Lot sizing rule comparison the foq rule generates

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Lot-Sizing Rule Comparison The FOQ rule generates high average inventory because it creates remnants The POQ rule reduces average on-hand inventory because it does a better job of matching order quantity to requirements The L4L rule minimizes inventory investment but maximizes the number of orders placed
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Calculation Procedure of MRP From product structure level : (from Level-0 to Lowest level) 1. Determine Gross Requirement (GR) from Higher Level Order Released 2. Calculate Net Requirement (NR) from Inventory Records 3. Establish Planned-Order-Receipt from Net Requirement 4. Set Planned-Order-Released from Planned-Order- Receipt backward by required Leadtime 5. Repeat Same Steps for all RM/ Parts / Subassemblies
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MRP Calculation Procedure Begins with number of end items needed Add service parts not included in MPS Explore MPS into gross requirements by consulting bill of materials file Modify gross requirements to get net requirements
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MRP Calculation Procedure (II) Net requirements= gross requirements + allocated inventory + safety stock - inventory on hand offset orders to allow for lead time
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The Basic Time Based MRP Record Gross Requirements The overall quantity of an item needed during each time period Scheduled Receipts The quantity of an item that will be received at the beginning of a time period as a result of manufacturing orders or purchase orders that have already been placed (open orders) Projected Available Balance The expected quantity of an item in inventory at the end of each time period. It can be calculated by the following equation: Projected Available Balance in the period t = Projected Available Balance in period t-1 + Scheduled Receipts in period t + Planned Order Receipts for the period t Gross Requirement s in period t
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The Basic Time Based MRP Record (II) Net Requirements The net quantity of an item that must be provided to satisfy the parent of MPS requirement. It can be calculated by the following equation: Planned Order Receipts The size of the planned order (the order has not placed or released yet) and when it is needed. This appears in the same period as the “Net Requirements,” but its size is modified by the appropriate lot sizing policy. Planned Order Releases When the order should be placed or released so the items are available when needed by the parent. This is the same period as the “Planned Order Release” at one level generate placed, it is removed from the “planned order receipts” and “planned order release” rows and entered in the “scheduled receipts” row. Net Requirements in period t = Gross Requirements in period t - Projected Available Balance in period t-1 - Scheduled Receipts in period t
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See Calculation Examples On your Supplementary P. 16-7 to 16-13.
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Item number 100 on-hand quantity = 10 lead time = 2 WK Lot size = 50 safety stock = 0 Week 1 2 3 4 5 Gross requirements Schedules receipts 50 Projected available balance Net requirements Planned order receipts Planned order releases 10 40 30 10 60 50 50 10 30 20 50 50 0
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