1. Manufacturing is performed to meet anticipated needs for future delivery of end items to customers according to a master schedule that summarizes both the firm orders and the forecasted needs, and translates these into requirements at specified "time buckets" (frequently defined as calendar weeks) for a specified planning period.

2. Low-level coding of a product-structure tree puts a given type of assembly at the same level in the tree, no matter what levels the "parents" may be at, a parent is the next higher level of assembly.

3. Material Requirements Planning (MRP) releases either internal production orders or external purchase orders for components, assemblies, subassemblies, etc., time phased so as to permit arrival of goods at the next higher level of assembly when they are needed.

4. The three principal computerized files in an MRP system are a master schedule, a bill of materials and an inventory record. The inventory record contains, for each element: (a) the lead time, safety stock and lot size, and for every time bucket in the planning period, (b) the gross requirements, available quantities, net requirements, scheduled receipts from past orders and planned releases of orders for future production.

5. For elements that go into multiple parents, MRP "pegs" (traces) requirements to specific parents.

6. An MRP schedule must be periodically reviewed and updated. The two principal types of review are regeneration and net change. Regeneration periodically revises the plan, recording all changes, and net change makes the changes as they are needed.

7. MRP generates useful information and reports for a variety of management purposes, but there is some potentially useful information it cannot produce. For example, it cannot show which departments are to be assigned a specific production workload. In order to insure that the plan is consistent with departmental and plant workload capacities, it should be tested for realism by being simulated several times with different proposed master schedules, to see which schedule yields the best results.

8. Part-period balancing is a technique for setting order sizes for a component or an end item in a situation of dynamic dependent demands, such as is usually associated with MRP, based on some of the significant theoretical considerations that underlie independent inventory systems. Recall that in Chapter 13, it is shown that the minimum stocking cost for an item is attained when the EOQ or economic lot size is set at a level such that the total of the holding costs is equal to the total of order or setup costs. Part-period balancing attempts to satisfy this same objective by setting the order interval and the size of an order such that the total order cost is equal to the total holding costs.

9. Capacity Requirements Planning is used in conjunction with MRP. It helps to insure that the MRP production plans are realistic, and that they are consistent with management objectives of smooth flow of materials, continuity of the labor force and balanced workloads between departments. The resulting revisions of the MRP schedules may affect the master schedule, the rough-cut capacity plan, or the overall production plan, or a combination of several of these plans.

10. MRP II systems actively integrate marketing and finance into rough-cut capacity planning, capacity requirements planning and setting up MRP master schedules.

11. Enterprise Resource Planning (ERP) is a computerized system that integrates standardized record keeping for the purpose of information sharing throughout an organization. Systeme, Anwendungen, Produkt (SAP) is one such example. Sales, billing, distribution and manufacturing are among the areas that are linked by an ERP system. Implementing ERP is generally costly and time-consuming. Organizations can easily underestimate implementation costs relating to training, data conversion, data analysis and consultants.