Chapter
11 Resource Planning
1. What is resource planning?
2. How does it relate to managing processes and managing value chains?
1. Materials Requirements Planning
1. Dependent demand
a. Parent relationship
b. Component
2. Master Production Scheduling
Purpose and process
1. Developing a master production schedule
a. Step 1: Calculate projected on-hand inventory
Projected on-hand
inventory at end
of this week
=
On-hand
inventory at end
of last week
+
MPS quantity
due at start
of this week
−
Projected
requirements
this week
where:
Projected requirements = max {Forecast, Customer orders booked}
• Step 2: Determine the timing and size of MPS quantities
b. Available-to–promise (ATP) inventory
c. Application 11.1: Developing a Master Production Schedule
Determine the MPS for Product A that has a 50-unit policy and 5 units on hand. The
demand forecast and booked orders are shown in the partially completed plan given
below. The lead time is one week.
Item: Product A
Order Policy: 50 units
Lead Time: 1 week
Quantity on Hand 55
1
2
3
4
5
6
7
8
9
10
Forecast
20
10
40
10
0
0
30
20
40
20
Customer orders
(booked)
30
20
5
8
0
2
0
0
0
0
Projected on-hand
inventory
MPS quantity
MPS start
Available-to–promise
(ATP) inventory
d. Freezing the MPS
e. Reconciling the MPS with the S&OP
3. MRP Explosion
1. Bill of materials
a. Parent-component relationship
b. 4 terms to describe inventory items:
• End item
• Intermediate item
• Subassembly
• Purchased item
c. Part commonality
2. Inventory record
a. Inventory transactions
b. Time buckets
c. Time-phased information
• Gross requirement
• Scheduled receipts
• Projected on-hand inventory
Projected on-hand
inventory balance
at end of week t
=
Inventory on
hand at end of
week t-1
+
Scheduled
or planned
receipts in
week t
–
Gross
requirements
in week t
• Planned receipts (different than scheduled receipts)
• Planned order releases
3. Planning factors
a. Planning lead time
b. Lot-sizing rule
• Fixed order quantity (FOQ)
• Application 11.2: MRP Record with FOQ Rule
Item H10-A is a produced item (not purchased) with an order quantity of 80 units. Complete
the rest of its MRP record using the fixed order quantity (FOQ) rule.
Item: H10-A Lot Size: FOQ=80 units
Description: Chair seat assembly Lead Time: 4 weeks
Week
31
32
33
34
35
36
37
38
39
40
Gross requirements
60
35
45
60
Scheduled receipts
80
Projected on-hand inventory 20
Planned receipts
Planned order releases
c. Periodic order quantity (POQ)
• Application 11.3: MRP Record with POQ Rule.
Now complete the H10-A record using a POQ rule. The P should give an average lot size of
80 units. Assume the average weekly requirements are 20 units.
P = –––––– = ___ weeks
Item: H10-A Lot Size: POQ=4
Description: Chair seat assembly Lead Time: 4 weeks
Week
31
32
33
34
35
36
37
38
39
40
Gross requirements
60
35
45
60
Scheduled receipts
80
Projected on-hand inventory 20
Planned receipts
Planned order releases
d. Lot-for-lot (LFL)
• Application 11.4: MRP Record with L4L Rule.
Revise the H10-A record using the lot-for-lot (L4L) rule.
Item: H10-A Lot Size: L4L
Description: Chair seat assembly Lead Time: 4 weeks
Week
31
32
33
34
35
36
37
38
39
40
Gross requirements
60
35
45
60
Scheduled receipts
80
Projected on-hand inventory 20
Planned receipts
Planned order releases
e. Comparison of lot sizing rules
FOQ
POQ
L4L
f. Safety stock
4. Outputs from MRP
a. Material Requirements
• Application 11.5: Material Requirements Planning for Single Product Case.
A firm makes a product (Item A) from three components (intermediate Items B and D, and
purchased item C). The latest MPS for product A calls for completion of a 250–unit order in
week 8, and its lead time is 2 weeks. The master schedule and bill of material for Product A
are given below.
Item: End Item A
Lead Time: 2 wks
Week
1
2
3
4
5
6
7
8
MPS quantity
250
MPS start
250
Develop a material requirements plan for items B, C, and D, given the following
inventory data. Blank MRP records are also provided.
Hints: Be sure to note that item B has two immediate parents (A and D) and item C has
2 immediate parents (A and B). Item D has only end item A as an immediate parent,
which is an MPS item. Note also that the usage quantities are not always 1-for-1.
Data Category
Item
B
C
D
Lot-sizing rule
POQ (P = 5)
FOQ = 1000
L4L
Lead time
2 weeks
1 week
3 weeks
Scheduled receipts
None
1000 (week 1)
None
Beginning inventory
0
800
0
Item: Lot Size:
Description: Lead Time: weeks
Week
1
2
3
4
5
6
7
8
Gross requirements
Scheduled receipts
Projected on-hand inventory
Planned receipts
Planned order releases
Item: Lot Size:
Description: Lead Time: weeks
Week
1
2
3
4
5
6
7
8
Gross requirements
Scheduled receipts
Projected on-hand inventory
Planned receipts
Planned order releases
Item: Lot Size:
Description: Lead Time: weeks
Week
1
2
3
4
5
6
7
8
Gross requirements
Scheduled receipts
Projected on-hand inventory
Planned receipts
Planned order releases
b. Action notice
c. Resource requirements reports
d. Performance reports
5. MRP and the environment
6. MRP, Core Processes, and Supply Chain Linkages
4. Enterprise Resource Planning
• What does an ERP system do?
o
o
1. How are ERP systems designed?
a.
b.
c.
d.
e.
f.
5. Resource Planning for Service Providers
1. Dependent demand for services
a. Restaurants
b. Airlines
c. Hospitals
d. Hotels
2. Bill of resources