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Chapter 15 - Resource Planning

Chapter 15 - Resource Planning. Demand Patterns. 2000 — 1500 — 1000 — 500 — 0. 2000 — 1500 — 1000 — 500 — 0. Rims. Rims. Bicycles. | | | | | | | | | | 1 5 10 Day. | | | | | | | | | | 1 5 10 Day.

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Chapter 15 - Resource Planning

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  1. Chapter 15 -Resource Planning

  2. Demand Patterns

  3. 2000 — 1500 — 1000 — 500 — 0 2000 — 1500 — 1000 — 500 — 0 Rims Rims Bicycles | | | | | | | | | | 1 5 10 Day | | | | | | | | | | 1 5 10 Day (a) (b) Figure 15.1 Demand Patterns

  4. 2000 — 1500 — 1000 — 500 — 0 2000 — 1500 — 1000 — 500 — 0 Rims Rims Bicycles Reorder point | | | | | | | | | | 1 5 10 Day | | | | | | | | | | 1 5 10 Day Demand Patterns (a) (b) Figure 15.1

  5. 2000 — 1500 — 1000 — 500 — 0 Order 1000 on day 3 Rims Rims Bicycles Reorder point | | | | | | | | | | 1 5 10 Day | | | | | | | | | | 1 5 10 Day Figure 15.1 2000 — 1500 — 1000 — 500 — 0 Demand Patterns (a) (b)

  6. 2000 — 1500 — 1000 — 500 — 0 Order 1000 on day 3 Rims Rims Bicycles Reorder point | | | | | | | | | | 1 5 10 Day | | | | | | | | | | 1 5 10 Day Figure 15.1 2000 — 1500 — 1000 — 500 — 0 Demand Patterns (a) (b)

  7. Prior to MRP and before computers dominated the industry, reorder-point/reorder-quantity (ROP/ROQ) type methods like EOQ had been used in manufacturing and inventory management. In the 1960s, Joseph Orlicky, a former IBM employee developed Material Requirements Planning (MRP). By 1975, MRP was implemented in 150 companies. This number had grown to about 8,000 by 1981. In the 1980s, Orlicky's MRP evolved into Oliver Wight's Manufacturing Resource Planning (MRP II), which brings Master Scheduling, Capacity Requirements Planning and other concepts to classical MRP. In the 80´s the American Production and Inventory Control Society (APICS) helped to spread the MRP/MRPII concepts. By 1989, about one third of the software industry was MRP II software sold to American industry ($1.2 billion worth of software). MRP - history

  8. Engineering and process designs Bills of materials Material Requirements Plan Inputs Figure 15.2

  9. Authorized master production schedule Other sources of demand Engineering and process designs Inventory transactions Inventory records Bills of materials Material Requirements Plan Inputs Figure 15.2

  10. Authorized master production schedule Other sources of demand Engineering and process designs Inventory transactions Inventory records MRP explosion Bills of materials Material Requirements Plan Explosion Figure 15.2

  11. Authorized master production schedule Other sources of demand Engineering and process designs Inventory transactions Inventory records MRP explosion Bills of materials Material requirements plan Material Requirements Plan Output Figure 15.2

  12. Bill of Materials Back slats Seat cushion Leg supports Seat-frame boards Back legs Front legs A Ladder-back chair Figure 15.3

  13. A Ladder-back chair Back slats Seat cushion B (1) Ladder-back subassembly C (1) Seat subassembly D (2) Front legs E (4) Leg supports Leg supports Seat-frame boards F (2) Back legs G (4) Back slats H (1) Seat frame I (1) Seat cushion Back legs Front legs A Ladder-back chair J (4) Seat-frame boards Bill of Materials Figure 15.3

  14. April May Master Production Schedule 1 2 3 4 5 6 7 8 Ladder-back chair 150 150 Kitchen chair 120 120 Desk chair 200 200 200 200 Aggregate production plan 670 670 for chair family Figure 15.4

  15. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 Planned receipts Planned order releases Figure 15.5 Inventory Record

  16. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 Planned receipts Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150 Planned order releases Figure 15.5 Inventory Record

  17. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 Planned receipts Explanation: Gross requirements are the total demand for the two chairs. Projected on-hand inventory in week 1 is 37 + 230 – 150 = 117 units. Planned order releases Figure 15.5 Inventory Record

  18. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.6 Inventory Record

  19. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 Planned receipts Scheduled or planned receipts in week t Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t = + – Planned order releases Figure 15.5 Inventory Record

  20. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 – 3 – 3 –153 –273 –273 Planned receipts Scheduled or planned receipts in week t Projected on-hand inventory balance at end of week t Inventory on hand at end of week t - 1 Gross requirements in week t = + – Planned order releases Figure 15.5 Inventory Record

