overview dependent demand dependent demand master production schedule master production schedule...

OverviewOverview Dependent demandDependent demand Master production scheduleMaster production schedule Bill of materialsBill of materials MRPMRP

Time-phased product structureTime-phased product structure Gross material requirements planGross material requirements plan Net requirements planNet requirements plan

Lot-sizing techniquesLot-sizing techniques Extensions of MRPExtensions of MRP

Furniture Mfg.Furniture Mfg. Produces 3-types of Produces 3-types of

chairschairs Ladder-back chairLadder-back chair Kitchen chairKitchen chair Desk chairDesk chair

Master Production Master Production ScheduleSchedule

200

Ladder-back chair

Kitchen chair

Desk chair

1 2

April May

670670

3 4 5 6 7 8

200

150

120

200

150

200

120

Aggregate production plan for chair family

670670

Bill of MaterialsBill of Materials

• List of components & quantities needed List of components & quantities needed to make product to make product

• Provides product structure (tree)Provides product structure (tree)– Parents: Items above given levelParents: Items above given level– Children: Items below given levelChildren: Items below given level


Seat cushion

Seat-frame boards

Front legs A

Ladder-back chair

Back legs

Leg supports

Back slats


Back slats Seat cushion

Seat-frame boards

Leg supports

Front legs

Back legs A

Ladder-back chairJ (4)

Seat-frameboards

C (1)Seat

subassembly

D (2)Frontlegs

B (1)Ladder-backsubassembly

E (4)Leg

supports

AALadder-backLadder-back

chairchair

I (1)Seat

cushion

H (1)Seat

frame

G (4)Backslats

F (2)Backlegs

Dependent vs. Independent Dependent vs. Independent DemandDemand

Demand for chairsDemand for chairs A finished productA finished product IndependentIndependent

Demand for front legsDemand for front legs A component or subassemblyA component or subassembly DependsDepends on the demand for chairs on the demand for chairs

(parent)(parent)

Materials WithIndependent Demand

Materials WithDependent Demand

DemandSource Company Customers Parent Items

MaterialType Finished Goods WIP & Raw Materials

Method ofEstimatingDemand

Forecast & BookedCustomer Orders

Calculated

PlanningMethod EOQ & POQ MRP

Dependent vs. Independent Dependent vs. Independent DemandDemand

Requirements for Effective Use of Requirements for Effective Use of Dependent Demand Inventory Dependent Demand Inventory

ModelsModels

master production schedulemaster production schedule

specifications or bills-of-specifications or bills-of-

materialmaterial

inventory availabilityinventory availability

purchase orders outstandingpurchase orders outstanding

lead timeslead times

Cooperstown Cars, Inc.Cooperstown Cars, Inc.

Produces Produces

toy carstoy cars BodyBody

Axles (2)Axles (2)

Wheels (4)Wheels (4)

Toy Car

WheelAssembly(2)

Body

Axle (1) Wheels (2)

Bill of Materials for Toy Car

Cooperstown Cars, Inc.Cooperstown Cars, Inc.

- Each - Each component component has a has a known lead known lead timetime

Toy Car

LT = 1

WheelAssembly(2)

LT = 1

Body

LT = 2

Axle (1)

LT = 2

Wheels (2)

LT = 1

Bill of Materials for Toy Car

Cooperstown Cars, Inc.Cooperstown Cars, Inc. Demand for Toy Car in Week 8 is 100 Demand for Toy Car in Week 8 is 100

Schedule production for:Schedule production for: Toy car assemblyToy car assembly Wheel assemblyWheel assembly BodyBody AxleAxle WheelsWheels

