Category Archives: Inventory Systems for Dependent Demand

Setup or Ordering Costs

Setup or Ordering Costs These are fixed cost- usually associated with the production of a lot internally or the placing of an order externally with a vendor. In other words. these costs are independent of the number of units that are requested. Setup costs are related to the amount of time needed to adjust the equipment to perform a specific task. This would include the alignment of special tooling such as jigs and

Lot Sizing in MRP Systems

Lot Sizing in MRP Systems The determination of lot sizes in an MRP system is a complicated and difficult problem. Lot sizes are the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule. For parts produced in house. lot sizes are the production quantities or batch sizes. For purchased parts. these are the quantities ordered from the supplier. Lot sizes general

MRP in Services

MRP in Services In general, MRP systems have not made significant inroads in service operations. This is due, in part, to the belief that MRP is strictly a manufacturing tool. However, modified versions of MRP are used in service operations where an actual product is manufactured as part of the service delivery process. Examples of these quasi-manufacturing services. as stated in an earlier chapter, include rest


FURNITURE MANUFACTURER USES MRP II  O CUT DELIVERY TIME  In 1988, Harpers, Inc., an office furniture manufacturer  located in Cali1omia, was expenencmq sustained growth in sales, but profits continued to fall. To reverse the downward  trend in profits, management determined that it would have to reduce manufacturing costs by 15 percent, reduce product delivery y times from six weeks (which was the industry

Manufacturing Resource Planning (MRP II

Manufacturing Resource Planning (MRP II Earlier in thi chapter, our discussion of MRP focused only on the materials requirements rhar resulted from an explosion of the master schedule. We did not include the needs of all the other types of resources, such as staffing, facilities. and tools. In addition. while we discussed capacity requirements planning. we did this somewhat externally to the !vIRP system.  In t

Capacity Requirements Planning (CRP)

Capacity Requirements Planning (CRP) In the previous sections of this chapter that focused on the MPS and running the MRP program. we mentioned that production capacity is usually some finite amount and obviously has limits. We also cited the interaction between the scheduler and rerunning the MRP program to obtain feasible schedule in light of thi limited capacity. In this ection we explicitly  point out how c

MRP Computer Program

MRP Computer Program The MRP program operates on the inventory file, the MPS. and the BOM file. It works as follows: A list of end items needed by time periods (or time “buckets”) is specified by the MPS. A description of the materials and parts needed to make each item is specified in the 80M file. The number of units of each item and material currently on hand and on order are contained in the inv

MRP System Structure

MRP System Structure The MRP system most closely interacts with the MPS schedule, the bill of materials file. the  inventory records file, and the output reports. Exhibit 17.6 shows a portion of Exhibit 15.1in Chapter J 5 with several additions. Note that capacity is not addressed here. nor are there any feedback loops to higher levels. We discuss these elements later in this chapter under MRP II and capacity re


CLASS A PERFORMANCE COMPANIES REAP SIGNIFICANT BENEFITS FROM MRP Those firms that have achieved excellence in implementing MRP are designated Class A companies. Usted below are – several Class A companies and the benefits they have achieved to job runs that alternate output products and do not include continuous processes such as petroleum or steel. As you can see in the exhibit, MRP is most valuable to c

Benefits of an MRP System

Benefits of an MRP System Manufacturing companies with more than S I0 million in annual sales are most likely to  have some form of a computerized MRP system. A computerized system is necessary because of the sheer volume of materials, supplies, and components that are part of expanding product lines, and the speed that firms need to react to constant changes in the system. When firms switched from existing manu