15 mrp

POM - J. GalvánPOM - J. Galván 11

PRODUCTION AND PRODUCTION AND OPERATIONS OPERATIONS

MANAGEMENTMANAGEMENT

Ch. 15: Material Requirements Ch. 15: Material Requirements Planning (MRP)Planning (MRP)


Distinguish dependent from Distinguish dependent from independent demand inventoryindependent demand inventory

Define material requirements planningDefine material requirements planning Explain the benefits of MRPExplain the benefits of MRP Identify the requirements of MRP, DRP, Identify the requirements of MRP, DRP,

and ERPand ERP Explain the inputs & outputs of MRPExplain the inputs & outputs of MRP Compute order releasesCompute order releases

Learning ObjectivesLearning Objectives


ItemMaterials With

Independent Demand

Materials With

Dependent Demand

Demand

SourceCompany Customers Parent Items

Material

TypeFinished Goods WIP & Raw Materials

Method of

Estimating

Demand

Forecast & Booked Customer Orders

Calculated

Planning

MethodEOQ & ROP MRP

Dependent versus Independent Dependent versus Independent DemandDemand


Inputs to theInputs to the Production Plan Production Plan

ProductionPlan

MarketingCustomerDemand

EngineeringDesign

Completion

ManagementReturn onInvestment

Capital

HumanResourcesManpowerPlanning

ProcurementSupplier

Performance

FinanceCash Flow

ProductionCapacityInventory


Requirements for Effective Use of Requirements for Effective Use of Dependent Demand Inventory ModelsDependent Demand Inventory Models

Effective use of dependent demand Effective use of dependent demand inventory models requires that the inventory models requires that the operations manager know the:operations manager know the:• master production schedulemaster production schedule• specifications or bills-of-materialspecifications or bills-of-material• inventory availabilityinventory availability• purchase orders outstandingpurchase orders outstanding• lead timeslead times


The Planning ProcessThe Planning ProcessProduction Plan

Execute MaterialPlans

Master ProductionSchedule

MaterialRequirements

Plan

CapacityRequirements

Plan

Execute CapacityPlans

Realistic??No

Yes


Typical Level for the Typical Level for the Master ScheduleMaster Schedule

A A customer ordercustomer order in a job shop in a job shop (process focused/make to order) (process focused/make to order) companycompany

ModulesModules in a repetitive (assemble-to- in a repetitive (assemble-to-stock) companystock) company

An An end itemend item in a continuous (product in a continuous (product focused/make to stock) companyfocused/make to stock) company


List of components & quantities List of components & quantities needed to make product needed to make product

Provides product structure (tree)Provides product structure (tree)• Parents: Items above given levelParents: Items above given level• Children: Items below given levelChildren: Items below given level

Shows low-level codingShows low-level coding• Lowest level in structure item occursLowest level in structure item occurs• Top level is 0; next level is 1 etc.Top level is 0; next level is 1 etc.

Bill-of-MaterialBill-of-Material


Bicycle(1)P/N 1000

Handle Bars (1)P/N 1001

Frame Assy (1)P/N 1002

Wheels (2)P/N 1003

Frame (1)P/N 1004

Bill-of-MaterialBill-of-Material Product Structure Tree Product Structure Tree


Time-Phased Product StructureTime-Phased Product Structure

1 2 3 4 5 6 7 8

D

GF

E

C

E

D

B

A

2 weeks

1 week

3 weeks

2 weeks

1 week

1 week

2 weeks

1 week 2 weeks to produce

Start production of D

Must have D and E completed here so

production can begin on B


1 2 3 4 5

Gross Requirements 2 20 25 15

Scheduled Receipts 5 30

Available 25 23 33 33 8

Net Requirements 7

Planned Order Receipts 7

Planned Order Releases 7

Manufacturing computer information Manufacturing computer information system system

Determines quantity & timing of Determines quantity & timing of dependent demand itemsdependent demand items

Material Requirements Material Requirements Planning (MRP)Planning (MRP)


Computer systemComputer system Mainly discrete productsMainly discrete products Accurate bill-of-materialAccurate bill-of-material Accurate inventory statusAccurate inventory status

• 99% inventory accuracy99% inventory accuracy Stable lead timesStable lead times

MRP RequirementsMRP Requirements

MRP PURPOSEMRP PURPOSE• Coordination of Production and Inventory Coordination of Production and Inventory

in large, multi-stage production systems in large, multi-stage production systems

• Capacity planning, scheduling, supplier Capacity planning, scheduling, supplier coordination coordination

• Timely dissemination of information Timely dissemination of information

• Synchronized production and procurement Synchronized production and procurement

• Central engineering and logistic database Central engineering and logistic database (Central element of the ERP system)(Central element of the ERP system)

MRP PROBLEMSMRP PROBLEMS

• Deterministic model

• Large data requirements and GIGO (Garbage in garbage out)

• Self-fulfilling lead-times, so then what happens if fulfilment is not accomplished?

