Chapter 11 - Work System Design

Material requirements planning (MRP)

A computer-based system for planning material requirements to meet dependent demand.

Dependent demand

Demand for items that are subassemblies or components of finished goods.

Independent demand

Demand for finished goods, not derived from other items.

Master production schedule (MPS)

A schedule specifying which end items are to be produced, when, and in what quantities.

Bill of materials (BOM)

A listing of all components, parts, and raw materials needed to produce one unit of a finished product.

Inventory records

Files that contain information on the status of each item in inventory.

Exploding the BOM

Breaking down end items into all components needed using the bill of materials.

Gross requirements

Total demand for an item in a time period before considering inventory on hand.

Scheduled receipts

Orders that have already been placed and are scheduled to arrive.

Projected on-hand

Expected inventory on hand at the beginning of each time period.

Planned order releases

Orders planned for release in future periods to meet net requirements.

Lead time

The time required to produce or procure an item.

Net requirements

The amount needed when on-hand inventory and scheduled receipts are not sufficient.

Lot sizing

Determining the quantity of an item to be ordered or produced.

Lot-for-lot ordering

A lot-sizing method where the order quantity equals the net requirements.

Economic order quantity (EOQ)

A method for calculating order size that minimizes total inventory costs.

Safety stock

Extra inventory kept to protect against uncertainty in demand or lead time.

Time fences

Boundaries within which certain changes to the MPS are restricted.

Pegging

Tracing which parent items create the demand for a component.

Capacity requirements planning (CRP)

Determines the labor and machine resources needed to fulfill MRP plans.

Load reports

Reports showing the workload compared to capacity.

MRP II (Manufacturing Resource Planning)

An expanded version of MRP that includes resource and capacity planning.

Enterprise Resource Planning (ERP)

Integrates all business processes and functions into a single comprehensive system.