Outline of Previous Lecture Lecture 9Chapter 6- Resource Planning Systems Part 1SCM 3301 1st EditionOutline of Previous Lecture Lecture 9Chapter 6- Resource Planning Systems Part 1Aggregate Production Planning (Sales & Operations Planning)Organized by Product Family- Chase Production Strategyo Adjusting capacity to match demando Inventory remains constant- Level Production Strategyo Adjusting inventory to react to demando Capacity remains constant- Mixed Production Strategyo Workforce remains constanto Capacity is adjusted in other ways Overtime, additional shifts, subcontracting, and contract workersMaster Production Scheduling Components- Schedule Time Fence (System Nervousness)o Time Fence: Separates Planning Horizon into Firm and Tentative SegmentsSCM 3301 1st Editiono Nervousness: Small change upper level (MPS) leads to a large change lower level (MRP)- Available to Promise (ATP) Quantityo The uncommitted portion of the firm’s planned production (or scheduled MPS)o Calculation: Difference between confirmed customer orders and planned production (MPS)- Bill of Materials (BOM)o Engineering document that shows all component parts and subassemblies making up an end item.o Independent Demand: End-item (needs to be forecasted)o Dependent Demand: Component parts & subassemblies (no need to forecast)- Material Requirements Planning (MRP)o Software-based production planning and inventory management system used for computing dependent demand and timing requirements.Current Lecture Lecture 14Material Requirements Planning Key Vocabulary- Parent: The item generating the demand for lower lever components- Gross Requirement: A time-phased requirement prior to considering on-hand inventory and lead time- Net Requirement: The unsatisfied item requirement for a specific time period- Planned Order Release: A time-phased, specific order to be released to the shop or supplier- Explosion: The process of converting a parent item’s planned order releases into component gross requirements- Lot Size: The order size for each component or subassembly. May be determined by the supplier (FOQ, LFL) or by the firm (EOQ).- Safety Stock: Amount of extra inventory to protect against uncertainties in demand, supply, quality, and lead-timeSCM 3301 1st EditionCapacity Planning and Strategy- Capacity Planningo Excess or insufficient capacity: Machines and Laboro Resource requirements planning: APP Levelo Rough-cut capacity plan: MPS Levelo Capacity requirements planning: MRP Level- Distribution Requirements Planningo Time-phased finished goods inventory replenishment plan in a distribution network- Manufacturing Resource Planning (MRPII)o Linking supply chain functions with financial functionsERP- Designed to Minimize the Silo Effect- Most organizations are organized functionally - Business processes are performed across functions- ERP systems are designed to integrate business functionsImplementation Challenges of ERP Systems- Imposes implied process logic on real processesSCM 3301 1st Edition- Encourages companies to accept total integration throughout their enterprise- Path of least resistance: Implementing “out-of-the-box” ERP