• Difficulty and cost of installation and maintenance

• Centralized command and control mindset


Increased customer satisfaction due to meeting delivery Increased customer satisfaction due to meeting delivery schedules schedules

Faster response to market changesFaster response to market changes Improved labor & equipment utilizationImproved labor & equipment utilization Better inventory planning & schedulingBetter inventory planning & scheduling Reduced inventory levels without reduced customer Reduced inventory levels without reduced customer

serviceservice

MRP BenefitsMRP Benefits

Variables in MRPVariables in MRP

o Master Schedule -WHENMaster Schedule -WHENo Bills of Material -WHATBills of Material -WHATo Stocks & Work in Progress (WIP) – HOW Stocks & Work in Progress (WIP) – HOW

MUCHMUCHo Lead-times – WHEN TO HAVE AVAILABLELead-times – WHEN TO HAVE AVAILABLEo Work orders / schedules – WHAT TO DOWork orders / schedules – WHAT TO DOo Purchase orders / schedules –WHEN TO Purchase orders / schedules –WHEN TO

ORDERORDERo Yields – WHAT IS LOSTYields – WHAT IS LOSTo Working days Working days / times - CALENDAR/ times - CALENDAR


Structure of the MRP SystemStructure of the MRP System

MRP by period report

MRP by date report

Planned orders report

Purchase requirements

Exception reports

MRPPrograms

Master ProductionSchedule

BOM

Lead Times

(Item Master File)

(Bill-of-Material)

Inventory Data

Purchasing data


Forecast & Firm Orders


Planning

Aggregate Production

Planning

Resource Availability

MasterProductionScheduling

Shop Floor

Schedules


PlanningRealistic?

modify CRP, MRP, or MPSmodify CRP, MRP, or MPS

YesYes

MRP and The Production MRP and The Production Planning ProcessPlanning Process

NoNo


Shows items to be producedShows items to be produced• End item, customer order, moduleEnd item, customer order, module

Derived from aggregate planDerived from aggregate plan

Master Production ScheduleMaster Production Schedule


Item/Week Oct 3 Oct 10 Oct 17 Oct 24

Drills 300 200 310 300

Saws 300 450 310 330

Shows items to be producedShows items to be produced• End item, customer order, moduleEnd item, customer order, module

Derived from aggregate planDerived from aggregate plan ExampleExample

Master Production ScheduleMaster Production Schedule


MRP DynamicsMRP Dynamics Supports “replanning”Supports “replanning”

• Problem with system “nervousness”Problem with system “nervousness” ““Time fence” - allows a segment of the master Time fence” - allows a segment of the master

schedule to be designated as “not to be schedule to be designated as “not to be rescheduled”rescheduled”

““Pegging” - tracing upward in the bill-of-Pegging” - tracing upward in the bill-of-materials from the component to the parent materials from the component to the parent itemitem

Manager Manager cancan react to changes, doesn’t mean react to changes, doesn’t mean he/she shouldhe/she should


MRP and JITMRP and JIT

MRP - a planning and scheduling MRP - a planning and scheduling technique with fixed lead timestechnique with fixed lead times

JIT - a way to move material JIT - a way to move material expeditiouslyexpeditiously

Integrating the two:Integrating the two:• Small bucket approach and back flushingSmall bucket approach and back flushing• balanced flow approachbalanced flow approach


Extensions of MRPExtensions of MRP

Closed loop MRPClosed loop MRP Capacity planning - load reportsCapacity planning - load reports MRP II - Material MRP II - Material ResourceResource Planning Planning Enterprise Resource PlanningEnterprise Resource Planning


Extensions of MRPExtensions of MRPClosed Loop MRPClosed Loop MRP

Dispatch List

Isspecific capacity

adequate?

Isaverage capacity

adequate?


(detailed)


(detailed)

Input/Output

Desired MasterProductionScheduleRealistic?

Priority Control

Capacity PlanningPriority Planning

Capacity Control

ResourcePlanning

First CutCapacity

Production Plan

NoNo

No

Yes Yes


Extensions of MRPExtensions of MRPCapacity PlanningCapacity Planning

Tactics for smoothing the load and minimizing the impact Tactics for smoothing the load and minimizing the impact of changed lead time include:of changed lead time include:• Overlapping - reduces the lead time, entails sending Overlapping - reduces the lead time, entails sending

pieces to the second operation before the entire lot has pieces to the second operation before the entire lot has completed the first operationcompleted the first operation

• Operations splitting - sends the lot to two different Operations splitting - sends the lot to two different machines for the same operationmachines for the same operation

• Lot splitting - breaking up the order and running part of it Lot splitting - breaking up the order and running part of it ahead of the scheduleahead of the schedule


Extensions to MRPExtensions to MRPEnterprise Resource PlanningEnterprise Resource Planning

MRP II with ties to customers and MRP II with ties to customers and supplierssuppliers


MRP in ServicesMRP in Services

Can be used when demand for Can be used when demand for service or service items is directly service or service items is directly related to or derived from demand related to or derived from demand for other servicesfor other services• restaurant - rolls required for each mealrestaurant - rolls required for each meal• hospitals - implements for surgeryhospitals - implements for surgery• etc.etc.


Distribution Resource PlanningDistribution Resource Planning

DRP requires:DRP requires:• Gross requirements, which are the same Gross requirements, which are the same

as expected demand or sales forecastsas expected demand or sales forecasts• Minimum levels of inventory to meet Minimum levels of inventory to meet

customer service levelscustomer service levels• Accurate lead timesAccurate lead times• Definition of the distribution structureDefinition of the distribution structure

15 mrp

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Transcript of 15 mrp