Chapter 16 Inventory Systems for Dependent Demand

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Chapter 16Inventory Systems for Dependent Demand

• Master production schedule
• Material Requirements Planning (MRP)
• System structure
• Example
• MRP II
• MRP/JIT

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Material Requirements Planning

• How much of an item is needed?
• When is an item needed to complete
• a specified number of units...
• in a specified period of time?
• Dependent demand drives MRP

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Introductory Example - Dependent Demand
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
Product Structure Tree for Assembly A
Demand Day 10 50 A Day 8 20 B (Spares) Day
6 15 D (Spares)
Create a schedule to satisfy demand.
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LT 1 day
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• The McGraw-Hill Companies, Inc., 1998

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LT 2
Spares
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Irwin/McGraw-Hill

• The McGraw-Hill Companies, Inc., 1998

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• The McGraw-Hill Companies, Inc., 1998

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Master Production Schedule (MPS)

• Time-phased plan specifying how many and when the
  firm plans to build each end item

MPS (Specific End Items)
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Time Fences

• Frozen
• No schedule changes allowed within this window
• Moderately Firm
• Specific changes allowed within product groups as
  long as parts are available
• Flexible
• Significant variation allowed as long as overall
  capacity requirements remain at the same levels

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Time Fences
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Material Requirements Planning

• Based on a master production schedule, a material
  requirements planning system
• Creates schedules identifying the specific parts
  and materials required to produce end items
• Determines exact numbers needed
• Determines the dates when orders for those
  materials should be released, based on lead times

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Material planning (MRP)
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• The McGraw-Hill Companies, Inc., 1998

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Bill of Materials (BOM) FileA Complete Product
Description

• Materials
• Parts
• Components
• Production sequence
• Modular BOM
• Subassemblies
• Planning BOM
• Fractional options

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Inventory Records File

• Each inventory item carried as a separate file
• See, for example, Exhibit 16.15
• Status according to time buckets
• Pegging
• Identify each parent item that created demand

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Primary MRP Reports

• Planned orders
• to be released at a future time
• Order release notices
• to execute the planned orders
• Changes in due dates of open orders due to
  rescheduling

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Primary MRP Reports

• Cancellations or suspensions of open orders
• due to cancellation or suspension of orders on
  the master production schedule.
• Inventory status data

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Net Change System

• Activity driven
• Net change schedules
• Potential for system nervousness

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Another MRP Example
Requirements include 95 units (80 firm orders and
15 forecast) of X in week 10 plus the following
spares
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Adding some more terminology

• Gross Requirements
• On-hand
• Net requirements
• Planned order receipt
• Planned order release

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Manufacturing Resource Planning (MRP II)

• Goal Plan and monitor all resources of a
  manufacturing firm (closed loop)
• manufacturing
• marketing
• finance
• engineering
• Simulate the manufacturing system

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