MRP System Overview and Uncertainty Types
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Questions and Answers

MRP system converts MPS system into _________

Time-Phased schedule for all intermediate assemblies and component parts

What are the two main parts in any detailed schedule?

  • Schedule receipts (correct)
  • Open orders
  • Inventory levels
  • Planned orders (correct)

    • What are the natures of Net Requirement?

    They do not reflect the key independent demand assumption of constant demand, they are discrete, and they are considered lumpy.

    MRP lot-sizing procedures are designed specifically for ________ demand.

    <p>Discrete</p> Signup and view all the answers

    List the problems we might face when choosing a procedure.

    <p>Should use increasingly complex procedures to reduce inventory-related costs, local optimization impacts, and increased NR lumpiness with other procedures.</p> Signup and view all the answers

    If we consider there is only one part, what do we focus on?

    <p>How to group time-phased requirement data into schedule of replenishment orders while minimizing ordering and holding costs.</p> Signup and view all the answers

    List the assumptions made when using MRP lot-sizing procedures.

    <p>NR must be available at the beginning of each period, all future NR must be met with no back orders, ordering decisions are made at certain intervals, offsets for manufacturing lead times, and component requirements satisfied uniformly.</p> Signup and view all the answers

    What are the two sources of uncertainty?

    <p>Demand uncertainty and supply uncertainty.</p> Signup and view all the answers

    What are the two types of uncertainty?

    <p>Timing uncertainty and quantity uncertainty.</p> Signup and view all the answers

    What are four categories of uncertainty?

    <p>Demand timing uncertainty, demand quantity uncertainty, supply timing uncertainty, supply quantity uncertainty.</p> Signup and view all the answers

    What is demand timing uncertainty?

    <p>Occurs when there is a change in promise date to a customer or change in planned orders for higher-level items.</p> Signup and view all the answers

    What is demand quantity uncertainty?

    <p>Occurs when MPS varies to reflect changes in customer orders or demand forecasts.</p> Signup and view all the answers

    What is supply timing uncertainty?

    <p>Variations in vendor lead time or shop floor time.</p> Signup and view all the answers

    What is supply quantity uncertainty?

    <p>Shortages of lower-level items or production lots incurring scrap losses/overruns.</p> Signup and view all the answers

    What are two ways to buffer MRP uncertainty?

    <p>Specify safety stock and safety lead time.</p> Signup and view all the answers

    When should we use the safety lead time?

    <p>When there is demand or supply timing uncertainty.</p> Signup and view all the answers

    When should we use safety stock?

    <p>When there is demand or supply quantity uncertainty.</p> Signup and view all the answers

    What are the two categories with the largest difference in service level?

    <p>Supply timing uncertainty and demand quantity uncertainty.</p> Signup and view all the answers

    What is scrap allowances used for?

    <p>In calculating the lot size to start into production.</p> Signup and view all the answers

    What is the issue of scrap allowances?

    <p>The quantity shown on the shop paper is the starting quantity and relates to using safety stock for quantity uncertainty buffering.</p> Signup and view all the answers

    What are two other methods to deal with uncertainty?

    <p>Reducing uncertainty to an absolute minimum and providing for slack in the production system.</p> Signup and view all the answers

    How to reduce uncertainty to an absolute minimum?

    <p>Increase demand forecasts accuracy, develop effective procedures, freeze MPS, and have responsive shop floor control.</p> Signup and view all the answers

    How to provide for slack in the production system?

    <p>Production slack definition: additional time, labor, machine capacity needed for planned and unplanned production.</p> Signup and view all the answers

    What is nervousness in an MRP system?

    <p>Nervousness can be defined as significant changes in plans occurring with minor changes in higher-level MRP records or MPS.</p> Signup and view all the answers

    What causes MRP system nervousness?

    <p>Planned orders released prematurely, in unplanned quantities, or due to changes in MRP parameter values.</p> Signup and view all the answers

    What is the first method to reduce MRP system nervousness?

    <p>Reduce the causes of changes in MRP nervousness by introducing stability through time fences or freezing.</p> Signup and view all the answers

    What is the second method to reduce MRP system nervousness?

