What do we mean when we say that MRP is based on dependent demand?
MRP determines the requirements of producing a product in terms of the components or materials required. Therefore, it is based on dependent demand because the demand for one product determines the demand for another product or component, or material (Jacobs and Chase 556).
Discuss the importance of the master production schedule in an MRP system
MRP is a schedule essential for planning and controlling the manufacturing process. It is useful to plan product requirements in terms of materials required and delivery time. It also helps in forecasting the demand for a particular product depending upon the expected number of sale units. Therefore, it could be stated that it is important for ensuring that the company fulfills its commitments and delivers its product within the specified period.
Explain the need for time fences in the master production schedule
Time fences are needed in the master production schedule to assist with the planning of resources required for production. It involves the determination of the lead time for the ordering of materials, which is not possible if MPS is allowed to change and deliveries would be late.
What are the sources of demand in an MRP system? Are these dependent or independent, and how are they used as inputs to the system?
There are two sources of demand in an MRP system which include customers and aggregate production plants. Customers place their orders for a particular product which has to be completed by the delivery date. Customers are regarded as dependent demand, which is not part of forecasting, and it is used as the sum of total orders placed for a particular product. Aggregate production represents the company’s strategy to meet the future demand for its product. The company’s strategy is implemented through MPS by using this information in an MRP system. Therefore, it is used for forecasting and is considered as an independent demand.
Discuss the meaning of MRP terms such as planned order release and scheduled order receipts
Planned order release is the order that is in the planning phase of release. It can be changed according to the change in the demand for a particular product. On the other hand, scheduled order receipts are related to orders already released. The receipt indicates the estimated date of arrival, which is not definite because of possible delays or variations.
Many practitioners currently update MRP weekly or biweekly. Would it be more valuable if it were updated daily? Discuss
The reason for updating MRP weekly or biweekly is to smooth out the variations that could be observed daily. The firm’s operations may vary significantly due to high variations daily. Therefore, it is not suitable to update MRP every day as it would create an exception report in which normal variations are reported as abnormal variations. The weekly or biweekly update averages the firm’s daily performance, and it is a better indicator of the firm’s production performances and deviations.
Should safety stock be necessary for an MRP system with dependent demand? If so, why? If not, why do firms carry it anyway?
The inclusion of safety stock in an MRP system works as a safety buffer, and it is necessary for dealing with expected or unexpected variations in quantities. It is useful for meeting any variations in the dependent demand by customers. Safety stock is important for dealing with delays in the replenishment of stock. Moreover, safety lead time should be used to deal with any unexpected delay in delivery.
Planning orders on a lot-for-lot is commonly done because it is simple and intuitive. It also helps to minimize holding costs as you are only ordering what is needed when it is needed. So far it sounds like a good idea. Are there any disadvantages to this approach?
Lot-for-Lot (L4L) has two disadvantages, which are given below.
- This technique does not consider the set-up costs and limitations of production capacity.
- It could result in high set up costs when there are different items per week.
Works Cited
Jacobs, F Robert and Richard Chase. Operations and Supply Chain Management. The McGraw-Hill Companies, Inc, 2014.