POM/SCM Final Exam Ch11-12

  1. MRP plans for what?
    Plans for the required materials for making the products. The focs of the basic MRP systems is on materials and parts used to make the products.
  2. What are 7 features and aspects of the MRP concept and technology?
    • 1. Materials are often the largest cost in manufacturing operations, while the focus in many companies is placed on labor costs. (Consider savings in materila before you start laying off people)
    • 2. Keeping track of the availability of all materials is essential as the ability to finish the products rests on availability. Right materila  at the right time.
    • 3. MPR deals with dependent demand in this ch.
    • 4. In dependent demand, end item drives the need for lower level items
    • 5. MRP is based on perpetual inventory system. Can keep track of materials on continuous basis.
    • 6. Nearly all MRP systems are computer based. Can be large information systems.
    • 7. The basic structure or architecture of MRP systems is shown in the attached graph. It has input, processing, and output components.
  3. What are the 3 inputs for MRP systems? *important for problem
    • 1. Inventory status file
    • 2. Master Production Schedule (MPS)
    • 3. Bill of Material File (materials not supposed to be plural per notes)/product design. The 'meat loaf' recipe analogy.
  4. What are the outputs of MRP systems?
    Primary output=Quantity and Timing

    Secondary output=planning reports; performance reprots; exception reports
  5. Input#1 MPS
    Master production schedule. The engine that drives the factory. It is a very important input to MRP systems. It is the schedule of the number (quantity) and weeks (timing) of all end items that need to be produced over a short planning horizon.
  6. Input#2 Inventory Status File
    These include a variety of info about all parts in inventory (including lead times) such as:

    • *Materials on hand
    • *Materials on order
    • *Planned orders
    • *materials allocated to other purposes
    • *lot sizes/EOQ
    • *Safety Stock levels
    • *Lead times
    • *Costs
    • *Supplier's addresses, info, etc
  7. Input#3 Bill of Material (BOM)
    Addresses what it takes to make one unit of a product. It is the listing of all raw materials, parts, subassemblies, and assemblies that go into an end item along with their respective quantities.
  8. What are the 4 other names for the Bill of Material (BOM)?
    • Product Structure Tree
    • Assembly Time Chart
    • Indented Bill of Material
    • Gozinto Chart
  9. MRP logic /formula
    Net requirement=Gross Requirement-(inventory on hand-safety stock-inventory allocated to other purposes)
  10. The basic MRP system has what two goals?
    • Quantity of parts (not the end items) How much of each to order?
    • Timing of parts (not the end items) When to order each material.
  11. What is the difference between MRP and MPS?
    MRP -  Planning reports. Purely talks about items. It is a secondary output. Investment in tech. (The timing and quantity of ordering the little pieces that make up the end items, to meet demand)

    MPS- Master production schedule. Focuses on the END ITEMS only. Schedule of how many end items are needed at what times. MPS is an input that helps make the MRP.
  12. Cumulative lead time
    Sum of lead times that various milestones of an MPR process requires. This will cover from the first time materials are ordered all the way to the final completion of the end item. The span of time shows the overall amount of time required to complete the end item.
  13. Gross requirements-
    The quantity and timing of total requrirements for a particular item/material. This doesn't consider any availability of the material in inventory or scheduled receitps.
  14. Scheduled receipts
    Thes are items already on order. These items are scheduled to be received during certain periods. They need to be recorded on the appropriate periods on the MRP schedule.
  15. On-hand inventory
    Also known as beginning inventory. Items available at the beginning of a new MRP schedule. Thes are usually carred from the previous MRP schedule.
  16. Net requirements
    • The amount and timing of the needed materials that must be satisfied from the production or purchasing departments.
    • Gross requirements minus on hand inventory.
  17. Planned order receipt
    These are items ordered whose receipt periods are known. The amount of the planned order receitp depends on the net requirements.
  18. Planned order release
    This is the amount specified and released to suppliers for their delivery. If a lead time is 2 weeks, the order needs to be realsed to the supplier 2 weeks in advance so that the items are delivered on time when needed.
  19. Inventory alloacted to other purposes
    These are items allocated to other purposes such as internal use of to an outside customer. Although these items remain on the premises of the company, they are not available as part of on-hand inventory and they should not be counted in any available inventories.
  20. Changes (MRP terms)
    Changes could occur adn the MRP process can be overridden at any time. Some of these changes could include revisions of due dates, changes to order quantities, and cancellation of orders.
  21. Load schedules (MRP key terms)
    Opposite of MPS. A method used in capacity requirements planning to compare the amount of production capacity required by the MPS to the capacity available. These schedules are usually prepared in a hierarchy from the beginning to the end of the manufacturing system department by department.

