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Planning Process
Aggregate production plan
Master production schedule Material requirements plan Capacity plan
No
Realistic Yes
MPS Example 1
Months Aggregate Production Plan (shows the total quantity of amplifiers) Weeks Master Production Schedule (shows the specific type and quantity of amplifier to be produced 240 watt amplifier 150 watt amplifier 75 watt amplifier 1 January 1,500 February 1,200
100 500
100 450
MPS Planning
Ft Ot It Qt
1000 1000 1000 1000 2000 2000 2000 2000 1200 800 300 200 100 0 0 0
W1
W2
W3
W4
W5
W6
W7
W8
Ft Ot It Qt
1000 1000 1000 1000 2000 2000 2000 2000 1200 800 300 200 100 0 0 0
Objectives of MRP
Minimize inventory level Maximize operating efficiency Improve customer service
Inputs of MRP
Master production schedule Specifications or bills-of-material Inventory availability Purchase orders outstanding Lead times
Lead times
(Item master file) Planned order report
Purchase advice
Exception reports Order early or late or not needed Order quantity too small or too large
Purchasing data
Items above given level are called parents Items below given level are called children
E(2)
Packing box and installation kit of wire, bolts, and screws
E(2)
D(2)
G(1)
D(2)
Amp-booster
12 Speaker 12 Speaker
BOM
Lvl 0 1 1 2 2 3 3
Part A B C E F D G
Qty 1 1 1 1 1 1 1
UM EA EA EA EA EA EA EA
Description Awesome speaker kits Std. 12" speaker set Std. 12" speaker set w/ amp-booster packing box and installation kit 12" speaker & booster assembly 12" speaker Amp-booster
BOM Explosion
To produce 50 part A:
Part B: Part C: Part D: Part E: Part F: Part G: 2 x number of As = 3 x number of As = 2 x number of Bs + 2 x number of Fs = 2 x number of Bs + 2 x number of Cs = 2 x number of Cs = 1 x number of Fs = (2)(50) = (3)(50) = 100 150
(2)(100) + (2)(300) = 800 (2)(100) + (2)(150) = 500 (2)(150) = 300 (1)(300) = 300
Gross Requirements
1 A. B. C. Required date Order release date Required date Order release date Required date Order release date 100 150 150 1 week 2 weeks 300 300 600 600 300 300 2 weeks 200 200 1 week 3 weeks 2 3
Week 4 5
7 50 100
E.
F. D. G.
200
200 300
300
MRP
Level 0, Part A 0 1 2 50 50 3 4 50 5 6 50 7 8 50 9 10 100
Gross Requirements
Scheduled Receipts Inventory Balance Net Requirements Planned Receipts Planned Order Release
Level 1, Part B
Gross Req. Sch. Receipts Inv. Balance Net Req. Plan. Receipts Plan. Order Level 1, Part C Gross Req. Sch. Receipts
1
50
2
50
10
50
1 50
10
Inv. Balance
Net Req. Plan. Receipts Plan. Order
50
Level 2, Part E
Gross Req. Sch. Receipts Inv. Balance Net Req. Plan. Receipts Plan. Order Level 2, Part F Gross Req. Sch. Receipts
10
10
Inv. Balance
Net Req. Plan. Receipts Plan. Order
200
Level 3, Part D
Gross Req. Sch. Receipts Inv. Balance Net Req. Plan. Receipts Plan. Order Level 3, Part G Gross Req. Sch. Receipts
10
500
10
100 100
Inv. Balance
Net Req. Plan. Receipts Plan. Order
100
Capacity Plan
MRP systems do not consider capacity during normal planning cycles Finite capacity scheduling (FCS) recognizes actual capacity limits By merging MRP and FCS, a finite schedule is created with feasible capacities which facilitates rapid material movement
Example
MPS/MRP W1 W2 W3 W4 Bill of capacity (min) Assembly Inspection
1000 1500
20 24 22 25
Given Week 4 capacity
Assm. Insp.
1200 110
Allows automation and integration of many business processes Shares common data bases and business practices Produces information in real time levels Coordinates business from supplier evaluation to customer invoicing Has potential to reduce transaction costs and to increase the speed and accuracy of information
ERP Modules
Basic MRP Finance Human resources Supply chain management (SCM) Customer relationship management (CRM)
ERP Structure
Provides integration of the supply-chain, production, and administration Creates commonality of databases Can incorporate improved best processes Increases communication and collaboration between business units and sites Has an off-the-shelf software database May provide a strategic advantage
Is very expensive to purchase and even more so to customize Implementation may require major changes in the company and its processes Is so complex that many companies cannot adjust to it Involves an ongoing, possibly never ending, process for implementation Expertise is limited with ongoing staffing problems