chapter 12 resource planning

To Accompany Ritzman & Krajewski Foundations of Operations Management, © 2003 Prentice Hall, Inc. All rights reserved.

Chapter 12 Chapter 12

Resource Resource PlanningPlanning


Learning Objectives

• Be Able To Apply Concepts Listed In Learning Goals

• Be Able To Use Formulas Listed In The Equation Summary of Chapter


Material Requirements Planning (MRP)


MRP• Computer Based System

• Explodes Master Production Schedule (MPS) Into Required Amounts of Raw Materials & Subassemblies to Support MPS

• Nets Against Current Orders & Inventories to Develop Production & Purchased Material Ordering Schedules


Objectives of MRP

• Improve Customer Service

• Reduce Inventory Investment

• Improve Plant Operating Efficiency


Order ChangesOrder ChangesOrderOrder

PlanningPlanningReport Report

Elements of MRP

MRPMRPSystemSystem

Planned OrderPlanned OrderScheduleSchedule

InventoryInventoryTransaction DataTransaction Data

Bill ofBill of Materials FileMaterials File

MasterMasterProductionProductionScheduleSchedule

InventoryInventoryStatus FileStatus File

Service-PartsService-PartsOrders andOrders andForecastsForecasts

PerformancePerformance

Action Action NoticesNotices

Inputs Outputs


MRP Computer Program• Begins With Number of End Items Needed• Add Service Parts Not Included in MPS• Explode MPS Into Gross Requirements by Consulting

Bill of Materials File• Modify Gross Requirements to Get Net Requirements:• Net Requirements = Gross Requirements

+ Allocated Inventory

+ Safety Stock

- Inventory On Hand• Offset Orders to Allow for Lead Time


Material Requirements Material Requirements Plan InputsPlan Inputs

Bills ofmaterials

Engineeringand process

designs



Bills ofmaterials


designs

Othersources

of demand

Authorizedmaster production

schedule



Inventorytransactions

Inventoryrecords

Bills ofmaterials


designs

Othersources

of demand


schedule


Material Requirements Material Requirements Plan ExplosionPlan Explosion


Inventoryrecords

Bills ofmaterials


designs

MRPMRPexplosionexplosion

Othersources

of demand


schedule


Material Requirements Material Requirements Plan OutputPlan Output


Inventoryrecords

Bills ofmaterials


designs

Materialrequirements

plan


Othersources

of demand


schedule


Bill of MaterialsBill of Materials

Seat cushion

Seat-frame boards

Front legs A

Ladder-back chair

Back legs

Leg supports

Back slats


Bill of MaterialsBill of Materials

Back slats Seat cushion

Seat-frame boards

Leg supports

Front legs

Back legs A

Ladder-back chairJ (4)

Seat-frameboards

C (1)Seat

subassembly

D (2)Frontlegs

B (1)Ladder-backsubassembly

E (4)Leg

supports

AALadder-backLadder-back

chairchair

I (1)Seat

cushion

H (1)Seat

frame

G (4)Backslats

F (2)Backlegs

Level Code0

1

2

3


Master Production ScheduleMaster Production Schedule

200

Ladder-back chair

Kitchen chair

Desk chair

1 2

April May

670670

3 4 5 6 7 8

200

150

120

200

150

200

120

Aggregate production plan for chair family

670670


Inventory RecordInventory RecordItem: CDescription: Seat subassembly

Lot Size: 230 unitsLead Time: 2 weeks

Gross requirements 150150

1

230230

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8

00Scheduled receipts

Projected on-hand inventory

Planned receipts

Planned order releases

37

Week

0000





1

230230

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

Explanation:Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

Explanation:Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150 = 117 units.





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

Projected on-hand inventory balance at end of week t

Inventory on hand at end of week t - 1

Gross requirements

in week t

Scheduled or planned receipts in

week t

= + –





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 – – 33 – – 33 ––153153 ––273273 ––273273

Projected on-hand inventory balance at end of week t

Inventory on hand at end of week t - 1

Gross requirements

in week t

Scheduled or planned receipts in

week t

= + –


Item: CDescription: Seat subassembly



1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 ––33 – – 33 ––153153 – – 273273 – – 273273

Planned OrdersPlanned OrdersExplanation:Without a new order in week 4, there will be a shortage of three units: 117 + 0 + 0 – 120 = – 3 units.





