Extending The Role of MRP
• The basic procedure might suggest a series of
small, frequent orders. It may be cheaper and
more convenient to combine several of these
small orders into one larger one.
• This is called batching. There are four common
methods of batching:
– Lot-for-lot – where you order exactly the net
requirement suggested by MRP for each
period. This has the advantage of minimising
the amount of stock, but can give high
ordering, delivery and administration costs.
– Fixed-order quantity – where you find an order
size that is convenient, such as a truckload, a
container load, or an economic order quantity.
– Periodic orders – where you combine the
requirements over some fixed period, and place
regular orders for different quantities.
– Batching rules – which uses a specific procedure
to calculate the best pattern of orders. Typically
they look for the combination of orders that
gives the lowest overall cost.
• Another improvement comes when the same
material is used for different products.
• A more significant extension to MRP adds
feedback for planning. In other words, we
introduce feedback from MRP to capacity
planning.
• This linking of capacity planning to MRP is
called capacity requirements planning.
• Overall systems with feedback of this kind are
called closed-loop MRP.
Extending The Role of MRP• The basic procedure might suggest a series of small, frequent orders. It may be cheaper and more convenient to combine several of these small orders into one larger one. • This is called batching. There are four common methods of batching:– Lot-for-lot – where you order exactly the net requirement suggested by MRP for each period. This has the advantage of minimising the amount of stock, but can give high ordering, delivery and administration costs.– Fixed-order quantity – where you find an order size that is convenient, such as a truckload, a container load, or an economic order quantity. – Periodic orders – where you combine the requirements over some fixed period, and place regular orders for different quantities.– Batching rules – which uses a specific procedure to calculate the best pattern of orders. Typically they look for the combination of orders that gives the lowest overall cost.• Another improvement comes when the same material is used for different products. • A more significant extension to MRP adds feedback for planning. In other words, we introduce feedback from MRP to capacity planning. • This linking of capacity planning to MRP is called capacity requirements planning. • Overall systems with feedback of this kind are called closed-loop MRP.
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