MT 303 1st Edition Lecture 6 Previous Chapter Outline 1 Supply Chain Management 2 The Purchasing Cycle 3 Ethics in Purchasing 4 Creating an Effective Supply Chain 5 Aggregate Production Plan 6 Strategies Chapter Outline 1 Tableau Method 2 Overtime in US companies 3 Master Production Schedule 4 MRP and ERP 5 Typical MRP format 6 MRP 7 Capacity Requirements Planning I Tableau Method These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute a Step 1 formulation i Rows and columns b Step 2 Production rate month i Regular time ii Over time iii Idle time iv Subcontracting c Step 3 APP interpretation i Best APP is the lowest cost II Overtime in US companies a The Bureau of Labor Statistics reports that more than a tenth of all work done in the nation s factories is performed on overtime b One reason employers are going the overtime route is that overtime pay doesn t cost much extra i Fringe benefits are mostly covered by the first 40 hours worked ii Overtime hours generally are worked by employers most skilled and productive people III Master Production Schedule a Objective is to develop a production plan for specific end items i How much ii When b Input is APP and OH inventories c Characteristics are a weekly production plan for the next 16 to 26 weeks d Output is material requirements planning e The person is charge is the master scheduler f Rough cut capacity planning i Validates MPS ii It is used to determine whether sufficient production capacity will exist to meet the MPS IV MRP and ERP a Objective to develop a time i Phased production and purchasing plan for all components parts and raw materials called dependent or lumpy demand ii Input 1 Authorized MPS 2 BOM Bill of Materials iii Inventory data 1 POH projected on hand inventory 2 LT lead time time between releasing and receiving an order 3 SR Scheduled Receipts orders already released being delivered either manufactured or shipped quantity due date 4 SS Safety Stock to be used in emergencies to control stockouts iv Quantity Pattern 1 Lot for lot order exactly what us needed 2 Fixed quantity a Minimum order b Multiple orders 3 Characteristics a 8 to 16 weeks time frame with weekly time bucket b Output purchasing department for raw materials production floor for items produced c Materials manager is responsible V Typical MRP format a Gross requirements i Quantity and week the item must be available b Scheduled receipts i From inventory data c Projected on hand inventory i End or beginning of week d Net requirement i Reduced by OH and SR e Planned Receipts f Planned Order Release VI MRP a Characteristics i Right time right quantity right quality right place ii Requirements 1 Data accuracy 2 Discipline 3 Product improvement redesign iii Pegging 1 Reverse time phased process to enable managers to determine which products will be affected if orders are late due to late deliveries quality problems or other problems iv Backflushing 1 Exploding an end items bill of materials to determine the quantities of the components that were used to make the item VII Capacity requirements planning a Objective i To establish measure and adjust limits or levels of capacity that will be required at each work center or machine b Input i MRP and routing data for parts manufactured in house c Characteristics i Validates MRP usually in the form of load report d Output i Production activity control e Materials manager is responsible