Time-Phased Product Time-Phased Product StructureStructure


0 1 2 3 4

Time in Weeks


1 weekToyCar

Time in Weeks

0 1 2 3 4


1 week ToyCar

WheelAssembly

Body

2 weeks

0 1 2 3 4

Time in Weeks


1 week

1 week ToyCar

WheelAssembly

Body

2 weeks

0 1 2 3 4

Time in Weeks


1 week

1 week ToyCar

WheelAssembly

Body

Axles

Wheels

2 weeks

1 week

2 weeks

1 2 3 4 5

Time in Weeks

1 2 3 4 5 6 7 8Toy Car Required Date

Order release dataWheel assembly Required Date

Order release dataBody Required Date

Order release dataAxle Required Date

Order release dataWheels Required Date

Order release data

WeekGross Requirements Plan

1 2 3 4 5 6 7 8Toy Car Required Date 100

Order release dataWheel assembly Required Date




Order release data



Order release data 100Wheel assembly Required Date




Order release data



Order release data 100Wheel assembly Required Date 200




Order release data




Order release data 200Body Required Date



Order release data




Order release data 200Body Required Date 100



Order release data





Order release data 100Axle Required Date


Order release data





Order release data 100Axle Required Date 200

Order release data 200Wheels Required Date

Order release data





Order release data 100Axle Required Date 200

Order release data 200Wheels Required Date 400

Order release data 400


1 2 3 4 5 6 7 8Toy Car Gross requirements 100

Scheduled receiptsProjected on-hand | 20 20 20 20 20 20 20 20 20Planned order receiptsPlanned order releases

Net Requirements PlanWeek


Scheduled receiptsProjected on-hand | 20 20 20 20 20 20 20 20 20Planned order receipts 80Planned order releases



Scheduled receiptsProjected on-hand | 20 20 20 20 20 20 20 20 20Planned order receipts 80Planned order releases 80




Wheel assembly Gross requirements 160Scheduled receiptsProjected on-hand |10Planned order receiptsPlanned order releases




Wheel assembly Gross requirements 160Scheduled receiptsProjected on-hand |10 10 10 10 10 10 10 10Planned order receiptsPlanned order releases




Wheel assembly Gross requirements 160Scheduled receiptsProjected on-hand |10 10 10 10 10 10 10 10Planned order receipts 150Planned order releases 150




Body Gross requirements 80Scheduled receiptsProjected on-hand |40 40 40 40 40 40 40 40Planned order receiptsPlanned order releases




Body Gross requirements 80Scheduled receiptsProjected on-hand |40 40 40 40 40 40 40 40Planned order receipts 40Planned order releases 40


1 2 3 4 5 6 7 8Wheel assembly Gross requirements 160

Scheduled receiptsProjected on-hand |10 10 10 10 10 10 10 10Planned order receipts 150Planned order releases 150

Axles Gross requirements 150Scheduled receiptsProjected on-hand | 15Planned order receiptsPlanned order releases




Axles Gross requirements 150Scheduled receiptsProjected on-hand | 15 15 15 15 15 15 15Planned order receipts 135Planned order releases




Axles Gross requirements 150Scheduled receiptsProjected on-hand | 15 15 15 15 15 15 15Planned order receipts 135Planned order releases 135




Wheels Gross requirements 300Scheduled receiptsProjected on-hand | 30Planned order receiptsPlanned order releases




Wheels Gross requirements 300Scheduled receiptsProjected on-hand | 30 30 30 30 30 30 30Planned order receipts 270Planned order releases




Wheels Gross requirements 300Scheduled receiptsProjected on-hand | 30 30 30 30 30 30 30Planned order receipts 270Planned order releases 270


1 2 3 4 5 6 7 8Wheels Gross requirements 150 120 150 120

Scheduled receiptsProjected on-hand | 30Planned order receiptsPlanned order releases


More complexity/Scheduled receiptsMore complexity/Scheduled receipts


Scheduled receipts 200Projected on-hand | 30Planned order receiptsPlanned order releases




Scheduled receipts 200Projected on-hand | 30Planned order receiptsPlanned order releases



Explanation:Gross requirements are the total demand for wheels. Projected on-hand inventory in week 1 is 30 + 200 – 150


Scheduled receipts 200Projected on-hand | 30 80Planned order receiptsPlanned order releases



Projected on-hand inventory balance at

end of week t

Inventory on hand at end of

week t - 1

Gross requirements

in week t

Scheduled or planned receipts in

week t

= + –


Scheduled receipts 200Projected on-hand | 30 80 80 80 80Planned order receiptsPlanned order releases



Lot-Sizing RulesLot-Sizing Rules

When there is a net requirement, how much

should we order?

