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Material Requirements Planning
Material requirements planning (MRP) is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives: * Ensure raw materials are available for production and products are available for delivery to customers. * Maintain the lowest possible material and product levels in store * Plan manufacturing activities, delivery schedules and purchasing activities. History Prior to MRP, and before computers dominated industry, reorder point (ROP)/reorder-quantity (ROQ) type methods like EOQ (economic order quantity) had been used in manufacturing and inventory management. MRP was computerized by the aero engine makers Rolls-Royce and General Electric in the early 1950s but not commercialized by them. It was then 'reinvented' to supply the Polaris program and then, in 1964, as a response to the ...
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Production Planning
Production planning is the planning of production and manufacturing modules in a company or industry. It utilizes the resource allocation of activities of employees, materials and production capacity, in order to serve different customers.Fargher, Hugh E., and Richard A. Smith. "Method and system for production planning." U.S. Patent No. 5,586,021. 17 Dec. 1996. Different types of production methods, such as single item manufacturing, batch production, mass production, continuous production etc. have their own type of production planning. Production planning can be combined with production control into production planning and control, or it can be combined with enterprise resource planning. Overview Production planning is the future of production. It can help in efficient manufacturing or setting up of a production site by facilitating required needs. A production plan is made periodically for a specific time period, called the planning horizon. It can comprise the following ...
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Capacity Planning
Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, design capacity is the maximum amount of work that an organization is capable of completing in a given period. Effective capacity is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as quality problems, delays, material handling, etc. The phrase is also used in business computing and information technology as a synonym for capacity management. IT capacity planning involves estimating the storage, computer hardware, software and connection infrastructure resources required over some future period of time. A common concern of enterprises is whether the required resources are in place to handle an increase in users or number of interactions. Capacity management is concerned about adding central processing units (CPUs), memory and storage to ...
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Silver–Meal Heuristic
The Silver–Meal heuristic is a production planning method in manufacturing, composed in 1973EA Silver, HC Meal, A heuristic for selecting lot size quantities for the case of a deterministic time-varying demand rate and discrete opportunities for replenishment, Production and inventory management, 1973 by Edward A. Silver and H.C. Meal. Its purpose is to determine production quantities to meet the requirement of operations at minimum cost. The method is an approximate heuristic for the dynamic lot-size model, perceived as computationally too complex. Definition The Silver–Meal heuristic is a forward method that requires determining the average cost per period as a function of the number of periods the current order is to span and stopping the computation when this function first increases. Procedure Define : ''K'': the setup cost per lot produced. ''h'': holding cost per unit per period. ''C(T)'' : the average holding and setup cost per period if the current order spans ...
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Dynamic Lot-sizing
The dynamic lot-size model in inventory theory, is a generalization of the economic order quantity model that takes into account that demand for the product varies over time. The model was introduced by Harvey M. Wagner and Thomson M. Whitin in 1958.Harvey M. Wagner and Thomson M. Whitin, "Dynamic version of the economic lot size model," Management Science, Vol. 5, pp. 89–96, 1958 Problem setup We have available a Demand forecasting, forecast of product demand over a relevant time horizon t=1,2,...,N (for example we might know how many Widget (economics), widgets will be needed each week for the next 52 weeks). There is a setup cost incurred for each order and there is an inventory holding cost per item per period ( and can also vary with time if desired). The problem is how many units to order now to minimize the sum of setup cost and inventory cost. Let us denote inventory: I=I_+\sum_^x_-\sum_^d_\geq0 The functional equation representing minimal cost policy is: f ...
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Purchase Order
A purchase order is a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from external suppliers. Purchase orders can be an essential part of enterprise resource planning system orders. An indent is a purchase order often placed through an agent (indent agent) under specified conditions of sale. The issue of a purchase order does not itself form a contract. If no prior contract exists, then it is the acceptance of the order by the seller that forms a contract between the buyer and seller. Overview Purchase orders allow buyers to clearly and openly communicate with the sellers to maintain transparency. They may also help a purchasing agent to manage incoming orders and pending orders. Sellers are also protected by the use of purchase orders, in case of a buyer's refusal to pay for goods or services. Purchase orders ...
