Professional Documents
Culture Documents
EOQ
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where EOQ = economic order quantity (number of parts that should be produced in the batch); and
other terms are previously defined
Reorder Point System
When the inventory level for a given stock item declines to some point defined as the reorder
point, this is the signal to place an order to restock the item
Reorder point is set at a high enough level so as to minimize the probability that a stock-out
will occur during the period between when the reorder point is reached and a new batch is
received
Reorder point policies can be implemented using computerized inventory control systems
purchased parts
work-in-process
used to manufacture independent demand products
Common Use Items in MRP
The master schedule specifies the production of final products in terms of month-by-month
deliveries
Each product may contain hundreds of components
These components are produced from raw materials, some of which are common among the
components (e.g., sheet steel for stampings)
Some of the components themselves may be common to several different products
These materials and components are called common use items in MRP
Lead Times in MRP
The lead time for a job is the time that must be allowed to complete the job from start to finish
Cancellation notices - indicate that certain orders are canceled due to changes in the master
schedule
Inventory status reports
Exception reports, showing deviations from schedule, overdue orders, scrap, etc.
Benefits of MRP
Inventory reductions
Faster response to changes in demand
Reduced setup and changeover costs
Better machine utilization
Improved ability to respond to changes in the master schedule
Helpful in developing the master schedule
Capacity Requirements Planning
Concerned with determining labor and equipment requirements needed to meet the master
production schedule
Also concerned with identifying the firm's long term future capacity needs
Also serves to identify production resource limitations so that a realistic master production
schedule can be planned
Order Release
Generates the documents needed to process a production order through the factory
The documents are sometimes called the shop packet, which consists of:
Route sheet
Requisitions to obtain starting materials
Job cards to report direct labor time
Move tickets to transport parts
Parts list for assembly jobs
Order Scheduling
Assigns the production orders to work centers in the factory
A dispatch list is prepared indicating which orders should be accomplished at each work center
Also provides relative priorities for the jobs, e.g., by showing due dates for each job
Dispatch list helps the department foreman assign work and allocate resources to achieve the
master schedule
Order Progress
Monitors the status of the orders, work-in-process, and other parameters in the plant that
indicate progress and production performance
Various techniques are available to collect data from factory operations
Called the factory data collection system, the techniques range from requiring workers to submit
paper forms that are later compiled, to fully automated techniques with no human participation