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Chapter 14

GMS401- Chapter 14- Material requirements, Planning and Enterprise, Resource Planning.docx

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Global Management Studies
GMS 401
Sam Lampropoulos

GMS401- Chapter 14- Material requirements, Planning and Enterprise, Resource Planning Introduction  Dependent demand- demand for subassemblies, parts, or raw materials that are derived from the plan for production of finished goods  Independent demand for most finished goods and supplies is fairly steady once allowance are made for seasonal variations o Dependent demands tend to be sporadic or ‘lumpy’ o Large quantity are used at specific points in time or no usage at other times  Once the independent demand is known the dependent demand can be determined  Overview of the map o Material requirements (MPR)- determines the plans for purchasing and production of dependent-demand components.  Determine when and how much to order o Production plan for a specified number of each product is converted into the requirements for its sub-assemblies, parts, and raw materials, working backward from the due date of the product, using lead times and inventories on hand o Historically—planning purchasing and production of components for assembled products suffered from 2 difficulties  Enormous task of setting up production schedules for products  Keeping track of large numbers of raw materials, parts and subassemblies and coping with change  Lack of differentiation between independent demand and dependent demand items o Outputs from MRP—immediate and planning other releases and various reports MRP Inputs  Master production schedule- anticipated build schedule stating which end items are to be produced, when, and in what quantities for the next 12 weeks or so o Time-phased plan specifying timing and quantity of production for each end item.  Separates the planning horizon into series of time periods or time buckets—expressed in weeks or days o Separated into time buckets o Planning horizon > cumulative lead time (for all phases of process)  Cumulative lead time- sum of the lead times that sequential phases of a process require, from ordering of components to completion of final assembly  Bills of material (BOM)- listing of all of the raw materials, parts, and subassemblies needed to produce one unit of a product o Assembly diagram and product structure tree – Visual and nominal depiction of the requirements in a bill of material, where components are shown by levels 1 GMS401- Chapter 14- Material requirements, Planning and Enterprise, Resource Planning o Quantities of each item in the product structure tree refer to the amounts needed to complete one unit of the parent at the next higher level  Special types of BOM o Planning bill- also called a pseudo bill or a kit, it’s a commination of several BOMS  Does not relate to a real product—its use will result in the calculation of the right number of components to be purchases or produced  Reduce the number of BOMs necessary for planning when the products have various options o Modular bill- a BOM for a module  Used to reduce the number of BOMs when a product consists of various modules, each with a few options o Phantom bill- transient bill, is for an item that is usually not kept in inventory  0 lead time and special stock code so that it will not be regularly ordered  Inventory levels, lead times, and open orders o Lead time used to timing orders o Open order—has quality and due date, will be considered projected on-hand inventory on its due date MRP Processing, updating, and output  MRP processing- takes the end items requirements specified by the MPS and ‘explodes’ them into time-phases requirements for fabrication or assembly of subassemblies  Materials that a company must actually acquire to meet the demand generated by the MPS are the new requirements  Net requirements in period (t)= gross requirements in period (t) - projected inventory at the start of period (t) – scheduled receipts + safety stock o Negative value= no net requirement  Timing and size of orders are determined by planning-order release  Timing of receipts od these quantities is indicated by planned-order receipts  Inventory requirements o Net requirements= gross requirements- available inventory o Available inventory= projected on hand – safety stock – inventory allocated to other items  Gross requirements- demand for an item during a time period  Schedule receipt- open order schedule to arrive from a vendor or shop floor  Projected on-hand- expected amount of inventory that will be on hand at the beginning of a time period  Net requirement- actual amount needed in a time period  Planned-order receipt- quantity planned to be received in the beginning of a period  Planned-order release- quantity planned to be received in the beginning of a period planned-order receipt offset by lead time  Pegging- identifying the parent items that have generated a given set of requirements for an item  Lot for lot ordering- determine orders based on requirements  Lot size ordering- planned receipts may exceed new requirements Updating the system  Rolling horizon that plans are updated and revised so that they reflect the next set of periods  System nervousness can result from too many changes small changes can have large effects 2 GMS401- Chapter 14- Material requirements, Planning and Enterprise, Resource Planning  Regenerative MRP system- recalculates all the MPR quantities periodically o Updates MRP records periodically o Best suited for stable situations o
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