1.the MRP II Hierarchy

8/2/2019 1.the MRP II Hierarchy

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The MRP II Hierarchy


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Long-Range Planning

At the top of the hierarchy we have long-range

planning. This involves three functions: resource

planning, aggregate planning, and forecasting. The

length of the time horizon for long-range planningranges from around six months to five years. The

frequency for replanning varies from once per month,

to once per year, with two to four times per year

being typical. The degree of detail is typically at thepart family level.


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Forecasting

The forecasting function seeks to predictdemands in the future. Long-range fore-casting is important to determining the

capacity, tooling, and personnelrequirements. Short-term forecastingconverts a long-range forecast of partfamilies to short-term fore-casts of individual

end items. Both kinds of forecasts are inputto-the intermediate-level function ofdemandmanagement.


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Resource planning

Resource planning is the process of determining

capacity requirements over the long term. Decisions

such as whether to build a new plant or to expand an

existing one are part of the capacity planningfunction. An important output of resource planning is

projected available capacity over the long-term

planning horizon. This information is fed as a

parameter to the aggregate planning function.


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Aggregate planning

Aggregate planning is used to determine levels ofproduction, staffing, inventory, overtime, and so onover the long term. The level of detail is typically bymonth and for part families. For instance, the

aggregate planning function will determine whetherwe build up inventories in anticipation of increaseddemand (from the forecasting function), "chase" thedemand by varying capacity using overtime, or dosome combination of both. Optimization techniquessuch as linear programming are often used to assistthe aggregate planning process.


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Intermediate Planning

Included production planning functions:

demand management

rough-cut capacity planning

master production scheduling

material requirements planning

capacity requirements planning


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Demand management

The process of converting the long-term

aggregate forecast to a detailed forecast

while tracking individual customer orders is

the function ofdemand management. Theoutput of the demand management module is

a set of actual customer orders plus a

forecast of anticipated orders. As timeprogresses, the anticipated orders should be

"consumed" by actual orders.


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ATP

Demand management is accomplished with a

technique known as available to promise

(ATP). This feature allows the planner to

know which orders on the MPS are alreadycommitted and which are available to

promise to new customers. ATP combined

with a capacity-feasible MPS facilitatesnegotiation of realistic due dates.


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ATP

If more orders than expected are received, sothat quoted lead times become excessive,additional capacity (e.g., overtime) might be

required. On the other hand, if fewer thanexpected orders arrive, sales might want tooffer discounts or some other incentives toincrease demand. In either case, the forecast

and possibly the aggregate plan should berevised.


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Master productionscheduling

Master production scheduling takes the demandforecast along with the firm orders from the demandmanagement module and, using aggregate capacitylimits, generates an anticipated build schedule at the

highest level of planning detail. These are the"demands" (i.e., part number, quantity, and due date)used by MRP. Thus, the master production schedulecontains an order quantity in each time bucket for

every item with independent demand, for everyplanning date.


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RCCP

Rough-cut capacity planning (RCCP) is used to

provide a quick capacity check of a few critical

resources to ensure the feasibility of the master

production schedule. Although more detailed thanaggregate planning, RCCP is less detailed than

capacity requirements planning (CRP), which is

another tool for performing capacity checks after the

MRP processing. RCCP makes use of a bill of

resources for each end item on the MPS. 1


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CRP

Capacity requirements planning (CRP) provides a

more detailed capacity check on MRP-generated

production plans than RCCP. Necessary inputs

include all planned orderreleases, existing WIPpositions, routing data, as well as capacity and lead

times for all process centers. In spite of its name,

capacity requirements planning does notgenerate

finite capacity analysis. Instead, CRP performs what

is called infinite forward loading.2


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Short-Term Control

The plans generated in the long- and

intermediate-term planning functions are

imple-mented in the short-term control

modules, ofjob release, job dispatching,and in-put/output control.


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Job release

Job release converts planned order releases

to scheduled receipts. One of the impor-tant

functions of job release is allocation. When

there are several high-level items that use thesame lower-level part, a conflict can arise

when there is an insufficient quantity on

hand. By allocating parts to one job oranother, the job release function can

rationalize these conflicts.


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Job Dispatching

The basic idea behind job dispatching is

simple: Develop a rule for arranging the

queue in front of each workstation that will

maintain due date integrity while keepingmachine utilization high and manufacturing

times low. Many rules have been proposed

for doing this.


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Input/Output Control

1. Monitor the WIP level in each process center.

2. If the WIP goes above a certain level, then the

current release rate is too high, so reduce it.

3. If it goes below a specified lower level, then thecurrent release rate is too low, so increase it.

4. If it stays between these control levels, the

release rate is correct for the current conditions.

1.the MRP II Hierarchy

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