Material Requirements Planning

Planned Orders

Demand

BOM

MaterialData

Inputs

Output

Material Requirements Planning

PlannedOrders

Demand

BOM

MaterialData

Inputs

Output

With MRP, production is planned to meet: Future demand forecasts (make-to-stock) Orders to be completed in the future (make-

to-order or assemble-to-order) A key input is, therefore, actual demand or a

demand forecast

MRP is a Push production system

Material Requirements Planning

PlannedOrders

Demand

BOM

MaterialData

Inputs

Output

Planning Sales and Operations Planning (SOP)

Forecasting, marketing plans, capacity Profitability Analysis

Controlling (CO) Module (CO-PA) Direct Input (Demand Management)

Demand Sources

Demand Management

• Simplest way to create demand it to input it directly:

Demand

Demand—S/R List

Material Requirements Planning

PlannedOrders

Demand

BOM

MaterialData

Inputs

Output

MRP uses the assembly structure, or Bill of Material (BOM) to determine how many components or subassemblies are needed to make the required number of finished products Considers available inventory of

components and subassemblies in calculations—net requirements

MRP is designed for assembled products

Material Requirements Planning

PlannedOrders

Demand

BOM

MaterialData

Inputs

Output

For end-items, demand is “independent”—from customers

For other components, demand can be determined using the BOM Dependent demand

MRP is designed for assembled products

Material Requirements Planning

PlannedOrders

Demand

BOM

MaterialData

Inputs

Output## NRG–A

(7 cases)

## Dough NRG–A(500 lb)

## Oats(300 lb)

## Wheat Germ(50 lb)

## Carob Chips(50 lb)

## Raisins(50 lb)

Material Requirements Planning

PlannedOrders

Demand

BOM

MaterialData

Inputs

Output## NRG–A

(7 cases)

## Dough NRG–A(500 lb)

## Oats(300 lb)

## Wheat Germ(50 lb)

## Carob Chips(50 lb)

## Raisins(50 lb)

Time

Key MRP concept:

Time-phased BOM

Bill of Material (BOM)

Bill of Material (BOM)

## NRG–A(7 cases)

## Dough NRG–A(500 lb)

Bill of Material (BOM)

## NRG–A(7 cases)

## Dough NRG–A(500 lb)

Bill of Material (BOM)

## Dough NRG–A(500 lb)

## Oats(300 lb)

## Wheat Germ(50 lb)

## Nutmeg(2 lb)

## Cinnamon(5 lb)

Bill of Material (BOM)

## Dough NRG–A(500 lb)

## Oats(300 lb)

## Wheat Germ(50 lb)

## Nutmeg(2 lb)

## Cinnamon(5 lb)

Material Requirements Planning

PlannedOrders

Demand

BOM

MaterialData

Inputs

Output

Primary material data includes: Current Inventory Lot sizing procedure Production lead times

All of this data is available in SAP via the Stock/Requirements List

Material Data determines production lot size and timing

Material Data—S/R List

Inventory Level0

Inventory Detail

Inventory—Detail

Material Data—S/R List

Lot SizeFX, 7

Material Data—S/R List

LeadTime1

Material Requirements Planning

Material Requirements Planning

Material Requirements Planning

Material Requirements Planning

Material Requirements Planning

Material Requirements Planning

Material Requirements Planning

MRP—Net Requirements

Part: A

LS: 50 LT: 2 1 2 3 4 5 6 7 8 9 10

Gross Requirements 10 10 15 15 15 20 20 15 10 10

Scheduled Receipts 50

Planned Order Receipts 50 50

Available Balance 15 5 45 30 15 0 30 10 45 35 25

Planned Order Releases 50 50

Textbook MRP uses a bucketed system

Textbook MRP

Textbook MRP

LS - lot size - size of production batch or lot sizing methodGross Requirements - quantity needed in each period - from MPS or from other components and assembliesScheduled Receipts - Planned receipt dates for orders that have already been placedPlanned Order Receipts - expected receipt date for planned orders (orders that haven't been placed yet)Available Balance - Projected inventory balance at the end of each periodPlanned Order Releases - Orders that need to be placed (as determined by MRP process) to meet gross requirements (source of planned order receipts)

C

B C D

A

(2)

MPS Period

Part # 1 2 3 4 5 6 7 8 9 10 A 10 10 15 10 10 5 10 10 15 15

Inventory Data

Component

LS

LT

Initial Inventory

Scheduled Receipts

A LFL 1 - 10 in pd. 1 B 50 2 30 50 in pd. 2 C 50 3 40 50 in pd. 3 D 30 4 30

30 in pd. 3

Textbook MRP—Example Problem