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 227227

230230

Planned OrdersPlanned OrdersExplanation:Adding the planned receipt brings the balance to 117 + 0 + 230230 – 120 = 227 units.





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 227227

230230

230230

Planned OrdersPlanned OrdersExplanation:Offsetting for a two-week lead time puts the corresponding planned order release back to week 2.





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 227227

230230

230230

227227 7777 ––4343

Planned OrdersPlanned OrdersExplanation:The first planned order lasts until week 7, when projected inventory would drop to – 43.





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 227227

230230

230230

227227 7777

230230

Planned OrdersPlanned OrdersExplanation:Adding the second planned receipt brings the balance to 77 + 0 + 230230 – 120 = 187.





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 227227

230230

230230

227227 7777

230230

Planned OrdersPlanned OrdersExplanation:Adding the second planned receipt brings the balance to 77 + 0 + 230230 – 120 = 187.

187187





1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 227227

230230

230230

227227 7777

230230

187187

230230

Planned OrdersPlanned OrdersExplanation:The corresponding planned order release is for week 5.


Planned OrdersPlanned OrdersItem: CDescription: Seat subassembly



1

230230

117117

00

2

00

00

3

00

120120

4

00

5

00

150150

6

00

120120

7

00

8



Planned receipts


37

Week

0000

117117 117117 227227

230230

230230

227227 7777

230230

187187

230230

187187


Lot-Sizing Rule ComparisonLot-Sizing Rule Comparison The FOQ rule generates high average The FOQ rule generates high average

inventory because it creates remnants.inventory because it creates remnants.

The POQ rule reduces The POQ rule reduces average on-hand inventory average on-hand inventory because it does a better because it does a better job of matching order job of matching order quantity to requirements.quantity to requirements.

The L4L rule minimizes The L4L rule minimizes inventory investment inventory investment but maximizes the number of orders placed.but maximizes the number of orders placed.


Safety StockSafety Stock


MRP OutputsMRP OutputsMRP MRP

explosionexplosion


MRP OutputsMRP Outputs

Material requirements plan

Action notices Releasing new orders Adjusting due dates

Priority reports Dispatch lists Supplier schedules

Capacity reports Capacity requirements planning Finite capacity scheduling Input-output control