•Lot-for-lot – L4L

•Economic Order Quantity – EOQ

•Part Period Balancing - PPB

•Wagner-Whitin Algorithm

Lead time = 1 week 1 2 3 4 5 6 7 8Wheels Gross requirements 150 120 150 120



Lot-Sizing Rules: L4LLot-Sizing Rules: L4L

L4L- order the amount needed to fulfill requirementsL4L- order the amount needed to fulfill requirements

Lead Time = 1 week 1 2 3 4 5 6 7 8Wheels Gross requirements 150 120 150 120

Scheduled receipts 200Projected on-hand | 30 80 80 80 80Planned order receipts 40Planned order releases 40




Scheduled receipts 200Projected on-hand | 30 80 80 80 80 0 0Planned order receipts 40 150Planned order releases 40 150




Scheduled receipts 200Projected on-hand | 30 80 80 80 80 0 0 0Planned order receipts 40 150 120Planned order releases 40 150 120






Lot-Sizing Rules: EOQLot-Sizing Rules: EOQ

EOQ- order the EOQEOQ- order the EOQ

yearunitswkunitsD /3510/5.678/)120150120150(

11652

100)3510(22*

H

DSQ

yearunitweekunitH

S

//52$//1$

100$


Scheduled receipts 200Projected on-hand | 30 80 80 80 80Planned order receipts 116Planned order releases 116


Lot-Sizing Rules: EOQLot-Sizing Rules: EOQEOQ- order the EOQEOQ- order the EOQ


11652

100)3510(22*

H

DSQ

yearunitweekunitH

S

//52$//1$

100$


Scheduled receipts 200Projected on-hand | 30 80 80 80 80 76Planned order receipts 116Planned order releases 116





11652

100)3510(22*

H

DSQ

80+116-120 = 76

yearunitweekunitH

S

//52$//1$

100$


Scheduled receipts 200Projected on-hand | 30 80 80 80 80 76 76Planned order receipts 116 116Planned order releases 116 116





11652

100)3510(22*

H

DSQ

yearunitweekunitH

S

//52$//1$

100$


Scheduled receipts 200Projected on-hand | 30 80 80 80 80 76 76 42Planned order receipts 116 116 116Planned order releases 116 116 116





11652

100)3510(22*

H

DSQ

yearunitweekunitH

S

//52$//1$

100$


Scheduled receipts 200Projected on-hand | 30 80 80 80 80 76 76 42 38Planned order receipts 116 116 116Planned order releases 116 116 116





11652

100)3510(22*

H

DSQ

yearunitweekunitH

S

//52$//1$

100$

MRP MRP IIII

Inventory records Inventory transactions

Bills of materialsRoutings

Time standards

MRPMRPexplosionexplosion

Master production schedule

Customer orders Forecasts

MRP IIMRP II

Material requirements plan



Time standards




MRP MRP IIII




Time standards



Manufacturing resource planCost and

financial data


MRP MRP IIII




Time standards



Manufacturing resource planCost and

financial data

Purchasing reports

Financial/ accounting

reports

Sales and marketing

reports

Human resource reports

Manufacturing reports


MRP MRP IIII

Extensions to MRPExtensions to MRPEnterprise Resource Enterprise Resource

PlanningPlanning

MRP II with ties to customers and MRP II with ties to customers and supplierssuppliers

