance of record integrity. Error rates as low as 2 - 4 percent may lead to instability in an MRP system.**We start this chapter by linking Dependent Demand Inventory back to Independent Demand Inventory. You might note to students that independent demand is created external to the company, dependent demand, internally.*You might add to this list that the operations manager must know that inventory records, bill-of-materials, etc., are accurate.**Students should be asked to explain why the focus of the Master Production Schedule changes depending upon the nature of the production process.*A bicycle provides a good example for deriving a bill-of-material. Most students remember enough of the parts of a bicycle to develop several levels.*You might ask students to develop a similar product for a product with which they are familiar. Possibly a ball-point pen?*The bicycle is simple, yet complex enough to be used for a special bills example also.

Modules - pair of wheels; gearshift & cables; multiple sprockets; etc. Etc.

The following slide outlines such an example.**This slide has been animated to demonstrate backward scheduling - item A is scheduled first, then the remaining items are scheduled so as to produce A at the proper time.*A point to stress here is that while MRP is heavily computer-based, it is more than simply a computer program.*It is important to emphasize the need for accurate records - both bill-of-material and inventory.*While MRP certainly can produce these benefits, it is useful to discuss the problems faced in establishing an MRP system. A number of companies have given up on the task - the necessary transformation of old processes has simply proven too difficult.*Emphasize that this slide illustrates the overall technological structure of MRP - people and process are also extremely important in its actual success.***This slide is also animated in an attempt to demonstrate the building of the master schedule.*This slide does merit discussion - especially the items about system nervousness and the managers reaction to change.*Students sometimes begin to think of MRP and JIT as in some way interchangeable. Here is a chance to stress the differences.*****What does one gain by implementing one of the extensions of MRP?**It usually seems to be helpful to discuss the overall concept of load leveling before tackling load leveling and MRP.****Have the students consider what modifications may be necessary for MRP to be valuable in services.*

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