Information used in the Material Planning Process

Demand

· Independent Demand comes from:

o Customer order/forecast

o Interplant requirement

o Request from a branch warehouse

o Safety stock replenishment

o Unexpected levels of scrap or yield

Inventory Turnover

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· Should be based on the company’s annual average inventory level

Deviation from Target

· Identify how close actual performance is to target performance

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· Intent is to get deviation to remain at 0 percent

Inventory Data

· Database Design Elements

o Item identification

§ Unique item numbers

§ One set of item numbers should be used

§ Assigned responsibility for number creation

§ Numbers no longer used should NOT be reassigned

§ Concise

§ Kept uniform

§ Avoid confusing characters

§ Allow room fro expansion

o Item description

o Stock locations

o On hand balances at each location

o On order information by due date

o Reorder and safety stock info

o Financial info

o Usage

o Unit of measure

o Classification information

o Sourcing

o Lead time

Storage and Location of Inventory Items

· Areas that store inventory are usually referred to as Bins with a location code identifying it

· Bin examples

o Space on shelf

o Vat or other liquid container

o Space on floor

o Outdoor space in storage lot

o Designated segment of a rack

· Requirements of bin-location system

o Sequence bin-location codes

o Identify location of bin numbers with multiple storage sites

o Include aisle number

o Design grid arrangement

· Location Methods

o Random Locations: Bins assigned each time a shipment arrives

§ Advantages

· Variations in stock quantities – store material in more than one bin, computer tracks quantities in each bin, allows for smaller bins and less wasted space

· Lot or batch identity maintained easily

· First-in, First-out picking

· Changes to variety of items stocked can be accomodated

o Fixed Locations: each bin designated to hold a particular item number

§ Advantages

· Items always in same place… easy to locate

· Items requested most frequently can be located where easiest to access

· Location strategy easy to grasp and understand

· Bin locations can be assigned to facilitate picking

§ Disadvantages

· Inadequate capacity

· Unused space

o Zoned Locations

§ Can be based on characteristics of item: flammability, dimension, value, risk of pilferage, etc…

· Automated Storage and Retrieval (ASR)

o Robotic

Stock Balances

· Scheduled Receipts (Open-Order or On-Order)

o How much?

o When will it arrive?

o Where will it go?

· Allocations

o Reserved inventory, assigned to specific orders not yet released

· Current Usage Rates

Master Production Schedule (MPS)

· Input into detailed scheduling and planning

Planning Horizon

· Amount of time the master production schedule extends into the future.

· For the MPS…should be at least as long as longest cumulative lead time for items being scheduled but is usually longer.

· Long Planning Horizon: Longer view into the future (avoids future problems, take advantage of special circumstances)

Resolution of Differences

· Difference between available capacity and required capacity

· If available exceeds required, the production schedule is workable

· If not, available capacity must be increased (overtime? Extra workers? Subcontracting?) or the requirements have to be decreased by revising the production schedule

· Planner needs to measure value of the MPS in following terms:

o Resource Use

o Customer Service

o Cost

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