Transcript Chapter 1, Heizer/Render, 5th edition

Management Science 2
Material Requirements Planning
(MRP)
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Management, 6E (Heizer & Render)
14-1
© 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458
Inventory Classifications
Inventory
Process
stage
Raw Material WIP
Finished Goods
Number
& Value
Demand
Type
A Items
B Items
C Items
Independent
Dependent
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Management, 6E (Heizer & Render)
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Other
Maintenance
Dependent
Operating
© 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458
Dependent versus Independent
Demand
Item
Demand
Source
Material
Type
Method of
Estimating
Demand
Materials With
Independent Demand
Materials With
Dependent Demand
Company Customers
Parent Items
Finished Goods
WIP & Raw Materials
Forecast & Booked
Customer Orders
Planning
Method
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Management, 6E (Heizer & Render)
EOQ & ROP
14-3
Calculated
MRP
© 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458
Inputs to the
Production Plan
Marketing
Customer
Demand
Production
Capacity
Inventory
Procurement
Supplier
Performance
Human
Resources
Manpower
Planning
Aggregate
Production Plan
Management
Return on
Investment
Capital
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Management, 6E (Heizer & Render)
Finance
Cash Flow
Engineering
Design
Completion
14-4
© 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458
Requirements for Effective Use of Dependent
Demand Inventory Models
Effective use of dependent demand
inventory models requires that the
operations manager know the:





master production schedule
specifications or bills-of-material
inventory availability
purchase orders outstanding
lead times
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
14-5
© 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458
MRP Benefits
 Increased customer satisfaction due to
meeting delivery schedules
 Faster response to market changes
 Improved labor & equipment utilization
 Better inventory planning & scheduling
 Reduced inventory levels without reduced
customer service
PowerPoint presentation to accompany Operations
Management, 6E (Heizer & Render)
14-6
© 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458