    How you'll load up your plant in terms of labor utilities.
  22. Lumpy demand (MRP key terms)
    The demand for a material that exhibits an irregular period-to-period pattern.
  23. Planning reports (MRP)
    A secondary output. These are generated by the MRP system in order to improve the planning aspects of MRP operations. These could include: How to plan for the materials needed for new products, how to develop new sources of supply, and how to reduce the overall materials cost.
  24. Performance reports (MRP)
    A secondary output. These reprots outline the performance of suppliers, materials, and products.  Could include: Which suppliers have been late in their deliveries and for how long and how many times. Which supplier has exceeded the cost structure. Which material has had more waste during processing?etc.
  25. Exception reports (MRP)
    • Secondary output to MRP. These are deviations from standards. These reports are based on the performance reports and they outline deviations from the standards set forth by the company.
    • Example: Standard Lt=2 days
    • Actual performance= 3 days
    • compare to get 1 day unfavorable deviation
  26. Is MRP a pull or a push system?
    MRP is a push system where you go back wards to determine the mile stones. Milestones are determined to complete the products in the future based on certain schedules. The work os moved (pushed) from one station to the next station when completed and as required by MRP schedules.
  27. Is JIT a pull or a push system?
    JIT is a pull system, where consumer demand pulls the product through the system. Downstream operations drive the requirements for upstream operations.
  28. Lot sizing rules in MRP
    • Lots refer to quantities, batches, or some of any item. Lot sizing rule is deciding on the size or quantity of an item to order. There are 4 rules.
    • 1. LFL (Lot for lot ordering) You need 5? Order 5.
    • 2. Economic Order Quantity (EOQ) order based on EOQ
    • 3. Fixed Period ordering (not on test)
    • 4. Part-Period Model (not on test)
  29. LFL
    • Lot for lot ordering. A lot sizing rule.
    • Order the quantities as you need them and in what Q you need them in.
  30. EOQ (in relation to Lot Sizing)
    EOQ. If your EOQ is 250 and you only need 100, you still must obey the EOQ and order 250. You order in multiples of 250, so if your need is 945, you order 1000, a multiple of 250.
  31. What are the objectives or benefits of MRP? (5)
    • 1. Improve customer service -quick and as promised
    • 2. Reduce inventory investment- inventory levels reduced
    • 3. Improve plant operating efficiency- reduces uneccessary down times caused by stockouts of materials and parts.
    • 4. Improve Capacity requirements - use of MRP will facilitate and improve the evaluation and implementation of capacity requirements planning.
    • 5. Allocate Production time - use of MRP facilitates the allocation of production time and efficiency of operations. Can synchronize schedules and labor.
  32. Regenerative MRP systems
    These are systems that periodically (usually weekly) prcess an entire MRP run. This type is easily understoodd but inefficient to process on a computer.
  33. Net change MRP systems
    These are systems that periodically (usually weekly) process only the changes that have occurred since the last MRP run. This type is more complex, more difficult to understand, and more efficient to process on a computer.
  34. What is the difference between regenerative MRP systems and Net change MRP systems?
    • Regenerative MRP systems creates a whole new (entire) MRP report/run each week/period.
    • Net chnage MRP systems only process the changes that have occurred since the last period/week.
  35. MRP I
    This is the conventional MRP system described in the book/ch 11. Material Requirement Planning.

    Developed in the 1970s. Mainframe based.
  36. Closed-loop MRP
    An MRP system that includes the additional planning functions of aggregate planning, MPS, and CRP. Also, shop floor control and scheduling are included. The term closed loop implies that not only are these elements included in the overall system, but also that there is a feedback system. This allows for the planning to be kept valid at all times.

