1. http://www.slideshare.net/anandsubramani
am/lot-sizing-techniques

2. *Computerized Inventory Control
*Production Planning System
*Management Information System
*Manufacturing Control System
*

3. *This is the most comprehensive approach to
manufacturing inventory and other dependents
which demand an efficient inventory management
system.
*

4. *The MRP system determines item-by-item,
what is to be processed and when, as well as
what is to be manufactured when.
*This is based on order priorities and available
capacities.

5. An MRP system is intended to simultaneously
meet three objectives:
* Ensure materials and products are available for
production and delivery to customers.
*Maintain the lowest possible level of inventory.
*Plan manufacturing activities, delivery schedules and
purchasing activities

6. *Forecasting
*Order, Planning and Control
*Priority Planning and Control
*Planning Capacity Requirement and
Development of Broad Business Plans
*

7. *
Manufacturing organizations, whatever their
products, face the same daily practical
problem - that customers want products to be
available in a shorter time than it takes to
make them. This means that some level of
planning is required.

8. Making a bad decision in any of these areas will make the
company lose money. A few examples are given below:
* If a company purchases insufficient quantities of an item used in
manufacturing, or the wrong item, they may be unable to meet
contracts to supply products by the agreed date.
* If a company purchases excessive quantities of an item, money is
being wasted - the excess quantity ties up cash while it remains as
stock and may never even be used at all. This is a particularly
severe problem for food manufacturers and companies with very
short product life cycles. However, some purchased items will have a
minimum quantity that must be met, therefore, purchasing excess is
necessary.
* Beginning production of an order at the wrong time can cause
customer deadlines to be missed.

9. Independent demand: Demand for final products.
Dependent demand: Demand fort items that are subassemblies or component parts to
be used in production of finished goods.
A Independent Demand
B(4) C(2) Dependent Demand
D(2) E(1) D(3) F(2)
*
Independent demand is uncertain.
Dependent demand is certain.

10. *
* Reduce Inventory Levels * Reduce Purchasing Cost
* Reduce Component * Improve Production
Shortages Schedules
* Improve Shipping * Reduce Manufacturing Cost
Performance * Reduce Lead Times
* Improve Customer Service * Less Scrap and Rework
* Improve Productivity * Higher Production Quality
* Simplified and Accurate
Scheduling

11. *
* Improve Communication * Reduce Overtime
* Improve Plant Efficiency * Improve Supply Schedules
* Reduce Freight Cost * Improve Calculation of
* Reduction in Excess Material Requirements
Inventory * Improve Competitive
Position

12. *Identifying Requirements
*Running MRP – Creating the
Suggestions
*Firming the Suggestions
*

13. *
*Quantity on Hand
*Quantity on Open Purchase Order
*Quantity in/or Planned for Manufacturing
*Quantity Committed to Existing Orders
*Quantity Forecasted

14. *
*Company Sensitive
*Location Sensitive
*Date Sensitive

15. *
*Critical Items
*Expedite Items
*Delay Items

16. *Manufacturing Orders
*Purchasing Orders
*Various Reports
*

17. *
Master
Product Inventory
Production
Structure File Master File
Schedule
Material
Requirements
Planning
Manufacturing Purchase
Various Reports
Orders Orders

18. *
*Product Structure File
*Master Production Schedule
*Inventory Master File
18

19. *Bill of Materials:
* It is a materials list that provides
information useful to reconstruct the
manufacturing process. It is the
master product definition that contains
“as designed” information.
*
19

21. *Schedule of Finished Products
*Represents Production, not Demand
*Combination of Customer Orders and
Demand Forecasts
*What Needs to be Produced
*
21

22. *
*On-Hand Quantities
*On-Order Quantities
*Lot Sizes
*Safety Stock
*Lead Time
*Past-Usage Figures

23. *
* Schedules the Production of all items using an MRP Matrix
MRP Matrix
Item: Low-Level Code:
Lot Size: Lead Time: PD 1 2 3 4 5
Gross Requirements
Scheduled Receipts
Projected on Hand
Net Requirements
Planned Order Receipts
Planned Order Releases

24. *
*Item – name or number for the item being
scheduled
*Low-Level Code – the lowest level of the item on
the product structure file
*Lot Size – order multiples of quantity
*Lead Time – the time from when an order is
placed to when it is received
*PD – Past Due Time Bucket, orders behind
schedule

25. *
*Gross Requirements – demand for an item by
time period
*Scheduled Receipts – material already ordered
*Projected on Hand – expected ending inventory
*Net Requirements – number of items to be
provided and when
*Planned Order Receipts – net requirements
adjusted for lot size
*Planned Order Releases – planned order
receipts offset for lead times

26. *
*Gross requirements: (Forecasted)Demand period by
period
*Net requirements(t)
=Gross requirements(t)-Projected inventory(t-1)
-Scheduled receipt(t)
*If Net requirement(t) > 0
set Planned order receipts(t)>=Net requirement(t)
26

27. *Planned-order receipts is the production planned
*Projected inventory(t)
=Projected inventory(t-1)+Scheduled receipt(t)
+Planned order receipts(t)-Gross requirements(t)
*Planned order release(t-LT)=Planned-order receipts(t)

28. *
Periods 0 1 2 3
Gross requirements 6 11 7 Inputs
Scheduled receipts 2 3 0
Projected on hand 10 6 0 0
Net requirements 0 2 7 Outputs
Planned order receipts 2 7
Planned order releases 2 7

29. *

30. *
*Safety Stock
*Not much for items with dependent demand
*Lot sizing
*Lot-for-lot ordering
*Economic order quantity
*Fixed-period ordering
*Part-period model

31. *
Periods 0 1 2 3
Gross requirements 6 11 9 Inputs
Scheduled receipts 2 3 0
Projected on hand 10 6 3 4
Net requirements 5 10 Outputs
Planned order receipts 5 10
Planned order releases 5 10

32. *
32

33. *
Marketing
Production Customer Finance
Capacity Demand Cash Flow
Inventory
Aggregate Human
Procurement Production Plan Resources
Supplier
Manpower
Performance
Planning
Management Engineering
Return on Design
Investment Completion
Capital

34. *
Production Plan Master Production
Schedule
Material
Requirements
Plan
Capacity
Requirements
Plan
No Realistic??
Yes
Execute Capacity
Plans
Execute Material
Plans

35. *Manufacturing Orders
*Purchasing Orders
*Various Reports
*

36. *
*Improved Business Results
*Improved Manufacturing Results
*More Accurate And Timely Information
*Less Inventory
*Less Materials Obsolescence
*Time Phased Ordering Of Materials
*Higher Reliability
*More Responsiveness To Market Demand
*Reduced Production Cost

37. * Increase In Material Acquisition Cost
* Higher Transportation Costs And Higher Unit Cost
* Potential Hazard Of A Production Slowdown Or Shutdown
* Use Of Standardized Software Packages
* Does not Take Into Account Plant Capacity And Distribution
Capacity
* High Stock-Out Costs.
*