MRP MRP explosionexplosion








Routings and time

standards








Manufacturing resources plan

Performance reports

Routings and time

standards








Manufacturing resources plan

Performance reportsCost and price data

Routings and time

standards


MRP ExplosionMRP ExplosionItem: Seat subassemblyLot size: 230 units

Lead time: 2 weeks


1

230230

117117

2 3

120120

4 5

150150

6

120120

7 8

Scheduled receipts


Planned receipts


37

Week

117117 117117

0 00 0

00 00 000 00 0

227 227 77 187 187

230230

230230


Item: Seat subassemblyLot size: 230 units

Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned receipts


Week

0 00 0

230

230

230

230

MRP ExplosionMRP Explosion



Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned receipts


Week

0 00 0

230

230

230

230


Item: Seat framesLot size: 300 units

Lead time: 1 week

Gross requirements

1

00

2 3 4 5 6 7 8

Scheduled receipts


Planned receipts


40

Week

00 00 00300 00 0

Item: Seat cushionLot size: L4L

Lead time: 1 week

Gross requirements

1

00

2 3 4 5 6 7 8

Scheduled receipts


Planned receipts


0

Week

00 00 000 00 0



Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned receipts


Week

0 00 0

230

230

230

230


Lead time: 1 week


1

00

2 3 4 5 6 7 8

Scheduled receipts


Planned receipts


40

Week

230

00 00 00300 00 0


Lead time: 1 week


1

00

2 3 4 5 6 7 8

Scheduled receipts


Planned receipts


0

Week

230

00 00 000 00 0

Usage quantity: 1 Usage quantity: 1




Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned receipts


Week

0 00 0

230

230

230

230


Lead time: 1 week


1

00

2 3

00

4 5 6 7 8

Scheduled receipts


Planned receipts


40

Week

230 2300

00 00 00300 00 0


Lead time: 1 week


1

00

2 3

00

4 5 6 7 8

Scheduled receipts


Planned receipts


0

Week

230 2300

00 00 000 00 0

Usage quantity: 1 Usage quantity: 1




Lead time: 2 weeks


1 2 3

120120

4 5

150150

6

120120

7 8

Planned receipts


Week

0 00 0

230

230

230

230


Lead time: 1 week


1

00

4040

2 3

00

4 5

00

6

00

7 8

Scheduled receipts


Planned receipts


40

Week

110110 110110

230 2300 0

00 00 00300 00 0

110 180 180 180 180

300

300


Lead time: 1 week


1

00

00

2 3

00

4 5

00

6

00

7 8

Scheduled receipts


Planned receipts


0

Week

00 00

230 2300 0

00 00 000 00 0

0 0 0 0 0

230

230

230

230




Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

300

300


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

230

230

230

230

00 00 00 00230 2300 000 00 00 00230 2300 0




Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

300

300


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

230

230

230

230

00 00 00 00230 2300 000 00 00 00230 2300 0

Gross requirements

1

00

2 3 4 5 6 7 8

Scheduled receipts

Planned receipts


200

Week

00 00 000 00 0


Item: Seat-frame boardsLot size: 1500 units

Lead time: 1 week




Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

300

300


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

230

230

230

230

00 00 00 00230 2300 000 00 00 00230 2300 0


1

00

2 3

12001200

4 5

00

6

00

7 8

Scheduled receipts

Planned receipts


200

Week

0 00 0

00 00 000 00 0



Lead time: 1 week

Usage quantity: 4




Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

300

300


Lead time: 1 week

Gross requirements

1 2 3 4 5 6 7 8

Planned receipts


Week

230

230

230

230

00 00 00 00230 2300 000 00 00 00230 2300 0


1

00

200200

2 3

12001200

4 5

00

6

00

7 8

Scheduled receipts

Planned receipts


200

Week

200200 200200

0 00 0

00 00 000 00 0

500 500 500 500 500

1500

1500



Lead time: 1 week



CRP


CRP

• Tests MPS for Feasibility• Utilizes Routings to Determine

Labor/Machine Loads• If Schedule Feasible, Recommends

Freezing• If Schedule Overloads Resources,

Points Out Processes That Are Overscheduled


Load Schedules

• Compares Actual Labor and Machine Hours Against Available Hours

• Offsets Schedules Between Successive Stages of Production by Lead Times

• Provides Feasible MPS and Economically Loaded Work Centers

• Promotes System Operating Efficiency ... Lowers Costs!


Capacity RequirementsCapacity RequirementsDate: Week: 32Plant 01 Dept. 03: Lathe StationCapacity: 320 hours per week

Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours

Total hours



Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours 210 104 41 0 0 0

Total hours



Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours 210 104 41 0 0 0

Total hours 300 260 390 210 360 280


Capacity RequirementsCapacity Requirements

Explanation:Projected capacity requirements exceed weekly hours of capacity.

Date: Week: 32Plant 01 Dept. 03: Lathe StationCapacity: 320 hours per week

Week

32 33 34 35 36 37

Planned hours 90 156 349 210 360 280

Actual hours 210 104 41 0 0 0

Total hours 300 260 390 210 360 280


MRP IIMRP II

Inventory records Inventory transactions

Bills of materialsRoutings

Time standards


Master production schedule

Customer orders Forecasts

Figure 12.11


MRP IIMRP II Figure 12.11




Time standards









Time standards



Manufacturing resource planCost and

financial data







Time standards



Manufacturing resource planCost and

financial data

Purchasing reports

Financial/ accounting

reports

Sales and marketing

reports

Human resource reports

Manufacturing reports



Distribution Distribution Requirements PlanningRequirements Planning

Retail stores



Retail stores

Distribution centers



Retail stores

Distribution centers

Plants


Bill of ResourcesBill of Resources

(a)

Level 1Discharge

Level 2Intermediate care

Level 3Postoperative care

(Step down)


(Intensive)


(Testing)

Level 5Surgery


(Angiogram)




(Angiogram)

(b)

(a)

Level 1Discharge



(Step down)


(Intensive)


(Testing)

Level 5Surgery


(Angiogram)



(a)

Level 1Discharge



(Step down)


(Intensive)


(Testing)

Level 5Surgery


(Angiogram)

Nurse(6 hr)

MD(1 hr)

Therapy(1 hr)

Bed(24 hr)

Lab(3 tests)

Kitchen(1 meal)

Pharmacy(10

medicines)

(b)


(Angiogram)

chapter 12 resource planning

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