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Materials Requirements Planning CHAPTER 18. Learning Objectives 1. Describe what MRP is and where it...
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Transcript of Materials Requirements Planning CHAPTER 18. Learning Objectives 1. Describe what MRP is and where it...
Materials Requirements Planning
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Learning Objectives
1. Describe what MRP is and where it is best applied.
2. Understand the source of the information used by the system.
3. Demonstrate how to do an MRP “explosion.”
4. Explain how order quantities are calculated in MRP systems.
Firm orders from knowncustomers
Forecastsof demand
from randomcustomers
Aggregateproduct
plan
Bill ofmaterial
file
Engineeringdesign
changes
Inventoryrecord file
Inventorytransactions
Master productionSchedule (MPS)
Primary reportsSecondary reports
Planned order schedule for inventory and production control
Exception reportsPlanning reportsReports for performance control
Materialplanning(MRP
computer program)
Master Production Schedule (MPS)
Time-phased plan specifying how many and when the firm plans to build each end item
Aggregate Plan(Product Groups)
Aggregate Plan(Product Groups)
MPS(Specific End Items)
The Aggregate Plan and the Master Production Schedule for Mattresses
Master production schedule (MPS): the time-phased plan specifying how many and when the firm plans to build each end item
LO 2LO 2
Time Fences
Frozen: anything from no changes to only minor changes
Moderately firm: allow changes so long as parts are available
Flexible: allow almost any variations
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Demand for Products
1. Customers who have placed specific orders Generated by sales personnel Orders carry promised delivery dates No forecasting of these orders
2. Forecasted demand Normal independent-demand sales
3. Demand for parts and components Spares and repair
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Bill of Materials
Bill of materials (BOM): contains the complete product description, listing the materials, parts, and components along with the sequence in which the product is created One of the three main inputs to the MRP program
Often called the product structure file or product tree because it shows how a product is put together
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Bill of Materials (Product Structure Tree) for Product A
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Level Coding of Bills of Materials
LO 2LO 2
Inventory Records File
Each inventory item carried as a separate file Status according to “time buckets”
Pegging Identify each parent item that created
demand
MRP Explosion Process
1. The requirements for end items are retrieved from the master schedule
• These are referred to as “gross requirements” by the MRP program
2. Uses on-hand balance with schedule of orders to calculate the “net requirements”
3. Using net requirements, it calculates when orders should be received to meet these requirements
LO 3LO 3
Additional MRP Scheduling Terminology
Gross Requirements
Scheduled receipts
Projected available balance
Net requirements
Planned order receipt
Planned order release
Primary MRP Reports
Planned orders to be released at a future time
Order release notices to execute the planned orders
Changes in due dates of open orders due to rescheduling
Cancellations or suspensions of open orders due to cancellation or suspension of orders on the master production schedule
Inventory status data
Secondary MRP Reports
Planning reports, for example, forecasting inventory requirements over a period of time
Performance reports used to determine agreement between actual and programmed usage and costs
Exception reports used to point out serious discrepancies, such as late or overdue orders
Lot Sizing in MRP Systems
Determination of lot sizes in an MRP system is a complicated and difficult problem
Lot sizes: the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule
Will look at four1. Lot-for-lot (L4L)
2. Economic order quantity (EOQ)
3. Least total cost (LTC)
4. Least unit cost (LUC)
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Lot-for-Lot
Sets planned orders to exactly match the net requirements
Produces exactly what is needed each week with none carried over into future periods
Minimizes carrying cost Does not take into account setup costs or
capacity limitations.
