Jobs are generated by MRP, which stands for "material requirements planning". MRP generates jobs directly from sales order lines for custom to order items. For all other items, MRP uses four common sense item settings to generate jobs in response to the net demand within each item's planning period. Jobs are generated on a just in time basis within a lean, coordinated master job schedule. The master job schedule is your blueprint for lean manufacturing - completing jobs on time using less inventory and WIP.
CTO Items - Jobs for custom to order items are generated differently than jobs for net demand items. In the MRP Settings screen you can flag an item as being 'CTO', which stands for "custom to order". A CTO item is one that is altered or customized in some manner for each customer order such that it cannot be stocked or sold to other customers. One-off items generated during sales order entry are automatically designated as CTO items.
Job Generation - Jobs for CTO items are generated by MRP directly from sales order lines in the exact quantity ordered. To generate CTO jobs, click the Generate button in the MRP screen. Select the 'Generate Planned Jobs for CTO Items' option. The planned jobs are then listed in the grid.
Job Conversion - After planned jobs are generated within the MRP screen, they can be reviewed and selected for conversion into actual jobs. After planned jobs are selected, click the Convert button to convert the planned jobs into actual jobs. In the associated sales order, the CTO Job field indicates that a CTO job has been generated for the line item.
Net Demand Items - Unlike jobs for CTO items, which are generated directly from sales order lines, all other jobs are generated in response to the net demand within each item's planning period. Each item's planning period is simply the total number of days allocated by MRP for making the item. Job generation for net demand items is driven by four common sense item settings that are maintained in the MRP Settings screen - the Job Days, Lead Days, Reorder Point, and Minimum Order.
Job Days Setting - The Job Days is the number of shop days allocated by MRP for making the item. The Job Days amount is an "allocation" and is not the literal time it takes to manufacture the item. For example, on paper an item may only take so many hours to make the typical job quantity, but in reality, jobs spend much more time moving from work center to work center and waiting in queues than they do in actual production. The best way to set the Job Days allocation is to give it a common sense value based on your past experience. The Production inquiry can be used to get a listing of the actual shop days associated with past jobs.
Lead Days Setting - The Lead Days is used by MRP to allocate sufficient time prior to starting the job for material procurement or making subassemblies. The Lead Days amount that is automatically calculated by the program is made equal to the longest lead time among any of its components that are made or purchased to order. The Lead Days Inquiry enables you to review the components that contribute to the calculated Lead Days amount. The inquiry displays a multi-level view in cases where a chain of subassemblies must be made to order before a job for this item can be started. If you want to shorten a product's delivery time, it can be done by changing one or more contributor components to be made or purchased to stock instead of to order, which is done by giving the item a Reorder Point value.
Reorder Point Setting - Some items need to be made to stock so that they are immediately available when needed by sales orders or other jobs. To make an item to stock, it must be given a Reorder Point. MRP will generate a job whenever net demand within the item's planning period falls below its Reorder Point. The Reorder Point amount is established using the Reorder Calculator (see next), which is launched by clicking the button in the Reorder Point field.
Reorder Calculator - The Reorder Point is calculated using the Reorder Calculator. The Reorder Point must be sufficient to cover projected demand within the item's planning period. Projected demand consists of three elements -- estimated monthly unit sales, estimated monthly usage, and a safety stock amount to cover potential variations in net demand that can occur in any given month. In the lower portion of the screen you can review past sales and usage history with monthly and quarterly averages to help determine your monthly estimates. The item's planning period is displayed, which is the number of days allocated by MRP for making the item. The program translates the sum of the three amounts into a daily average that is then multiplied by the item's planning period days to arrive at a calculated Reorder Point.
Minimum Order Setting - The Minimum Order provides control over job quantities. When MRP generates a job, the quantity will be equal or greater than the Minimum Order amount, no matter how little the actual net demand may be. The Minimum Order can be used as an economical order quantity. It generates job quantities sufficiently large enough to justify machine setups or to match quantities with machine sizes.
Job Generation - Jobs for net demand items are generated within the MRP screen. To generate net demand jobs, click the Generate button. Select the 'Generate Jobs for Net Demand' option. Jobs are generated in response to each item's net demand relative to its Reorder Level. Within the item's planning period, "net demand" is the item's stock on hand, plus expected supply from open jobs, less demand from sales orders and other jobs. The item's planning period, is the number of days allocated by MRP for making the item. Any demand outside the planning period is responded to in a future MRP run. This makes the master job schedule easier to manage because scheduling dates are short term and the number of jobs is kept to a minimum.
Planned Job Conversion - After planned jobs are generated within the MRP screen, they are listed in the grid. Each planned job can be reviewed by clicking the Demand icon. This launches the Projected tab of the Stock Status screen, which displays all the supply and demand details within the items planning period. In the lower grid you see any demand that exists beyond the planning period that will be responded to in a future MRP run. The Stock Status inquiry tells you everything you need to know about the planning for this item. On the summary tab you can see the item's MRP settings that drive MRP generation. As you finish each review, select the Convert checkbox to flag the planned job for conversion. After all planned jobs are flagged for conversion, click the Convert checkbox to convert the planned jobs into actual jobs.
Multi-Level Generation - After each set of planned jobs is converted, the program examines manufactured components within the newly created jobs and automatically generates additional planned jobs for lower-level subassemblies as needed. This process continues, level by level, until no more net demand is detected. A major source of inefficiency with manual planning is treating each make to order product structure as an independent chain of multi-level jobs. In actuality, much of your demand is "interdependent", meaning that it is shared in a one-to-many relationship instead of one-to-one. So instead of having separate sets of subassembly jobs for each top level job, MRP generates one subassembly job for multiple jobs whenever it is warranted. By combining interdependent demand into fewer jobs and POs, MRP generates a more efficient master schedule that is easier to manage and execute and helps keep work in process to a minimum.
Job Schedule - The master job schedule can be viewed in the Job Schedule screen. Because MRP only generates net demand jobs in response to the net demand within each item's planning period, jobs are scheduled on a just in time basis. Therefore the master schedule is short term in nature. Demand beyond an item's planning period does not require an immediate job and will be given a job later when that demand falls into the planning period. This keeps the schedule lean and accurate for maximum efficiency.