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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.