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MGT613 - Production / Operations Management - Lecture Handout 35

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MATERIAL REQUIREMENTS PLANNING / ENTERPRISE RESOURCE PLANNING- I

Learning Objectives

  • Discuss benefits and requirements of MRP.
  • Explain how an MRP system is useful in Capacity Requirements
  • Benefits and shortcomings of MRP
  • MRP II and MRP.

MRP: A Recap

  1. Material Requirements Planning (MRP) is software focusing on production planning and inventory control system used to manage manufacturing processes.
  2. An MRP system is intended to simultaneously meet three objectives:
    1. Ensure materials and products are available for production and delivery to customers.
    2. Maintain the lowest possible level of inventory.
    3. Plan manufacturing activities, delivery schedules and purchasing activities.

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MGT613 - Production / Operations Management - Lecture Handout 09

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FORECASTING-II

Time Series Forecasts

  • Trend - long-term upward or downward movement in data often relates to population shifts, changing incomes, and cultural changes.
  • Seasonality - short-term fairly regular variations in data related to factors like weather, festive holidays and vacations. Mostly experienced by supermarkets, restaurants, theatres, theme parks.
  • Cycle – wavelike variations of more than one year’s duration these occurs because of political, economic and even agricultural conditions
  • Irregular variations - caused by unusual circumstances such as severe weathers, earthquakes, worker strikes, or major change in product or service. They do not capture or reflect the true behavior of a variable and can distort the overall picture. These should be identified and removed from the data.
  • Random variations - caused by chance and are in reality are the residual variations that remain after the other behaviors have been identified and accounted for.
    Forecast Variations

Techniques for Averaging

  • Moving average
  • Weighted moving average
  • Exponential smoothing
  1. Moving average – A technique that averages a number of recent actual values, updated as new values become available.
  2. Weighted moving average – More recent values in a series are given more weight in computing the forecast.

  3. Read more: MGT613 - Production / Operations Management - Lecture Handout 09