    Developed in the 1980s. PC based.
  37. MRP II
    This is known as Manufacturing Resource Planning (as opposed to Material Requirement Planning). It is a full fledged system, closed loop system that is enhanced by the financial planning of the firm. MRP II usually has simulation capabilities that can answer 'what if' questions.

    Developed in the 1990s. Terminal based.
  38. ERP
    • Enterprise Resource Planning
    • This is the most advanced form of MRP systems.
    • Developed in 90s and 2000s. Internet based.
    • Enterprise=total company, not just mfg.
    • ERP=MRP+CRM(consumer relations mgmt) + SCM+ E-commerce
  39. Capacity Requirements Panning (CRP)
    The CRP determines whether there is enough capacity on a short term basis to meet the production schedule. This is called loading the plant in order to meet MPS.
  40. Load reports
    Match MRP to CRP. Load reports compare known and expected future capacities against projected capacity availability. Shows if each dept is overladed or underloaded, etc.
  41. Time fences
    Intervals (i.e. weeks or a series of production buckets) in the MPS. THe nearest time fences are  most restrictive to change. The furthest fences are least restrictive to change.
  42. MRP and Services
    Can be used in restaurants for food, can be used in developing schedules to offer services as promised to customers.
  43. Requirements for effective MRP implementation
    • 1. Data integrity is very important. Garbage in, garbage out.
    • 2. MRP systems require timely, accurate, and relevant MPS schedule, Inventory status file, and Bill of Material (BOM)
    • 3. Most MRP systems are computer based. Require hardware, software, and terminals accessible by many individuals.  Costly and require major changes in how company operates.
  44. What is ERP (detailed)
    ERP integrates many functional areas within an organization so that these functions and departments have access to standardized records and these functions are able to effectively communicate and share information with each other.

    1. w/internet, Customer Relationship Managment, and many aspects of SCM, erp systems can handle entire processes assocated w/customer order from cradle to grave.

    2. Contributes to productivity

    3. Use of ERP Systems not limited to certain kinds of industries, products, or organization types

    4. Challenge to ERP Providers (peoplesoft etc)=to develop comprehensive, up to date adn relevent tech solutions for companies seeking ERP systems.

    5. Evolved to adapt to nearly every business type

    6. obstacles need to be overcome to adapt to ERP systems.

    7. ERP systems require employee training and development. Training cost usually very high.

    8. Payback time for ERP systems can be anywhere from 2-10 years.
  45. What are the two approaches to JIT?
    • Little JIT
    • Big JIT (JIT manufacturing)
  46. Little JIT
    • *Purpose is narrow.
    • *Opposite of Just in Case
    • *Main 2 objectives:
    • **Inventory reduction (not to 0)
    • **Close cooperative relationship with suppliers.

