Resource Planning Study Guide

Vocabulary-style flashcards based on Chapter 12 lecture notes, covering resource planning, MRP, ERP, demand relationships, and the Bill of Materials.

Resource planning

A process that takes sales and operations plans, processes information such as time standards and routings, and determines the necessary input requirements for production.

Material Requirements Planning (MRP)

A computerized information system designed specifically to help manufacturers manage dependent demand inventory and schedule replenishment orders.

MRP Explosion

The process of converting the requirements of final products into a detailed replenishment schedule for all subassemblies, components, and raw materials.

Enterprise Resource Planning (ERP)

Large, integrated systems that support company-wide processes across multiple functional areas like human resources, sales, and accounting.

Independent Demand

Demand that is influenced by market conditions, such as the final product like a chair or bicycle.

Dependent Demand

Demand that occurs because the item is required to produce a "parent" item, such as wheels for a bicycle or rims for a wheel.

Parent

A product manufactured from one or more components.

Component

An item that becomes part of one or more parents through operations or assembly.

Master Production Schedule (MPS)

The build plan that details how many end items (parents) will be produced within specific timeframes; it also serves as an input in MRP.

Projected On-Hand Inventory

The estimated inventory balance at the end of a period.

End-period inventory formula

$\text{End-period inv} = \text{Prev week inv} + \text{MPS Qnty} - \text{requirements}$ where requirements is the higher of the forecast or booked customer orders.

Available-to-Promise (ATP) Inventory

The quantity of end items that marketing can promise to deliver to customers on specific dates, representing the difference between customer orders already booked and what operations are planning to produce.

Freezing the MPS

A policy of disallowing changes to the near-term portion of the schedule to maintain stability in production.

Bill of Materials (BOM)

A record of all components of an item, showing parent-component relationships and usage quantities.

End Items

The final products sold to the customer.

Intermediate Items

Items that have at least one parent and at least one component.

Subassemblies

Intermediate items that have been assembled.

Purchased Items

Items with no components that are bought from a supplier.

Planned Purchase Orders

An MRP output based on scheduled start dates.

Planned Work Orders

An MRP output generated for manufacturing jobs.

Performance Reports

An MRP output that includes details on capacity utilization, late POs, and overtime requirements.