Chap016.ppt Materials Requirements Planning
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Transcript of Chap016.ppt Materials Requirements Planning
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McGraw-Hill/Irwin The McGraw-Hill Companies, Inc. 2007, All Rights Reserved
Materials Requirements
Planning
Chapter 16
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Chapter 16 Outline
Definition of MRP Systems
MRP versus Order-Point Systems
MRP ExampleMRP Elements
Operating an MRP System
The Successful MRP System
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Introduction to MRP
Used to manage dependent demand itemsRaw materials and purchased parts
Work in process (WIP)
Driven by the master schedule (which is drivenby S&OP).
End items exploded into all componentsusing bill of materials (BOM)
Schedule offset based on lead times
Is the heart of a larger ERP system
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Definitions of MRP Systems
Developed by Joe Orlicky at IBM, 1975.
IBM 370 was the first computer with the
capacity to handle MRP calculations
Types of MRP: Type I. An inventory control system (MRP)
Type II. Manufacturing Resource Planning system
(MRPII)
Type III. Enterprise Resource Planning (ERP) system
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Definitions of MRP Systems
Three principal functions of MRP (Orlicky):Inventory Order the right part
Order in the right quantity
Order at the right time
Priorities Order with the right due date
Keep the due date valid
Capacity
A complete load An accurate (valid) load
An adequate time span for visibility of future load
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TR 4-6
Firm orders from
Customers
Sister plants
Stock replenishment
Engineering Design changes
BOM
Forecast of Demand
Purchase Orders
Vendors
MRP PartsExplosion
Rough-cutcapacity planning
Capacity planning
Shop Orders
Shop-floor control
Masterschedule
S & OP
Closed Loop MRP System
Operations ProductRaw Materials
Inventory Records
Inv. Transactions
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Attribute MRP Order Point
Demand Dependent Independent
Order philosophy Requirements Replenishment
Forecast Based on master schedule Based on past demand
Control concept Control all items ABC
Objectives Meet manufacturing needs Meet customer needs
Lot sizing Discrete EOQ
Demand pattern Lumpy but predictable Random
Types of inventory Work in process and raw
materials
Finished goods and spare
parts
Comparison of MRP & Order-Point Systems
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MRP Elements
Inputs
1. Master Schedule
2. Bill of Materials (BOM)
3. Inventory Records
Capacity Planning (feasibility)
Planned Order Releases (outputs)
Purchasing (buy)
Shop Floor Control (make)
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MRP Inputs
1. Master schedule
2. Product structure file (bill of materials or
BOM)
1. Parts & subassemblies contained in product
2. Sequence of operations
3. Inventory master file
1. Item master information
2. Balances & ordering information
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1. Master Schedule
Quantities derived from S&OP production plan(product groups) [input]
Drives MRP process with a schedule of finished
products (actual items by week) [output]Quantities may consist of a combination of
customer orders & demand forecasts
Quantities represent what needs to be produced,not what can be produced (infinite capacity
planning)
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2. MRP Example of BOM
Top
Leg
Long Rail
Short Rail
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BOM (Product Structure)
Short Rails (2)
1 week
Table (End Item)
1 week
Long Rails (2)
1 week
Legs (4)
1 week
Top (1)
2 weeks
Leg Assembly (1)
1 week
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Indented BOM
Level Code Component
0 Table (end-item)
1 Leg assembly (1)
2 Short rails (2)
2 Long rails (2)
2 Legs (4)
1 Top(1)
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3. Inventory (item master) File
Description
Part number
Part name
Safety stockItem classification
Cost
Yield
Lead time
Group to which itembelongs
Assemblies in whichitem is used
Shelf life
Batch controlrequirements
Substitutes
Suppliers and their
ratingsUnit of measure (SKU)
Permanent information may include:
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Inventory Status File
Quantities
Ordered
Received
Issued
Allocated
Previously allocated that have been issued
Dates ordered, received, issued, and allocated
Shipping, production, and purchase numbersOn-hand balance & Available balance
Batch identification (e.g. lot number)
Changing information includes:
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MRP Example
The Alpha Beta Company
Inventory Position
Item On Hand Scheduled Receipts Lot Size MPS
A 10 0 1 100, period 8
B 5 0 1 200, period 6
C 140 0 150 - - -
D 200 250, period 2 250 - - -
A
LT=3
C(3)
LT=4
D(2)
LT=2
D(3)
LT=2
B
LT=2Level (LLC)=0
Level (LLC)=1
BOM
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MRP Matrices For A & B
Item: A LLC: 0 Period
Lot size: 1 LT: 3 PD 1 2 3 4 5 6 7 8
Gross requirements 100
Scheduled receipts
Projected on hand 10 10 10 10 10 10 10 10 0
Net requirements 90
Planned order receipts 90Planned order releases 90
Item: B LLC: 0 Period
Lot size: 1 LT: 2 PD 1 2 3 4 5 6 7 8
Gross requirements 200
Scheduled receipts
Projected on hand 5 5 5 5 5 5 0 0 0Net requirements 195
Planned order receipts 195
Planned order releases 195
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Origin of Requirements
At Level Zero: gross requirements come
from the master production schedule (MPS)
Below level zero: gross requirements comefrom planned order releases for the next
level above.
Net requirements are gross requirements
plus scheduled receipts minus inventory on-
hand
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MRP Matrices For C & D
Item: C LLC: 1 Period
Lot size: 150 LT: 4 PD 1 2 3 4 5 6 7 8
Gross requirements 270
Scheduled receipts
Projected on hand 140 140 140 140 140 20 20 20 20
Net requirements 130
Planned order receipts 150Planned order releases 150
Item: D LLC: 1 Period
Lot size: 250 LT: 2 PD 1 2 3 4 5 6 7 8
Gross requirements 585 180
Scheduled receipts 250
Projected on hand 200 200 450 450 115 185 185 185 185Net requirements 135 65
Planned order receipts 250 250
Planned order releases 250 250
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Alpha Beta Planned Order
Release Report
Period Item Quantity
1 C 150
2 D 250
3 D 250
4 B 195
5 A 90
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Operating an MRP System
Should MRP carry safety stock?
How much safety stock should be carried?
Issue of safety lead time
Danger of informal system driving out the formal
system
Expansion of MRP to other functions (finance, HRM,
etc.) of business
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Operating a Successful MRP
SystemAccurate Inventory Records
Stable master production schedule
Realistic master production scheduleGood control of engineering change orders
(impacts BOM)
Good interface with capacity planning (CRP)Reports that are useful
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Elements of Successful MRP
ImplementationAllow enough time (18 months minimum)
Put materials people in charge of cross-functional team (not IS or accountants)
Train everyone and train them again!
Top Management supportAccurate records
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Summary
Definition of MRP Systems
MRP versus Order-Point Systems
MRP ExampleMRP Elements
Operating an MRP System
The Successful MRP System
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End of Chapter Sixteen