  21. Explanation: Without a new order in week 4, there will be a shortage of three units: 117 + 0 + 0 – 120 = – 3 units. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 –3 – 3 –153 – 273 – 273 Planned receipts Planned order releases Figure 15.6 Planned Orders

  22. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 Planned receipts Planned order releases Figure 15.6 Planned Orders

  23. Explanation: Adding the planned receipt brings the balance to 117 + 0 + 230 – 120 = 227 units. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 227 Planned receipts 230 Planned order releases Figure 15.6 Planned Orders

  24. Explanation: Adding the planned receipt brings the balance to 117 + 0 + 230 – 120 = 227 units. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 227 Planned receipts 230 Planned order releases Figure 15.6 Planned Orders

  25. Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 227 Planned receipts 230 Planned order releases 230 Figure 15.6 Planned Orders

  26. Explanation: Offsetting for a two-week lead time puts the corresponding planned order release back to week 2. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 227 Planned receipts 230 Planned order releases 230 Figure 15.6 Planned Orders

  27. Explanation: The first planned order lasts until week 7, when projected inventory would drop to – 43. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory –43 37 117 117 117 77 227 227 Planned receipts 230 Planned order releases 230 Figure 15.6 Planned Orders

  28. Explanation: Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 77 227 227 Planned receipts 230 230 Planned order releases 230 Figure 15.6 Planned Orders

  29. Explanation: Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 37 117 117 117 77 227 227 Planned receipts 230 230 Planned order releases 230 Figure 15.6 Planned Orders 187

  30. Explanation: The corresponding planned order release is for week 5. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 187 37 117 117 117 77 227 227 Planned receipts 230 230 Planned order releases 230 230 Figure 15.6 Planned Orders

  31. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 Projected on-hand inventory 187 37 187 117 117 117 77 227 227 Planned receipts 230 230 Planned order releases 230 230 Figure 15.6 Planned Orders

  32. Lot-Sizing Rules

  33. Figure 15.7 Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Lot-Sizing Rules — POQ Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 117 117 Planned receipts Planned order releases

  34. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks POQ lot size Gross requirements for weeks 4, 5, and 6 Inventory at end of week 3 = – Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 Lot-Sizing Rules — POQ 117 117

  35. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 Lot-Sizing Rules — POQ 117 117

  36. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 (120 + 0 + 150) Lot-Sizing Rules — POQ 117 117

  37. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 (120 + 0 + 150) – 117 Lot-Sizing Rules — POQ 117 117

  38. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 (120 + 0 + 150) – 117 = 153 units Lot-Sizing Rules — POQ 117 117 153

  39. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 (120 + 0 + 150) – 117 = 153 units Lot-Sizing Rules — POQ 117 117 153

  40. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 (120 + 0 + 150) – 117 = 153 units Lot-Sizing Rules — POQ 150 117 117 153

  41. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 (120 + 0 + 150) – 117 = 153 units Lot-Sizing Rules — POQ 150 117 117 153 153

  42. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 (120 + 0) – 0 = 120 units Lot-Sizing Rules — POQ 150 0 0 0 150 117 117 153 120 153 120

  43. Item: C Description: Seat subassembly Lot Size: P = 3 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 Planned receipts Planned order releases Figure 15.7 Lot-Sizing Rules — POQ 150 0 0 0 150 117 117 153 120 153 120

  44. Figure 15.7 Lot-Sizing Rules — POQ

  45. Lot-Sizing Rules

  46. Figure 15.8 Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks Lot-Sizing Rules—L4L Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 117 117 Planned receipts Planned order releases

  47. Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks L4L lot size Gross requirements in week 4 Inventory balance at end of week 3 = – Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 117 117 Planned receipts Planned order releases Figure 15.8 Lot-Sizing Rules—L4L

  48. Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks L4L lot size = 120 – 117 = 3 Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 117 117 Planned receipts Planned order releases Figure 15.8 Lot-Sizing Rules—L4L

  49. Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks L4L lot size = 120 – 117 = 3 Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 117 117 Planned receipts Planned order releases Figure 15.8 Lot-Sizing Rules—L4L 3

  50. Item: C Description: Seat subassembly Lot Size: L4L Lead Time: 2 weeks L4L lot size = 120 – 117 = 3 Week 1 2 3 4 5 6 7 8 Gross requirements 150 120 150 120 Scheduled receipts 230 Projected on-hand inventory 37 117 117 117 Planned receipts Planned order releases Figure 15.8 Lot-Sizing Rules—L4L 0 3 3

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