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Week 15B – Resource Planning -MRP to ERP (Chapter 14)

Week 15B – Resource Planning -MRP to ERP (Chapter 14). Independent vs. dependent demand, MRP inputs and processing, Closed-loop MRP, MRP II, ERP. Traditional I/C Problems. Reorder point ( when to order) Assumes known, linear demand (sawtooth) Assumes rough knowledge of lead time

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Week 15B – Resource Planning -MRP to ERP (Chapter 14)

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  1. Week 15B – Resource Planning -MRP to ERP(Chapter 14) Independent vs. dependent demand, MRP inputs and processing, Closed-loop MRP, MRP II, ERP SJSU Bus 140 - David Bentley

  2. Traditional I/C Problems • Reorder point (when to order) • Assumes known, linear demand (sawtooth) • Assumes rough knowledge of lead time • Uses safety stock (or safety time) as buffer • Each item planned independently • EOQ (how much to order) • Focuses on mechanics of formula • Assumes linear (constant) usage • Always results in inventory SJSU Bus 140 - David Bentley

  3. Dependent vs. Independent Demand • Dependent demand • Demand which is directly related to the demand for another item • Examples: sub-assemblies, fabricated parts, purchased components • Independent demand • Demand which is not directly related to the demand for another item • Examples: finished products, spare parts SJSU Bus 140 - David Bentley

  4. MRP • Material Requirements Planning (MRP) • “Father” of MRP: Joseph Orlicky (???? - ????) • Dependent vs. independent demand concept • Other requirements • Manufacturing Bill of Materials (BOM) • Accurate, well-managed Master Production Schedule (MPS) to drive MRP • Computer software to “explode” BOMs • Computer hardware speed and data capacity SJSU Bus 140 - David Bentley

  5. Key MRP Inputs - 1 • Master Production Schedule (MPS) • Well managed “Build Plan” • Bill of Materials (or “recipes”) • Parent/child relationships • Single level vs. multi-level • Structured for manufacturing • On hand inventory (available to use) • Material on order (from “supplier”) SJSU Bus 140 - David Bentley

  6. Key MRP Inputs - 2 • Planning factors • Lead time • Lot sizing algorithm or rule • Optional adjustments • Safety stock • Safety time • Yield • Shrinkage • etc. SJSU Bus 140 - David Bentley

  7. MRP Processing • Answers both questions • When to order • How much to order • Proceeds one level at a time (level-by-level) • “Nets” and plans action only when lowest level in any BOM is reached SJSU Bus 140 - David Bentley

  8. Lot Sizing Algorithms • Lot for lot • Seeks to balance supply and demand • Fixed order quantity • May have minimums, maximums, multiples • Economic Order Quantity (EOQ) • Variations are Least Unit Cost, Least Total Cost, Part Period Balancing • Period Order Quantity • Fixed Period Requirements • Wagner-Whitin SJSU Bus 140 - David Bentley

  9. MRP Summary - 1 • Big “number-cruncher” • Follows rules using built-in logic and tables • Predicts shortages • Gross requirements derived from planned order releases of parent items • Processes level-by-level • Nets requirements and plans for an item at lowest level of use in any BOM SJSU Bus 140 - David Bentley

  10. MRP Summary - 2 • First suggests pull-ins, push-outs, cancellations • Then creates plannedorders (not released) • Provides action and/or exceptionmessages • High-speed computers now mean process in minutes rather than hours • Planner needs to evaluate results before acting SJSU Bus 140 - David Bentley

  11. Problems with MRP • Computer model • Decisions may be based on inaccurate data • Inventory-building features have crept in • Safety stock • Safety time • EOQ • Represents a “push” system SJSU Bus 140 - David Bentley

  12. Resource Planning Systems • MRP • Closed loop MRP • MRP II • ERP • SCM • Next emphasis > E-commerce SJSU Bus 140 - David Bentley

  13. Closed Loop MRP and MRP II • Oliver Wight (???? – 1983) • “Sold” concepts to American management • Closed Loop MRP • Feedback any changes in due dates and quantities • Must have accurate due dates • Manufacturing Resource Planning (MRP II) • Integrate Long Range, Intermediate Range, Short Range, and Real-time planning SJSU Bus 140 - David Bentley

  14. ERP and SCM • Enterprise Resource Planning (ERP) • Coined by Gartner Group • Extends integrated planning to Customer Service, Forecasting, Quality, Human Resources, Accounting, Project Management • Supply Chain Management (SCM) • Extends planning to other organizations • Tightly couples suppliers and customers SJSU Bus 140 - David Bentley

  15. ERP Software Vendors - 2001 • Enterprise Resource Planning (ERP) • SAP • Oracle • Baan • PeopleSoft • J.D. Edwards SJSU Bus 140 - David Bentley

  16. ERP Software Vendors - 2005 • Enterprise Resource Planning (ERP) • SAP • Oracle • PeopleSoft • J.D. Edwards • Baan (financial and legal problems followed by acquisition) SJSU Bus 140 - David Bentley

  17. ERP Software Vendors - 2012 • Enterprise Resource Planning (ERP) • SAP • Oracle • Infor Global Solutions (Infor ERP – formerly SSA ERP; formerly Baan) • Microsoft • Lawson Software • QAD • The Sage Group – Age Accpac ERP and Sage ERP X3 SJSU Bus 140 - David Bentley

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