Ch. 14 – MRP ; ERP – Flashcards
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What is dependent demand?
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Demand for one item is related to the demand for another item.
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What does MRP stand for?
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material requirements planning
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What is MRP?
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A dependent demand technique that uses a bill-of-material inventory, expected receipts, and a master production schedule to determine material requirements.
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What are the benefits of MRP?
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1. Better response to customer orders as the result of improved adherence to schedules 2. Faster response to market changes 3. Improved utilization of facilities and labor 4. Reduced inventory levels
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Effective use of dependent inventory models requires managers to know what five things?
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1. MPS 2. BOM 3. Inventory available 4. Purchase orders outstanding 5. Lead times
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What does MPS stand for?
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master production schedule
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What is an MPS?
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A timetable that specifies what is to be made (usually finished goods) and when.
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What is the difference between the aggregate plan and the MPS?
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The aggregate plan is established in terms of families or larger amounts, while the MPS is established in terms of specific products. ex. Amount of bats Louisville Slugger is going to produce in January vs. Birch C271 bats to be produced in January
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What is a fixed, firm, or frozen schedule?
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A production schedule where the near-term portion of the plan does not change. Ex. A 14-day fixed schedule means that the schedule can only be changed 14 days out.
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What does BOM stand for?
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bill of material
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What is a BOM?
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A listing of the components, their description, and the quantity of each required to make one unit of a product.
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In a BOM, what are items above any level called?
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Parents
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In a BOM, what are items below any level called?
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Children or components
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What are modules?
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Components that can be produced and assembled into units
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What is a modular bill?
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A BOM for modules
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What is a planning bill?
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A material grouping created in order to assign an artificial parent to a bill of material; also called "pseudo" bill, kitted material, or kit
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What is a phantom BOM?
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A BOM for components, usually assemblies, that exist only temporarily; they are never inventoried
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What is low-level coding?
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A number that identifies items at the lowest level at which they occur.
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What is lead time?
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The time between recognition of the need for an order and receiving it.
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What is a gross material requirements plan?
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A schedule that shows the total demand for an item and 1) when it must be ordered from suppliers, or 2) when production must be started to meet its demand by a particular date; assumes there is no inventory on hand
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What is a net requirements plan?
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The result of adjusting gross requirements for inventory on hand and scheduled receipts.
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What is a planned order receipt?
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The quantity planned to be received at a future date.
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What is a planned order release?
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The scheduled date for an order to be released.
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What is system nervousness?
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Frequent changes in an MRP system.
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What are time fences?
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A means for allowing a segment of the master schedule to be designated as "not to be rescheduled."
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What is pegging?
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In MRP systems, tracing upward in the bill of material from the component to the parent item.
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What are buckets?
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Time units in an MRP system.
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What is a lot-sizing decision?
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The process of, or techniques used in, determining lot size.
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What is lot-for-lot?
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A lot-sizing technique that generates exactly what is required to meet the plan.
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What does EOQ stand for?
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economic order quantity
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What is EOQ?
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An inventory-control technique that minimizes the total of ordering and holding costs (see ch. 12)
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What does POQ stand for?
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periodic order quantity
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What is POQ?
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An inventory ordering technique that issues orders on a predetermined time interval, with the order quantity covering the total of the interval's requirements.
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What is MRP II?
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A system that allows, with MRP in place, inventory data to be augmented by other resource variables; in this case, MRP becomes material resource planning.
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What is closed-loop MRP?
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A system that provides feedback to the capacity plan, master production schedule and production plan so planning can be kept valid at all times.
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What is a load report?
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A report showing the resource requirements in a work center for all work currently assigned there as well as planned and expected orders.
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What are the three ways closed-loop MRP systems can smooth load and minimize lead times?
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1. Overlapping 2. Operations splitting 3. Order or lot splitting
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What does DRP stand for?
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distribution resource planning
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What is DRP?
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A time-phased stock-replenishment plan for all levels of a distribution network (supply chain).
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What does ERP stand for?
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enterprise resource planning
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What is ERP?
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An information system for identifying and planning the enterprise-wide resources needed to take, make, ship, and account for customer orders.
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What three things does ERP software allow a company to do?
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1. Automate and integrate many of their business processes 2. Share a common database and business practices throughout the enterprise 3. Produce information in real time.
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In addition to MRP, ERP usually provides what information?
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1. Financial 2. Human resources management 3. Supply-chain management 4. Customer relationship management (CRM) 5. Sustainability
