Resource Planning

Outline
Material Requirements Planning (MRP)
Capacity Requirements Planning (CRP)
Enterprise Resource Planning (ERP)
Customer Relationship Management (CRM)
Supply Chain Management (SCM)
Product Life-Cycle Management (PLM)
Connectivity, Integration, and Services
Resource Planning
Semih Gümü¸sba¸s
Marmara University
December 13, 2015
Semih Gümü¸sba¸s Resource Planning

Outline
When To Use MRP
Master Production Schedule (MPS)
Product Structure File
Time-Phased Bills
Item Master File
The MRP Process
Lot Sizing in MRP Systems
MRP:
It is a computerized inventory control and production planning
system.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
...
One objective of MRP is to maintain the lowest possible level
of inventory.
MRP was the first inventory system to recognize that
inventories of raw materials, components, and finished goods
may need to be handled differently.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
...
of inventory.
One of the few certainties in a manufacturing environment is
that things rarely go as planned - orders arrive late, machines
break down, workers are absent, designs are changed, and so
on.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
...
of inventory.
One of the few certainties in a manufacturing environment is
that things rarely go as planned - orders arrive late, machines
break down, workers are absent, designs are changed, and so
on.
MRP systems have the ability to keep schedules valid and up
to date.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Resource Planning for Manufacturing

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
When To Use MRP
MRP is useful for...
Dependent demand items,
Discrete demand items,
Complex products
Erratic orders, and
Assemble-to-order environments.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Dependent Demand:
For one thing, the demand for component parts does not have
to be forecasted; it can be derived from the demand for the
ﬁnished product.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Discrete Demand:
Another diﬀerence between ﬁnished products and component
parts is the continuity of their demand.
The inventory systems were designed to keep some inventory
on hand at all times to meet each day’s demand.
With component items, demand does not necessarily occur on
a continuous basis.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Complex Products:
A complex product may have hundreds of component parts,
dozens of assemblies, and several levels of assembly.
MRP tries to ensure that multiple components of an assembly
are ready at the same time so that they can be assembled
together.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Demand Characteristics for Finished Products and Their
Components:

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Erratic Orders:
Manufacturing environments in which customer orders are
erratic, each job takes a diﬀerent path through the system,
lead time is uncertain, and due dates vary need an information
system such as MRP to keep track of the diﬀerent jobs and
coordinate their schedules.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Assemble-to-Order:
It is a manufacturing environment in which previously
completed sub-assemblies are configured to order.
There are three major inputs:
Master production schedule,
Product structure file, and
Item master file.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
MPS:
It specifies which end items or finished products a firm is to
produce, how many are needed, and when they are needed.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Material Requirements Planning:

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Cummulative Lead Time:
The total length of time required to manufacture a product is
called its cumulative lead time.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Several comments should be made concerning the quantities
contained in the MPS:
The quantities represent production, not demand

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
The quantities may consist of a combination of customer
orders and demand forecasts

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
The quantities represent what needs to be produced, not what
can be produced
Time fence: a management-speciﬁed date within which no
changes in the master schedule are allowed.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
The quantities represent what needs to be produced, not what
can be produced
Time fence: a management-speciﬁed date within which no
changes in the master schedule are allowed.
The quantities represent end items that may or may not be
ﬁnished products

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Product Structure File:
a ﬁle that contains a computerized bill of material for every
item produced.
Bill of material (BOM):
a list of all the materials, parts, and assemblies that make up
a product, including quantities, parent-component
relationships, and order of assembly.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Product Structure Diagram for a Clipboard

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
...
A diagram can be converted to a computerized bill of material
by labeling the levels in the product structure.
Several specialized bills of material have been designed to
simplify information requirements, clarify relationships, and
reduce computer processing time. They include phantom bills,
K-bills, and modular bills.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Phantom bills:
are used for transient sub-assemblies that never see a
stockroom because they are immediately consumed in the
next stage of manufacture.
K-bills:
or kit numbers, group small, loose parts such as fasteners,
nuts, and bolts together under one pseudo-item number.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Phantom bills:
are used for transient sub-assemblies that never see a
stockroom because they are immediately consumed in the
next stage of manufacture.
K-bills:
or kit numbers, group small, loose parts such as fasteners,
nuts, and bolts together under one pseudo-item number.
Modular bills:
are appropriate when the product is manufactured in major
sub-assemblies or modules that are later assembled into the
ﬁnal product with customer-designated options.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Time-Phased Bills
Time-phased bill of material:
an assembly chart shown against a time scale.
Forward scheduling:
schedules forward from today’s date.
Backward scheduling:
schedules backwards from the due date.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Time-Phased Assembly Chart

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Item Master File
Item Master File
a database of information on every item produced, ordered, or
inventoried.
includes such data as on-hand quantities, on-order quantities,
lot sizes, safety stock, lead time, and past usage ﬁgures.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Item Master File
Item Master File
a database of information on every item produced, ordered, or
inventoried.
includes such data as on-hand quantities, on-order quantities,
lot sizes, safety stock, lead time, and past usage ﬁgures.
is updated whenever items are withdrawn from or added to
inventory or whenever an order is released, revised, or
completed.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Cycle Counting:
involves taking physical count of at least some inventory items
daily and reconciling diﬀerences as they occur.
items that are used more often are counted more often.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
The MRP Process
The MRP process consists of four basic steps:
1 exploding the bill of material,
2 netting out inventory,

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
The MRP Process
3 lot sizing,

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
The MRP Process
3 lot sizing,
4 time-phasing requirements.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Netting:
the process of subtracting on-hand quantities and scheduled
receipts from gross requirements to produce net requirements.
Lot sizing:
determining the quantities in which items are usually made or
purchased.
Time phasing:
subtracting an item’s lead time from its due date to determine
when to order an item.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
The MRP Matrix

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
.
Several additional lot sizing techniques are available with most
MRP systems.
These include economic order quantity (EOQ) and periodic
order quantity (POQ).