    • Also: focuses on on time deliveries
    • It is a production planning and control method for scheduling jobs.
  47. Big JIT/JIT Manufacturing
    • Broad and comprehensive focus
    • way of life/philosophy
    • Focuses on human relationships and empowerment of employees.
    • Focuses on strategic alliances and partnerships with suppliers/captive relationship
    • Focuses on material management philosophy from inception to disposal
    • Focuses on technology management and waste reduction
  48. Name three success factors for Japanese manufacturing after WWII
    • Japan imported technology and improved it significantly in 1950s
    • Japan concentratred its effort on achieving high productivity with low unit cost=cost leadership strategy. Also means efficient (remember, productivity=O/I)
    • Japan concentrated its effort in achieving high quality and reliability.
  49. What are the two principals (pillars) of JIT manufacturing?
    • 1. Eliminate Waste- any wast should be eliminated or reduced wherever found. Waste=anything that doesn't add value. examples: repairs, space, materials, machine hours, labor hours, network times, and various process times. Time is perhaps the most important waste.
    • 2. Respect for people- The means empowering employees to make good decisions and to be able to fully contribute to the development of JIT. Respect=more than just being nice.
  50. Sources of waste (7)
    Will be on test!
    • 1. Waste of producing defects- defective parts/materials
    • 2. Waste transportation - (extra movements of items. One good rule is to handle everything only once if possible.)
    • 3. Waste of Inventory- Perhaps the most well known waste. Inventory hides problems. (Water covering the rocks example. )
    • 4. Waste of overproduction- Over-running the batches requires more space and resources. Issues of obsolescence and cost of capital.
    • 5. Wast of waiting time - More prevelant in services. Form of inventory. Other waste of waiting time includes: process time (largest), receiving on transport, maintenance and repair times.
    • 6. Waste of processing - This is a major waste area. For waste of processing: eliminate a step or procedure from a job; waste of processing is design related.
    • 7. Waste of motion - Only work content adds value. Unecessary moving activities do not add value (including reviewing times). Work content=work/motion. Work content could be less than 100%. Better layouts can improve waste of motion.
  51. What are the 7 SUB principles of elimination of waste principal? (7 principles+7 sub principles waste +7 sub principles respect for people=21)
    • 1.Focused factory networks- develop small, focused, specialized, and effective factories and service units. Not everything to everyone-dont spread yourself too thin. Focus on limited set of objectives.
    • 2. Group Technology (Cellular Manufacturing)- Batching parts(items/persons) together based on some similar characteristics, and running them together to reduce waste, time, and other resources. This increases the economy of scale. *use standarad parts, *modular design *use resources efficiently *use better layouts to minimize distance and time travelled.
    • 3. Jidoka- the quality at the source - stop everything when something goes wrong in terms of quality. Implies total commitment to quality. Uses poka yoke and fail safe tools and methods to avoid quality problems. Calls for adding NO value to WIP that is defective.
    • 4. JIT Production - mgmt philosophy that attacks waste, exposes problems and bottlenecks, and madkes production systems flexible and able to respond to changes.
    • 5. Uniform Plant Loading - lumpy demand should be avoided if possible.
    • 6. Kanban production system - crux of the pull system- card/signal/authorization- A simple and effective production planning and control system. Kanban could be a substitute for some parts of an MRP system.
    • 7. Minimize set-up (changeover) time - restaurant. How quickly can it change from lunch to dinner?
  52. Jidoka
    - the quality at the source - stop everything when something goes wrong in terms of quality. Implies total commitment to quality. Uses poka yoke and fail safe tools and methods to avoid quality problems. Calls for adding NO value to WIP that is defective.
  53. What does JIT production (sub principle of waste reduction) require?
    • True employee participation
    • use of industrial engineering concepts
    • Kaizen
    • Total Quality Control (TQC)
    • Small lot sizes (EOQ=1 is ideal size in JIT)
    • Limited Work in Process (WIP)
    • Small sized inventory and holding containers
    • less storage space
    • Visible and clutter free work environment
    • comprehensive and Total Preventive Maintenance (TPM) for all equipment and machines in order to prevent breakdowns
    • Cross trained workders
  54. What does JIT production (sub principle of waste reduction principle of JIT Mfg) assume?
    • Stable work environment
    • Stable demand
  55. Kanban Production System
    • The Kanban Pull or production system operates based on Kanban, which means card, or signal, or authorization from downstream operations to upstream operations. Chain reaction takes place,triggered by customer.
    • The kanban cards communicate the demand for parts from one downstream operation to an upstream operation.

    • Customers drive the entire operation.
    • Crux of the pull system.
  56. What are the 7 sub principles of respect for people (re: JIT manufacturing)
    • 1.Lifetime employment/job security
    • 2. Company Unions (more cooperative than adversarial relationships between union and mgmt)
    • 3. Attitude towards workers - respect, dignity, training, development, compensated well, tangible improvments provided, imporve leadership skills, employees are assets.
    • 4. Automation and Robotics - replace monotonous jobs, which free employee to do more creative or productive activities.
    • 5. Bottom-round management- employees involved in decision making prcess at company level. aka concensus mgmt or committe mgmt. May take longer, but better results in the end.
    • 6. Sub-contracting Network - respect applies not only to employees, but to vendors and suppliers as well. Calls for strategic alliances with suppliers based on mutual relationships. Usually long term relationships, become extension of your own company. sole supplier or dual supplier relationship.
    • 7. Quality Circles- group of employees who get together formally on company time to form a circle where they propose improvements in quality, prcesses, and products to the company. No supervisors are present. Not gripe sessions.
  57. The Focus Elements of JIT   - JIT is action oriented and includes the following: (7 more!)
    • 1. Simplification - simplify prcess, stick to basics, reduce steps.
    • 2. Cleanliness of Organization - avoid clutter, be neat
    • 3. Visibility- seeing is believing. JIT very transparent system.
    • 4. Cycle time - could be time between two events, could be time for a product to be produced. Cycle time improvement can lead to waste elimination. Could make difference between uneaven upredictable operations versus smooth operations.
    • 5. Agility - flexibility in operations by being able to increase or decrease volumes in response to changes.
    • 6. Variance Reduction- Variations are the enemy of JIT. Minimize variability in performance, attendance, supplies, equipment, and processes. Avoid tolerance stack ups; stay close to center tolerance values.
    • 7. Measurement - In order to improve things, you have to be able to measure them. Grass root measurments by employees, visual presentations of measurments
  58. What two ways can simplification be accomplished?
    • a) through product, processes, and procedure simplification (though DFA/DFM)
    • b)thorugh use of concurrent engineering