MRP and ERPMRP and ERP

ERP @ ERP @ BMW, BMW,

SpartanbSpartanburgurg

ProductProduct BMW X5 sport activity BMW X5 sport activity

vehiclevehicle

Application: Application: mySAP™ AutomotivemySAP™ Automotive

Goal: Goal: Tight supplier network in Tight supplier network in

order to ensure just-in-order to ensure just-in-time productiontime production

Compress Customer Order Compress Customer Order CycleCycle

Improve Inventory Improve Inventory AccuracyAccuracy

Why use ERPWhy use ERP

Automotive Industry is competitiveAutomotive Industry is competitive

Global competitionGlobal competition

Trend toward make-to-order manufacturing -- Trend toward make-to-order manufacturing -- filling individual customer requirements rather filling individual customer requirements rather than make-to-stockthan make-to-stock new demands on new demands on manufacturers and dealersmanufacturers and dealers

Potential cost reductionPotential cost reduction

Customers want what they want, when they Customers want what they want, when they want it.want it.

Key success factors in Key success factors in the Automotive Industrythe Automotive Industry

Speed: speed in product development, speed in product Speed: speed in product development, speed in product assembly, and speed in product delivery to dealers and assembly, and speed in product delivery to dealers and customers. customers.

Manufacturers must closely manage armies of suppliers Manufacturers must closely manage armies of suppliers and partners to make certain that the correct systems and and partners to make certain that the correct systems and components are delivered where and when they are components are delivered where and when they are needed. needed.

Collaboration among all the industry players -- suppliers, Collaboration among all the industry players -- suppliers, OEMs, dealers, and customers -- is essential.OEMs, dealers, and customers -- is essential.

Linking complex business processes into a logical flow, Linking complex business processes into a logical flow, maximizing efficiency and satisfying customers' maximizing efficiency and satisfying customers' expectations.expectations.

Business BenefitsBusiness Benefits

End-to-end integration of SAP and End-to-end integration of SAP and non-SAP products. non-SAP products.

Offers a Offers a single data platformsingle data platform for for EngineeringEngineering PlanningPlanning supply chain managementsupply chain management ProcurementProcurement customer relationship managementcustomer relationship management..

Business BenefitsBusiness Benefits Cost reduction of 3% to 6% per vehicle Cost reduction of 3% to 6% per vehicle

by changing the supply chain from the by changing the supply chain from the traditional push paradigmtraditional push paradigm

New level of collaboration and efficiency.New level of collaboration and efficiency.

Groups processes and functions by market Groups processes and functions by market segmentssegments OEMs, suppliers and aftermarket, or sales and OEMs, suppliers and aftermarket, or sales and

service. service.

How it worksHow it works

mySAP™ Automotive generates delivery mySAP™ Automotive generates delivery schedules to meet assembly-line planning schedules to meet assembly-line planning and sequencing directives.and sequencing directives.

Long-horizon forecasts and short-horizon Long-horizon forecasts and short-horizon J-I-T delivery schedules are sent to J-I-T delivery schedules are sent to suppliers.suppliers. Electronic Data Interchange (EDI)Electronic Data Interchange (EDI) mySAP™ Automotive Supplier Portal mySAP™ Automotive Supplier Portal

(Internet)(Internet)

How it worksHow it works BMW gets an advance shipping BMW gets an advance shipping

notificationnotification Exact information on part counts and Exact information on part counts and

delivery datesdelivery dates

Upon receipt parts are transferred Upon receipt parts are transferred

directly to the linedirectly to the line

Additional benefitsAdditional benefits Monitoring the production status in real Monitoring the production status in real

timetime Recording production confirmation and Recording production confirmation and

parts consumption every 3 minutes and parts consumption every 3 minutes and adjustment of inventoryadjustment of inventory

Costs are posted to calculate the value of Costs are posted to calculate the value of work in progresswork in progress

Seamless collaboration between business Seamless collaboration between business partners across the supply chain allows partners across the supply chain allows EngineeringEngineering High-volume productionHigh-volume production Highly customized productsHighly customized products

overview dependent demand dependent demand master production schedule master production schedule...

Documents

level slide

independent demand slide

chairs parent slide

independent demand demand

known lead time slide

legs demand

chairs demand

independent demand materials