Chapter 12: Learning Objectives
You should be able to:
Describe the conditions under which MRP is most appropriate
Describe the inputs, outputs, and nature of MRP processing
Explain how requirements in a MPS are translated into material requirements for lower-level items
Discuss the benefits and requirements of MRP
Explain how an MRP system is useful in capacity requirements planning
Outline the potential benefits and some of the difficulties users have encountered with MRP
Describe MRPII and its benefits
Describe ERP, what it provides, and its hidden costs
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MRP and ERPMcGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.You should be able to:Describe the conditions under which MRP is most appropriateDescribe the inputs, outputs, and nature of MRP processingExplain how requirements in a MPS are translated into material requirements for lower-level itemsDiscuss the benefits and requirements of MRPExplain how an MRP system is useful in capacity requirements planningOutline the potential benefits and some of the difficulties users have encountered with MRPDescribe MRPII and its benefitsDescribe ERP, what it provides, and its hidden costs12-*Student SlidesDependent demandDemand for items that are subassemblies or component parts to be used in the production of finished goods.Dependent demand tends to be sporadic or “lumpy”Large quantities are used at specific points in time with little or no usage at other times12-*Student SlidesMaterial requirements planning (MRP):A computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.The MRP is designed to answer three questions:What is needed?How much is needed?When is it needed?Student Slides12-*Student Slides12-*MRP processing takes the end item requirements specified by the master schedule and “explodes” them into time-phased requirements for assemblies, parts, and raw materials offset by lead timesStudent Slides12-*The MRP is based on the product structure tree diagramRequirements are determined level by level, beginning with the end item and working down the treeThe timing and quantity of each “parent” becomes the basis for determining the timing and quantity of the “children” items directly below it.The “children” items then become the “parent” items for the next level, and so onStudent Slides12-*Student Slides12-*Student Slides12-*Student Slides12-*Enables managers to easilydetermine the quantities of each component for a given order sizeTo know when to release orders for each componentTo be alerted when items need attentionAdditional benefitsLow levels of in-process inventoriesThe ability to track material requirementsThe ability to evaluate capacity requirementsA means of allocating production timeThe ability to easily determine inventory usage via backflushingExploding an end item’s BOM to determine the quantities of the components that were used to make the item12-*Student SlidesTo implement an effective MRP system requires:A computer and the necessary software to handle computations and maintain recordsAccurate and up-to-dateMaster schedulesBills of materialsInventory recordsIntegrity of data files12-*Student SlidesManufacturing resources planning (MRP II)Expanded approach to production resource planning, involving other areas of the firm in the planning process and enabling capacity requirements planningMost MRP II systems have the capability of performing simulation to answer a variety of “what if” questions so they can gain a better appreciation of available options and their consequencesStudent Slides12-*Enterprise resource planning (ERP) ERP was the next step in an evolution that began with MRP and evolved into MRPIIERP, like MRP II, typically has an MRP coreRepresents an expanded effort to integrate standardized that will permit information sharing among different areas of an organization in order to manage the system more effectivelyERP systems are composed of a collection of integrated modulesStudent Slides12-*ERP strategic implicationsHigh initial costHigh cost to maintainNeed for future upgradesIntensive training requiredERP as a strategic planning toolCan improve supply chain managementStronger links between their customers and their supplierMakes the organization more capable of satisfying changing customer requirementsOffers opportunities for continuous improvement12-*Student Slides