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Economic Order Quantity
Calculate reorder quantity based on EOQ
EOQ was not designed for a system with discrete time periods such as MRP
The lot sizes generated by EOQ do not always cover the entire number of periods
LO 4LO 4
Least Total Cost
Least total cost method (LTC): a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup costs for various lot sizes and then selects the lot in which these are most nearly equal
Influenced by the length of the planning horizon
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Least Unit Cost
Least unit cost method: a dynamic lot-sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost
LO 4LO 4
MRP Example
A(2) B(1)
D(5)C(2)
X
C(3)
Item On-Hand Lead Time (Weeks)X 50 2A 75 3B 25 1C 10 2D 20 2
Requirements include 95 units (80 firm orders and 15 forecast) of X in week 10
Requirements include 95 units (80 firm orders and 15 forecast) of X in week 10
A(2)
X
Day: 1 2 3 4 5 6 7 8 9 10X Gross requirements 95
LT=2 Scheduled receipts Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45hand Planned order receipt 4550 Planner order release 45A Gross requirements 90
LT=3 Scheduled receipts Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15 hand Planned order receipt 15 75 Planner order release 15 B Gross requirements 45
LT=1 Scheduled receipts Proj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20 hand Planned order receipt 20 25 Planner order release 20 C Gross requirements 45 40
LT=2 Scheduled receipts Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40 hand Planned order receipt 35 40 10 Planner order release 35 40 D Gross requirements 100
LT=2 Scheduled receipts Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80 hand Planned order receipt 80 20 Planner order release 80
It takes 2 A’s for each X
It takes 2 A’s for each X
Day: 1 2 3 4 5 6 7 8 9 10X Gross requirements 95
LT=2 Scheduled receipts Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45hand Planned order receipt 4550 Planner order release 45A Gross requirements 90
LT=3 Scheduled receipts Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15 hand Planned order receipt 15 75 Planner order release 15 B Gross requirements 45
LT=1 Scheduled receipts Proj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20 hand Planned order receipt 20 25 Planner order release 20 C Gross requirements 45 40
LT=2 Scheduled receipts Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40 hand Planned order receipt 35 40 10 Planner order release 35 40 D Gross requirements 100
LT=2 Scheduled receipts Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80 hand Planned order receipt 80 20 Planner order release 80
B(1)A(2)
X
It takes 1 B for each X
It takes 1 B for each X
A(2) B(1)
X
C(3)
Day: 1 2 3 4 5 6 7 8 9 10X Gross requirements 95
LT=2 Scheduled receipts Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45hand Planned order receipt 4550 Planner order release 45A Gross requirements 90
LT=3 Scheduled receipts Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15 hand Planned order receipt 15 75 Planner order release 15 B Gross requirements 45
LT=1 Scheduled receipts Proj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20 hand Planned order receipt 20 25 Planner order release 20 C Gross requirements 45 40
LT=2 Scheduled receipts Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40 hand Planned order receipt 35 40 10 Planner order release 35 40 D Gross requirements 100
LT=2 Scheduled receipts Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80 hand Planned order receipt 80 20 Planner order release 80
It takes 3 C’s for each A
It takes 3 C’s for each A
A(2) B(1)
C(2)
X
C(3)
Day: 1 2 3 4 5 6 7 8 9 10X Gross requirements 95
LT=2 Scheduled receipts Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45hand Planned order receipt 4550 Planner order release 45A Gross requirements 90
LT=3 Scheduled receipts Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15 hand Planned order receipt 15 75 Planner order release 15 B Gross requirements 45
LT=1 Scheduled receipts Proj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20 hand Planned order receipt 20 25 Planner order release 20 C Gross requirements 45 40
LT=2 Scheduled receipts Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40 hand Planned order receipt 35 40 10 Planner order release 35 40 D Gross requirements 100
LT=2 Scheduled receipts Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80 hand Planned order receipt 80 20 Planner order release 80
It takes 2 C’s for each B
It takes 2 C’s for each B
A(2) B(1)
D(5)C(2)
X
C(3)
Day: 1 2 3 4 5 6 7 8 9 10X Gross requirements 95
LT=2 Scheduled receipts Proj. avail. balance 50 50 50 50 50 50 50 50 50 50
On- Net requirements 45hand Planned order receipt 4550 Planner order release 45A Gross requirements 90
LT=3 Scheduled receipts Proj. avail. balance 75 75 75 75 75 75 75 75
On- Net requirements 15 hand Planned order receipt 15 75 Planner order release 15 B Gross requirements 45
LT=1 Scheduled receipts Proj. avail. balance 25 25 25 25 25 25 25 25
On- Net requirements 20 hand Planned order receipt 20 25 Planner order release 20 C Gross requirements 45 40
LT=2 Scheduled receipts Proj. avail. balance 10 10 10 10 10
On- Net requirements 35 40 hand Planned order receipt 35 40 10 Planner order release 35 40 D Gross requirements 100
LT=2 Scheduled receipts Proj. avail. balance 20 20 20 20 20 20 20
On- Net requirements 80 hand Planned order receipt 80 20 Planner order release 80
It takes 5 D’s for each B
It takes 5 D’s for each B
Closed Loop MRP
Production PlanningMaster Production SchedulingMaterial Requirements PlanningCapacity Requirements Planning
Realistic?No
Feedback
Execute:Capacity PlansMaterial Plans
Yes
Feedback
Any Questions?
