Distribution Planning Warehouse Replenishment Systems
Advantages-Low
The planning activities associated with complexity
Disadvantages-
Filtered data,
transportation, warehousing, inventory allocation is arbitrary,
decentralized data
levels, materials handling, order
Advantages-
administration, site and location planning, unfiltered data, better
coordination of
industrial packaging, data processing, and resources
Disadvantages-More
communications networks to support complex, works best
with steady demand
distribution. Advantages-reflects
projected
Sourced from the APICS Dictionary Online requirements, local
decisions with central
visibility
Unit 6 DRP Disadvantages- Unit 6 DRP
Figure 15.8
Highly complex
Distribution Requirements Planning
Definition
DRP Definition Continued
1) The function of determining the need to replenish
inventory at branch warehouses. A time-phased order 2) More generally, replenishment inventory
point approach is used where the planned orders at the calculations, which may be based on other
branch warehouse level are “exploded” via MRP logic to
become gross requirements on the supplying source. In planning approaches such as period order
the case of multilevel distribution networks, this
explosion process can continue down through the various quantities or “replace exactly what was
levels of regional warehouses (master warehouse, factory used,” rather than being limited to the time-
warehouse, etc.) and become input to the master
production schedule. Demand on the supplying sources is phased order point approach.
recognized as dependent, and standard MRP logic Sourced from the APICS Dictionary Online
applies. Sourced from the APICS Dictionary Online
Unit 6 DRP Unit 6 DRP
Demand
Mgmt
What is DRP? S &OP DRP Customers
Managing the flow of materials between MPS
firms, warehouses, distribution centers.
MRP
DRP helps manage these material flows. Internal MPC
Boundary
Just like MRP did in Manufacturing. Planned Orders
Links firms in the supply chain by providing to Vendor
planning records that carry demand DRP Links in the
Vendor DRP
information from receiving points to supply Supply Chain
points and vice versa. Vendor Demand
Planning
Unit 6 DRP Unit 6 DRP
Unit 6 Distribution Requirements
Planning 1
Front End DRP and Logistics Management
Customer demand information is brought into the DRP information is
master scheduling and S&OP processes. key to developing
DRP starts in the marketplace. Some firms gather logistics system
information on inventory levels and product
usage from customers. management
This knowledge of their customer requirements plans
provides firms the opportunity to make-to-
knowledge.
This is specially true when they have vendor
managed inventories.
Unit 6 DRP Unit 6 DRP
DRP and MPS DRP, MPS and MRP Interface
DRP greatest payoff is from integrating
records and information. DC1 DC2 DC3 DC4 DC5 DC6
Crossing the area of interfirm MPC systems
means negotiating with supply chain partners Bill of Distribution
for sharing costs and benefits.
RW1 RW2 DRP
DRP permits evaluation of current conditions
End Item
to determine if mfg. priorities need to revised. Dental Floss MPS
Provides the master scheduler better info to
match mfg output with shipment needs. Floss Plastic Label Steel
75 yds Case for case Cutter MRP
Unit 6 DRP Unit 6 DRP
DRP Grid has many similarities to the
MRP Grid
Safety Stock and DRP
PART # PARENT 1 2 3
When there is more uncertainty in terms of
GROSS REQUIREMENTS*** timing, then it may be better to use safety
IN TRANSIT
lead time.
When the uncertainty is in quantity then
Unit 6 DRP
PROJECTED AVAILABLE
INVENTORY safety stock may be better.
NET REQUIREMENTS Carry safety stock where there is
uncertainty (near the customer) or where
PLANNED ORDER RECEIPT**
**Not the same as the text there is some element of independent
PLANNED ORDER
RELEASES**
demand
Unit 6 DRP
Unit 6 Distribution Requirements
Planning 2
Managing Variations from Plan
Demand options
One method for dealing with errors is to stabilize
the information flow 1. Customer orders consume forecast (error
Firm planned orders–reduce variation by reviewing add back method)
implications of change before allowing changes to
occur 2. Forecast only
Error addback method–assumes forecasts are 3. Customer orders only, use with very short
unbiased
• Shortages from one period are predicted to be made-up in lead time respond quickly to customers
the next (or excess sales are believed to result in
reductions in the future) 4. Customer orders plus forecast, use with
• Less effective if the forecast is biased very long lead time.
Unit 6 DRP Unit 6 DRP
Quiz – Chapter 10
A major tool in DRP systems is the ____________ record.
Customer purchases are generally part of _________
demand.
The time-phased order point (TPOP) approach uses what
type of data to determine requirements?
DRP systems can utilize both safety stock and safety lead
time? (True/False)
Unit 6 DRP
Unit 6 Distribution Requirements
Planning 3
