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MRP and Erp: Mcgraw-Hill/Irwin

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19 views

MRP and Erp: Mcgraw-Hill/Irwin

mgt 613 ppt

Uploaded by

Anaya Malik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 16

13-1 MRP and ERP

Lecture
34

MRP and ERP

Operations Management, Eighth Edition, by William J. Stevenson


McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
13-2 MRP and ERP

MRP

 Material requirements planning (MRP):


Computer-based information system that
translates master schedule requirements for
end items into time-phased requirements for
subassemblies, components, and raw
materials.
13-3 MRP and ERP

MRP Process
 Three Inputs
 Master Schedule Plan
 Bill of Materials

 Inventor Records
13-4 MRP and ERP

Figure 13.2
MRP Inputs MRP Processing MRP Outputs

Changes
Order releases
Master
schedule Planned-order
schedules
Primary
reports Exception reports
Bill of Planning reports
materials MRP computer Secondary
Performance-
programs reports control
reports

Inventory
records Inventory
transaction
13-5 MRP and ERP

Cumulative lead time


 Cumulative lead time: The sum of the lead times
that sequential phases of a process require, from
ordering of parts or raw materials to completion of
final assembly.
13-6 MRP and ERP

Product Structure Tree


Figure 13.5

Level Chair
0

1 Leg Back
Assembly Seat Assembly

Cross Side Cross Back


2 Legs (2)
bar Rails (2) bar Supports (3)

3
13-7 MRP and ERP

MRP Processing

 Gross requirements
 Schedule receipts

 Projected on hand

 Net requirements

 Planned-order receipts

 Planned-order releases
13-8 MRP and ERP

Other Considerations

 Safety Stock
 Inventory systems with independent
demand should not require safety stock
below the end item level.
13-9 MRP and ERP

Other Considerations
 Lot sizing is the Choosing of a lot size for
ordering or production.
 For dependant demand, managers have variety
of methods available as there is no clear cut
advantage associated with anyone particular
method. They can use
1. Lot for Lot Ordering.
2. Economic Order Quantity Model
3. Fixed Period Ordering
4. Part Period Model.
13-10 MRP and ERP

Other Considerations
 Lot-for-lot ordering
 Simplest method
 The order or run size for EACH period is set equal to
demand for that period.
 Eliminates holding costs for parts carried over to other
periods.
 Minimizes investment in inventory.
 It involves different order sizes ( can not make use of
fixed order size , standard containers and standardized
procedures) and requires a new setup for each run.
 If set up costs can be reduced this would be ideal to
approximate the minimum cost lot size.
13-11 MRP and ERP

Other Considerations

 Economic order quantity models tends to be


less ideal.
 Fixed Period Ordering provides coverage for
some predetermined number of periods.
 Rule of thumb being to order to cover a two
period interval.
13-12 MRP and ERP

Other Considerations

 Part-Period Model represents an attempt to


balance set up and holding costs.
 The part period term refers to holding part or
parts over a number of periods, e.g if a business
holds 20 parts for 3 periods this would be a 20 X
3= 60 parts period.
 Economic Part Period ( EPP) is the ratio of setup
costs to the cost of hold a unit for one period.
13-13 MRP and ERP

Other Considerations

 Part-Period Model
 Various order sizes are examined for planning
horizon and each one\s number of part period is
determined.
 The one that is closet to the EPP is selected as the
best lot size.
13-14 MRP and ERP

Other Considerations
 Example
 Use part-period method to determine order sizes for
the demand schedule of a Montessori equipment
manufacturer in Karachi. The setup cost is Rs. 8000
per run for this item and unit holding cost is Rs. 100
per period.
13-15 MRP and ERP

Other Considerations
 Example
PERIODS

1 2 3 4 5 6 7 8
DEMAND
60 40 20 2 30 - 70 50
CUMMULA 60 100 120 122 152 152 222 272
TIVE
DEMAND
13-16 MRP and ERP

Other Considerations
 STEP I : First compute EPP which is 8000/100=80
PERIODS

Period when Lot Extra Multiplied Part Cummula


order is Size Inventory by Periods tive Part
placed carried Periods Periods
carried
1
60 0 0 0 0
100 40 1 40 40
120 20 2 40 80

122 2 3 6 86
5 30 0 0 0 0

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