18-1: Compose a master schedule and identify its functions.

The aggregate production and resource levels established by the sales and operations plan act as constraints to subsequent operational plans and should be disaggregated to provide the detailed material and resource plans needed to produce or acquire individual products and components. The first step of this disaggregation is the process of master scheduling. The master scheduling process leads to a manufacturing plan that determines the quantity of each end item to be produced in specific periods of the shortrange planning horizon. The process determines the production quantities required to meet demand from every possible source of an organization including end customers, warehouses, and requirements from other plants in a multi-plant environment. Among the functions of the master schedule are disaggregation of the sales and operations (aggregate) plans, evaluation of capacity requirements, generation of material requirements, and facilitation of information processing.

18-2: Explain the conditions under which MRP is appropriate, its inputs, processing, and outputs, as well as its benefits and limitations.

The master scheduling process leads to a manufacturing plan that determines the quantity of each end item to be produced in specific periods of the short-range planning horizon. The process determines the production quantities required to meet demand from every possible source of an organization including end customers, warehouses, and requirements from other plants in a multi-plant environment. Once the master schedule is set, material requirements planning (MRP) can be employed as a method for scheduling production and inventory control for products that are demand dependent. MRP depends on accurate requirements for all products, a master schedule, inventory and lead times, and purchasing records.

The inputs for an MRP system include the master schedule, inventory status file, and bill of materials (BOM) file, which is used to create a product structure tree. Processing in an MRP system starts with a master production schedule, which provides information on the number of units required for an end product for specific time periods of the planning horizon. The MRP system accepts these end-item requirements from the master schedule and then gathers information from the BOM file on the components needed to assemble the end product. In addition, the MRP system also gets information on the available inventory for both the finished products and the various components. The MRP system then calculates the gross and net requirements of all components and materials at each level of the product structure tree. This process is referred to as MRP explosion. The outputs of the MRP system include planned order schedules, planned order releases, changes to planned orders, performance control reports, planning reports, and exception reports.

Benefits of MRP Systems:

1. Inventory benefits. Production managers can minimize in-process inventory levels and their associated carrying costs.

2. Ability to track material requirements. MRP gathers the information on end-item requirements provided by the master schedule, available inventories from the inventory status file, and the information on subassemblies and components needed to produce the end product and the manufacturing sequence from the BOM file.

3. Capacity benefits. MRP systems enable production managers to use capacity by efficiently allocating production time among the various products, balancing workloads across departments, and planning for future capacity.

Problems with MRP systems arise if the master schedule and bill of materials are not accurate, if lead time estimates are poor, or if inventory records have not been maintained. Using an MRP system in these cases can lead to problems such as missing parts, excessive order quantities, schedule delays, and missed delivery dates. An MRP system can be difficult, time consuming, and costly to implement. Many companies have encountered employee resistance to MRP implementation.

18-3: Discuss the role that sustainability and ethics play in MRP systems.

Organizations are increasingly recognizing their ethical obligation to operate and produce goods and services in ways that minimize environmental damage. In a variety of ways, government actions and pressure from investors and consumers have caused companies to reexamine their manufacturing and service operations in light of sustainability. Furthermore, because MRP systems focus on controlling production flows in manufacturing and service settings, they allow companies to integrate environmental issues such as purchasing materials made from recycled products or reconfiguring bill of materials (BOM) files to eliminate unnecessary steps or hazardous materials.

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