Lecture 6 - Dependent demand systems PDF

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Summary

exploring the concept of dependent demand systems, that are reliant on a set amount of consumer demand to make production decisions...

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Lecture 6: Dependent Demand Systems – Materials Requirements Planning (MRP) KLPs: - Understand the difference between independent and dependent demand production systems - Learn about MRP and how it is used to control production in dependent demand conditions - Learn about MRP II and ERP Production control using inventory: Levels of inventory can control production but needs close monitoring and assumes demand for different components is independent. 2 types of demand: 1. independent demand: e.g: demand for tyres at a tyre fitting service is governed by random factors. a. no relationship between demand for different items, demand is driven by the market b. demand can be anticipated and stock held in anticipation through re-order or cyclical level systems 2. dependent demand : e.g: demand for car tyres is governed by the number of cars planned to be made therefore tyre demand is dependent on demand for cars a. demand for one item can be calculated from that for another and can use MRP (materials requirement planning)

A: Ice Skates, Roller skate as roller skates are not dependent on ice skates to be produced

Manufacturing control systems: Dependent demand  Backwards time tracing approach:

MRP (Material Requirements Planning) What is meant

To run MRP the following is required: - A master production schedule (normally based on the sales forecast) that includes: o Customer orders o Forecast demand o Known orders o Key capacity constraints o R&D demand o Safety stock requirements

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o Inventory levels o Spares demand o Promotion requirement Bill of materials (The representation of all the parts used within the production of an item) Inventory records Work orders Materials plans Purchase orders

The MRP calculation

The MRP for body and handle of the kettle are shown next:

MRP example: EOQ? Expected order quantity

BOM: used to work out time to fulfil orders: What is the lead time to respond to a customer order for product A assuming no existing inventories or scheduled receipts

THE LONGEST TIME IS THE OVERALL LEAD TIME

MRP 2 (Manufacturing Resource Planning) Holds info on the routing used to produce the parts, holds data on supplier lead times and addresses. Different modules can be also added that enable: automatic part ordering, scheduled orders, capacity check, production directions. ERP (enterprise resource planning) systems These are commercial software packages that integrate stractions-oriented data and business processes throughout an organisation and supply chain. Single central data store allows common information between modules

Advantages of MRP: - Crucial in inventory control and inventory levels and cost reduction - It provides info about purchases but also whether hand-on inventory balances are enough to meet the production demand - Uses historical data to forecast future material requirements - Helps detect and track changes in production demand and thefore material requirements. MRP (MRP 2& ERP) systems schedule the activities of the firm to meet the planned orders for finished products, they mtch output to demand, therefore reducing inventory and waste....