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Chapter 14
Material Requirements Planning
Copyright © 2010 by The McGraw-Hill Companies, Inc. ll rights reser!e". McGraw-Hill#Irwin
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Learning Objectives
• Describe what MRP is and where it is
best applied.
• Understand the source of the
information used b the sstem.
• Demonstrate how to do an MRP
!e"plosion.#
• $"plain how order quantities are
calculated in MRP sstems.
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Enterprise Resource Planning (ERP) andMaterial Requirements Planning (MRP)
• Enterprise resource planning &$RP'( acomputer sstem that integrates applicationprograms in accounting) sales) manufacturing)and the other functions in a firm
• Materials requirements planning &MRP'( ameans for determining the number of parts)components) and materials needed toproduce a product
* MRP pro+ides time scheduling informationspecifing when each of the materials) parts) andcomponents should be ordered or produced
* Dependent demand dri+es MRP
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Operations and Supply IntegrationOvervie
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Master Production Sc!eduling
• he master schedule deals with end items
and is a maor input to the MRP process
• /ll production sstems ha+e limited capacit
and limited resources * he aggregate plan pro+ides the general range of
operation) the master scheduler must specif
e"actl what is to be produced
•
o determine an acceptable feasible scheduleto be released to the shop) trial master
production schedules are run through the
MRP program
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"!e #ggregate Plan and t!e MasterProduction Sc!edule $or Mattresses
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"ime %ences
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&!ere MRP 'an e sed
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Material Requirements Planning SystemStructure
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ill o$ Materials
• 5ill of materials &56M'( contains thecomplete product description) listing thematerials) parts) and components along
with the sequence in which the productis created * 6ne of the three main inputs to the MRP
program
• 6ften called the product structure file orproduct tree because it shows how aproduct is put together
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ill o$ Materials (Product Structure "ree)$or Product #
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ills o$ Materials 'ontinued
• Modular bill o$ materials( a buildable
item that can be produced and stoc7ed
as a subassembl
• Super bill o$ materials( includes items
with fractional options
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Level 'oding o$ ills o$ Materials
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"!e Inventory Status Record $or an Itemin Inventory
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MRP E*plosion Process
1. he requirements for end items are
retrie+ed from the master schedule
• hese are referred to as !gross
requirements# b the MRP program
2. Uses on-hand balance with schedule of
orders to calculate the !net
requirements#
%. Using net requirements) it calculates
when orders should be recei+ed to
meet these requirements
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MRP E*plosion Process 'ontinued
4. 8ind a schedule for when orders are actuallreleased
• o account for lead time
,. Mo+e to le+el 1 items0. 9ross requirements for each le+el 1 item are
calculated from the planned-order releaseschedule for the parents of each le+el 1 item
. :et requirements) planned-order receipts)and planned-order releases are calculatedas described in steps 2*4
. Repeat for all items in bill of materials
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#n E*ample sing MRP
• /mpere) ;nc.) produces a line of electric
meters installed in residential buildings
• Meters are of two basic tpes for different
+oltage and amperage ranges *
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%uture Requirements $or Meters # and and Subassembly +
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# Master Sc!edule to Satis$y +emandRequirements
=e are con+erting monthl demand on=e are con+erting monthl demand on
the last slide to wee7s where it will bethe last slide to wee7s where it will be
producedproduced
1) > 2,1) > 2,?o+ers month?o+ers month
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Product Structure $or Meters # and
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,umber o$ nits on -and and Lead "ime+ata
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Material Requirements Planning Sc!edule $orMeters # and . and Subassemblies ' and +
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E*ample /01/2 +emand and +ata
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3-/4560
=ee7
1 2 % 4 , 0
9ross requirements %4 % 41 4, 4 4 4 4
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3-54/77
=ee7
1 2 % 4 , 0
9ross requirements 14 1%4 144 1,, 1%4 14 141 14,
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Lig!t Soc8et
=ee7
1 2 % 4 , 0
9ross requirements 0 4 2
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Lot Si9ing in MRP Systems
• Determination of lot si@es in an MRP sstem
is a complicated and difficult problem
• Lot si9es( the part quantities issued in the
planned order receipt and planned orderrelease sections of an MRP schedule
• =ill loo7 at four
1. Aot-for-lot &A4A'
2. $conomic order quantit &$6B'%. Aeast total cost &A?'
4. Aeast unit cost &AU?'
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Lot4$or4Lot
•
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Lot4$or4Lot Run Si9e $or an MRP Sc!edule
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Economic Order :uantity
• ?alculate reorder quantit based on
$6B
• $6B was not designed for a sstem
with discrete time periods such as MRP
• he lot si@es generated b $6B do not
alwas co+er the entire number of
periods
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Economic Order :uantity Run Si9e $or anMRP Sc!edule
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Least "otal 'ost Run Si9e $or an MRPSc!edule
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Least nit 'ost
• Least unit cost met!od( a dnamic
lot-si@ing technique that adds ordering
and in+entor carring cost for each
trial lot si@e and di+ides b the numberof units in each lot si@e) pic7ing the lot
si@e with the lowest unit cost
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Least nit 'ost Run Si9e $or an MRPSc!edule
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