    <p>If nervousness still exists, use different lot-sizing procedures at different product structure levels.</p> Signup and view all the answers

    What is the third method to reduce MRP system nervousness?

    <p>Using firm planned orders in MRP records to stabilize requirements for lower-level systems.</p> Signup and view all the answers

    Why does FOQ help in MRP nervousness?

    <p>FOQ passes along only order timing changes, dampening lot-size induced nervousness.</p> Signup and view all the answers

    What is the distinction between nervousness in MRP plans and execution of MRP system plans?

    <p>Nervousness in execution can influence behavior, leading users to make defensive decisions.</p> Signup and view all the answers

    How can we deal with execution of MRP system issues?

    <p>Passing information to users less often and having well-trained users to make intelligent decisions.</p> Signup and view all the answers

    Study Notes

    MRP System Overview

    • MRP (Material Requirements Planning) system transforms MPS (Master Production Schedule) into a time-phased schedule for all components and assemblies.
    • Core components of a detailed schedule are scheduled receipts (open orders) and planned orders.

    Net Requirements

    • Net requirements remain independent of constant demand assumptions, manifesting as discrete (monthly) instead of averaged figures.
    • They exhibit 'lumpiness', varying significantly from period to period.

    Demand and Supply Uncertainty

    • Two main sources of uncertainty:
      • Demand uncertainty
      • Supply uncertainty
    • Different types of uncertainties encompass:
      • Timing uncertainty: Any changes affecting delivery dates.
      • Quantity uncertainty: Variations in the amount needed.

    Categories of Uncertainty

    • Four uncertainty categories to consider:
      • Demand timing uncertainty: Changes in promise dates to customers.
      • Demand quantity uncertainty: Fluctuations in MPS due to changing customer orders or forecast variations.
      • Supply timing uncertainty: Variations in vendor lead time or processing time.
      • Supply quantity uncertainty: Shortages or production losses affecting lower-level items.

    Strategies for Managing Uncertainty

    • Two approaches for buffering MRP uncertainty:
      • Safety stock: Guarding against demand quantity uncertainties.
      • Safety lead time: Anticipating demand or supply timing uncertainties by initiating orders earlier.

    Minimizing Uncertainty

    • To reduce uncertainty:
      • Enhance accuracy of demand forecasts.
      • Create robust procedures to translate demand into tangible schedules.
      • Implement time freezing for the MPS.
      • Establish priority systems for components.
      • Leverage JIT (Just-In-Time) principles for responsive control.

    Production System Slack

    • Slack denotes excess time, labor, or machine capacity required for:
      • Planned production.
      • Oversized lots to accommodate shrinkage or unexpected orders.
      • Acceleration of production through additional efforts.

    Nervousness in MRP System

    • Nervousness indicates instability in the MRP system, marked by significant plan changes resulting from minor updates in higher-level records.
    • Common causes of MRP nervousness include premature or unplanned order releases and parameter shifts.

    Reducing MRP Nervousness

    • Strategies include:
      • Implementing time fences to introduce stability.
      • Adjusting lot-sizing methods across various product structures (e.g., FOQ at top levels, POQ at bottoms).
      • Utilizing firm planned orders to stabilize lower-level requirements.

    Understanding FOQ Impact on Nervousness

    • FOQ (Fixed Order Quantity) helps mitigate nervousness as it only passes along timing changes, reducing complexity by stabilizing quantity uncertainties.

    Distinction in Nervousness

    • Differentiation between nervousness in MRP plans versus execution:
      • Execution nervousness influences user behavior, leading to defensive decisions based on observed plan changes.

    Addressing Execution Issues

    • Mitigation strategies include:
      • Limiting the frequency of information updates for users.
      • Training users for more informed and intelligent decision-making, addressing the detection challenge of MRP issues.

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    Description

    This quiz covers the fundamentals of Material Requirements Planning (MRP) systems, including the transformation of Master Production Schedules into time-phased schedules. It also explores various types of uncertainties in demand and supply that impact planning, detailing the impact of timing and quantity variations.

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