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Purchase Order
A purchase order is a commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from external suppliers. Purchase orders can be an essential part of enterprise resource planning system orders. An indent is a purchase order often placed through an agent (indent agent) under specified conditions of sale. The issue of a purchase order does not itself form a contract. If no prior contract exists, then it is the acceptance of the order by the seller that forms a contract between the buyer and seller. Overview Purchase orders allow buyers to clearly and openly communicate with the sellers to maintain transparency. They may also help a purchasing agent to manage incoming orders and pending orders. Sellers are also protected by the use of purchase orders, in case of a buyer's refusal to pay for goods or services. Purchase orders ...
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Master Production Schedule
A master production schedule (MPS) is a plan for individual commodities to be produced in each time period such as production, staffing, inventory, etc. It is usually linked to manufacturing where the plan indicates when and how much of each product will be demanded.Kinney, Aric. "Production Planning Process & SCM" This plan quantifies significant processes, parts, and other resources in order to optimize production, to identify bottlenecks, and to anticipate needs and completed goods. Since a MPS drives much factory activity, its accuracy and viability dramatically affect profitability. Typical MPSs are created by software with user tweaking. Due to software limitations, but especially the intense work required by the "master production schedulers", schedules do not include every aspect of production, but only key elements that have proven their control effectivity, such as forecast demand, production costs, inventory costs, lead time, working hours, capacity, inventory levels, av ...
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Routing
Routing is the process of selecting a path for traffic in a network or between or across multiple networks. Broadly, routing is performed in many types of networks, including circuit-switched networks, such as the public switched telephone network (PSTN), and computer networks, such as the Internet. In packet switching networks, routing is the higher-level decision making that directs network packets from their source toward their destination through intermediate network nodes by specific packet forwarding mechanisms. Packet forwarding is the transit of network packets from one network interface to another. Intermediate nodes are typically network hardware devices such as routers, gateways, firewalls, or switches. General-purpose computers also forward packets and perform routing, although they have no specially optimized hardware for the task. The routing process usually directs forwarding on the basis of routing tables. Routing tables maintain a record of the routes to ...
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Shelf Life
Shelf life is the length of time that a commodity may be stored without becoming unfit for use, consumption, or sale. In other words, it might refer to whether a commodity should no longer be on a pantry shelf (unfit for use), or no longer on a supermarket shelf (unfit for sale, but not yet unfit for use). It applies to cosmetics, foods and beverages, medical devices, medicines, explosives, pharmaceutical drugs, chemicals, tyres, batteries, and many other perishable items. In some regions, an advisory ''best before'', mandatory ''use by'' or ''freshness date'' is required on packaged perishable foods. The concept of expiration date is related but legally distinct in some jurisdictions. Background Shelf life is the recommended maximum time for which products or fresh (harvested) produce can be stored, during which the defined quality of a specified proportion of the goods remains acceptable under expected (or specified) conditions of distribution, storage and display. Accordi ...
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Bill Of Material
A bill of materials or product structure (sometimes bill of material, BOM or associated list) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and the quantities of each needed to manufacture an end product. A BOM may be used for communication between manufacturing partners or confined to a single manufacturing plant. A bill of materials is often tied to a production order whose issuance may generate reservations for components in the bill of materials that are in stock and requisitions for components that are not in stock. There are two types of bill materials. A BOM can define products as they are designed (engineering bill of materials), as they are ordered (sales bill of materials), as they are built ( manufacturing bill of materials), or as they are maintained (service bill of materials). The different types depend on the business need and use for which they are intended. In process industries, the BOM is also known as the formu ...
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Inventory Control
Inventory control or stock control can be broadly defined as "the activity of checking a shop's stock". It is the process of ensuring that the right amount of supply is available within a business. However, a more focused definition takes into account the more science-based, methodical practice of not only verifying a business's inventory but also maximising the amount of profit from the least amount of inventory investment without affecting customer satisfaction. Other facets of inventory control include forecasting future demand, supply chain management, production control, financial flexibility, purchasing data, loss prevention and turnover, and customer satisfaction. An extension of inventory control is the inventory control system. This may come in the form of a technological system and its programmed software used for managing various aspects of inventory problems, or it may refer to a methodology (which may include the use of technological barriers) for handling loss preve ...
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