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Economic Order Quantity:
The EOQ can be adapted for use with MRP if it is treated as
a minimum order quantity.
The EOQ is used only sparingly, usually at the ﬁnished
product or raw material level, and does not perform well when
demand is highly variable.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
Periodic Order Quantity:
a lot sizing technique that orders at set time intervals.
was created as a variation of the EOQ more suited to variable
demand.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
demand.
is calculated by dividing the EOQ by average demand.

Outline
When To Use MRP
Time-Phased Bills
Item Master File
The MRP Process
demand.
is calculated by dividing the EOQ by average demand.
represents the number of demand periods covered by each
order.

Outline
Calculating Capacity
Load Profiles
Overloads
Load Leveling
Relaxing MRP Assumptions
CRP:
creates a load profile that identifies underloads and overloads.

Outline
Load Profiles
Overloads
Load Leveling
There are three major inputs to CRP:
The planned order releases from the MRP process;
A routing file, which specifies which machines or workers are
required to complete an order from the MRP plan, in what
order the operations are to be conducted, and the length of
time each operation should take;

Outline
Load Profiles
Overloads
Load Leveling
There are three major inputs to CRP:
The planned order releases from the MRP process;
A routing file, which specifies which machines or workers are
required to complete an order from the MRP plan, in what
order the operations are to be conducted, and the length of
time each operation should take;
an open orders file, which contains information on the
status of jobs that have already been released but have not
yet been completed.

Outline
Load Proﬁles
Overloads
Load Leveling

Outline
Load Profiles
Overloads
Load Leveling
Capacity:
the maximum capability to produce.
Effective capacity expressed in hours per day is calculated as:
Effective daily capacity = (no. of machines or workers) x (hours
per shift) x (no. of shifts) x (utilization) x (efficiency)

Outline
Load Proﬁles
Overloads
Load Leveling
Utilization:
the percent available time spent working.
Eﬃciency:
how well a machine or worker performs compared to a
standard output level.
Load:
the standard hours of work assigned to a facility.
Load percent:
the ratio of load to capacity.

Outline
Load Profiles
Overloads
Load Leveling
Load Profiles
Load Profile:
a graphical comparison of load versus capacity.
Underloaded conditions can be leveled by:
1 Acquiring more work;
2 Pulling work ahead that is scheduled for later periods;
3 Reducing normal capacity.

Outline
Load Proﬁles
Overloads
Load Leveling
Overloads
Overloads can be reduced by:
1 Eliminating unnecessary requirements;
2 Rerouting jobs to alternative machines, workers, or work
centers;
3 Splitting lots between two or more machines;
4 Increasing normal capacity; 5. Subcontracting;
5 Increasing the eﬃciency of the operation;
6 Pushing work back to later time periods;
7 Revising the master schedule.

Outline
Load Proﬁles
Overloads
Load Leveling
Load Leveling
Load Leveling:
the process of balancing underloads and overloads.

Outline
Load Proﬁles
Overloads
Load Leveling
Adjusted Load Proﬁle for Department A

Outline
Load Proﬁles
Overloads
Load Leveling
We have learned the following:
Material is not always the most constraining resource
Lead times can vary
Not every transaction needs to be recorded
The shop ﬂoor may require a more sophisticated scheduling
system
Scheduling in advance may not be appropriate for on-demand
production

Outline
ERP Modules
ERP:
software that organizes and manages a company’s business
processes by sharing information across functional areas.

Outline
ERP Modules
ERP Modules
ERP systems consist of a series of application modules that
can be used alone or in concert.
The modules are fully integrated, use a common database,
and support processes that extend across functional areas.

Outline
ERP Modules
ERP Modules
ERP systems consist of a series of application modules that
can be used alone or in concert.
The modules are fully integrated, use a common database,
and support processes that extend across functional areas.
Transactions in one module are immediately available to all
other modules at all relevant sites-corporate headquarters,
manufacturing plants, suppliers, sales oﬃces, and subsidiaries.

Outline
ERP Modules
ERP Modules are typically grouped into four main categories:
1 ﬁnance and accounting,
2 sales and marketing,
3 production and materials management, and
4 human resources.

Outline
ERP Modules

Outline
ERP Modules
ERP’s Central Database

Outline
CRM:
software that plans and executes business processes involving
customer interaction, such as sales, marketing, fulﬁllment, and
customer service.
prospect information, customer proﬁles, sales-force
automation, and campaign modules for direct mail and special
sales promotions are managed with CRM.

Outline
SCM:
software includes supply chain planning, supply chain
execution, and supplier relationship management.

Outline
...
Planning involves designing the supply chain network,
demand planning, and collaborative supply planning.
Execution involves fulﬁllment, manufacturing, and delivery.

Outline
...
Planning involves designing the supply chain network,
demand planning, and collaborative supply planning.
Execution involves fulﬁllment, manufacturing, and delivery.
Relationship management handles all the interactions with
suppliers from supplier certiﬁcation to quality assurance,
contracts, and agreements.

Outline
PLM:
software that manages the product development process,
product life-cycles, and design collaboration with suppliers and
customers.
manages product data through the life of the product,
coordinates product and processes redesign, and collaborates
with suppliers and customers in the design process.

Outline

Outline
XML:
the business language of the Internet.
Service-oriented architecture (SO):
service-oriented architecture.
Software as a service (SaaS):
software as a service.
Cloud computing:
on-demand IT services.

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