    The best simplification is to do the product design righ the first time
  59. Agility as a focus and element of JIT mfg
    • flexibility. ability to respond to changes in Q by increasing or decreasing volume.
    • how soon firm can respond to changes w/o previous plans
    • state of mind and attitude on part of employee
    • automation is not necessarily a pre-req
    • reducing set up times is a pre-req, however
    • decreasing lot sizes is important
    • might require development of new layout to improve communication and distance travelled.
    • requires flexible and well-rounded workers
    • requires TPM (Total preventive maintenance)
    • requires more effective methods for production and processes
  60. What does JIT accomplish?
    Adds value and eliminates waste. JIT is also a system of forced problem solving seeking to streamline the operations and eliminate waste wherever and whenever it exists.
  61. Requirements for JIT implementation:
    • 1. Requires a true 'participation encouraged' attitude. Mgmt doesn't make all decisions. Requires grass root efforts. Not just window dressing.
    • 2. JIT implementaion time-line JIT requires a long term commitment for the entire company. Toyota took more than 30 years to develop and master its JIT systems. Before producing results, JIT requires a system of priorities. Gradual conversion of operations and systems from non-JIT to JIT environment.
    • 3. JIT and quality - In a way, TQM (quality) is a pre-req to JIT!
    • 4. JIT environment- requires predictable and stable environment
    • 5. JIT and people - In JIT people take pride in their work. This pride includes paychecks plus intrinsic work satisfaction.
    • 6. JIT approach JIT is based on a set of pre-determined priorities and not a big bang approach. Not just re-engineering.  JIT is based on Kaizen. Not j
    • 7. JIT and suppliers - JIT's suppliers need conversion to the JIT philosophy and thinking.
  62. JIT in services.
    Wait times of customers are synonymous to inventories in manufacturing. Both wait times and inventories need to be reduced or eliminated.

    Simplification of service steps.

    Cross train employees/will improve service flow

    Reduction of Set-up or lead times
  63. Summary of the role of JIT in services:
    • 1. Waste removal
    • 2. Reduce Service Variance and Variety
    • 3. Manage demand
  64. Two strategies for JIT in services
    • 1. Service redeployment (reassignment)
    • 2. Human resource development
  65. Service re-deployment (reassignment) (re: strategy for JIT in services)
    Calls for shifting of employees from back office to front office and vice versa.

    • Redeployment creates cross training among service providers
    • creates versatility and flexibility for hte employees and operations
    • redeployment creates express lanes
    • redeployment reduces service times and waiting lines
    • redeployment improves real time communication among ee's
    • redeployment facilitates JIT or pull system
    • redeployment facilitates a chain or workers working as a team.
    • redeployment reduces reneging of customers in the system.
  66. Human resource development in JIT in services
    Employees are the backbone of the service organization.

    • empower front line employees. (develop ability to trust them)
    • facilitate an open system
    • create a fluid organic organizational structure
    • facilitate open and effective communication
    • focus on being team player
    • focus on customers not tasks
    • exercise effective and loose supervision. coaching, failitating, and providing mentorship.
    • focus on effectiveness not necessarily efficiency
    • focus on service delivery. (this is called moment of truth for customers)
    • provide cross training
    • develop the ability of the service providers to use judgement or discretion in conducting their jobs.
Card Set
POM/SCM Final Exam Ch11-12
Ch 11-12 MRP and JIT