chapter 14 mrp to erp.ppt
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Rev. 09/25/06 SJSU Bus 140 - David Bentley 1
Chapter 14 – MRP to ERP
Independent vs. dependent demand, MRP inputs and
processing, Closed-loop MRP, MRP II, ERP
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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
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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
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Key MRP Inputs 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”)
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Key MRP Inputs Planning factors
Lead time Lot sizing algorithm or rule Optional adjustments
Safety stock Safety time Yield Shrinkage etc.
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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
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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
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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
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MRP Summary - 2 First suggests pull-ins, push-outs,
cancellations
Then creates planned orders (not released) Provides action and/or exception messages
High-speed computers now mean process in minutes rather than hours
Planner needs to evaluate results before acting
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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
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Resource Planning Systems
MRP Closed loop MRP MRP II ERP SCM Next emphasis > E-commerce
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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
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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
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ERP Software Vendors - 2001
Enterprise Resource Planning (ERP)
SAP Oracle Baan PeopleSoft J.D. Edwards
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ERP Software Vendors - 2005
Enterprise Resource Planning (ERP)
SAPOracle
PeopleSoft J.D. Edwards
Baan (financial and legal problems followed by acquisition)
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ERP Software Vendors - 2008
Enterprise Resource Planning (ERP)
SAPOracle Infor Global Solutions (SSA ERP - formerly Baan) The Sage Group