MBA.782.Mat'l.Reqm'ts.PlanningCAJ9.14.1 Material Requirements Planning (MRP) MRP Logic and Product...

MBA.782.Mat'l.Reqm'ts.Planning CAJ9.14.1

• Material Requirements Planning (MRP)

• MRP Logic and Product Structure Trees

• Time Fences

• MRP Example

• MRP II

• Lot Sizing in MRP Programs

• Benefits of MRP Programs

Operations Management

Material Requirements Planning


Forecast &Firm Orders

MaterialRequirements

Planning

AggregateProductionPlanning

MasterProductionScheduling

Purchase Orders &Shop Floor Schedules

CapacityRequirements

Planning

M. R. P.

The Planning Hierarchy


• Materials requirements planning (MRP) is the

_________ for determining the number of parts,

components, and materials needed to produce a

product.

• MRP provides time ________________ information

specifying when each of the materials, parts, and

components should be ordered or produced.

• _____________ demand drives MRP.

• MRP is a ______________ system.

M. R. P.

M.R.P. - Defined


• Independent Demand– Requirements that are ____ related to the demands for

any other product

– Products that face the demand of the _____________– Demand must be ___________

• Dependent Demand

– __________ on demand of a finished good

– Demands can be ____________– ordering in lots or batches, thus “ _______ ”

M. R. P.

Types of Demand


• What is “Lumpy” demand

– results from need to have all components available ________ a production run begins

– Lumpy demand items are manufactured / ordered in a ____ - ________ manner

– “time phasing”

> not replenished when inventory level is low

> is replenished when ___________

M. R. P.

Demand Patterns


• The goal of MRP is getting “the right materials to the right place at the right time.”

• Based on a master production schedule, a material requirements planning system:

– Creates schedules identifying the _____________ parts and materials required to produce end items.

– Determines ________ unit numbers needed.

– Determines the _________ when orders for those materials should be released, based on lead times.

M. R. P.

M. R. P. System Structure


M. R. P.

System StructureAggregateProduction

Plan

MasterProductionSchedule

(MPS)

MaterialRequirements

Planning(MRP)

Bill ofMaterials

(BOM)file

InventoryRecords

file

Firm Ordersfrom

knowncustomers

Forecasts ofdemand from

futurecustomers

Secondary Reports

-- Exception reports-- Planning reports-- Performance measures

Time-phased

-- Shop Orders-- Purchase Orders-- Build Schedules

Material Plans

EndItems

RepairParts

Planner Messages

-- Release Orders-- Change due dates-- Other warnings


• Time-phased plan specifying ____ ______ and

______ the firm plans to build each end item

Aggregate Plan(Product Groups)

MPS(Specific End Items)

Inputs to M.R.P.

Master Production Schedule (MPS)


Inputs to M.R.P.

Master Production Schedule

Production Plan:

Month

Days per Month

Plan Totals:

Master Production Schedule

Week 14 15 16 17 18 19 20 21

Ladder-back Chair 20 20 20 20

Kitchen Chair 30 30 30 30 35 35 35 35

Desk Chair 20 20 20 20

Sub-Totals: 50 50 50 50 55 55 55 55

Totals:

May

22

220

200 220

April

20

200


• Part number

– Stock-Keeping-Unit ( _____ )> refers to a given part number at a given _________.

• Captures ______ data about each SKU, including:

– Quantity on hand

– Quantity on order and when delivery is expected

– Lead time

– Ordering Policies

– Other management data, e.g. part name, description, cost

Inputs to M.R.P.

Inventory Record


• A list of components and quantities needed

to make _____ assembly

– each component has a unique part number

• Provides product structure (tree)

– Parents: Items _______ given level

– Children: Items _______ given level

– A purchased item has ___ children

• Shows low-level coding

– Lowest level in structure item occurs

– Top level is 0; next level is 1 etc.

Inputs to M. R. P.

Bill of Materials


Lead time: The time from when an order is placed until

the part is _______ for use

Offsetting: Placing the requirements in their _________ time periods based on lead time

Exploding: Multiplying the parent requirements by the

usage ___________ through the product tree

A LT = 3 Wk

P LT = 7 Wk I LT = 4 Wk

C LT = 8 Wk S LT = 6 Wk

Bill of Materials

Lead Times, Exploding, and Offsetting


TimeWeeks

5 10 15 20

R = WK 10

R = WK 17

R = WK 5

R = WK 13

R = WK 7

F = WK 17

F = WK 20

F = WK 13

F = WK 17

F = WK 13

Component part #P

Component part #C

Component part #S

Subassembly part #I

Final assembly item #A

Order for final assembly, item #A, due in week 20:R = ReleaseF = Finish

Bill of Materials

Backward SchedulingA LT = 3 Wk

P LT = 7 Wk I LT = 4 Wk

C LT = 8 Wk S LT = 6 Wk


Problem 4.1

Number of Gs needed?

Purchased components?


• Gross Requirements

– the ________ demand derived from all parents at the MPS level and lower levels

• Scheduled Receipts

– total units that are on order, but _____ yet received.

• Projected on-hand inventory (for a planning period)

(aka. _________ __________ _____)

= On-hand Amount (from the previous period)+ Scheduled Receipts + Planned Order Receipts- Gross Requirements

M.R.P. Worksheet

Elements of Worksheet


• Net requirements

– If the Projected on-hand inventory (PAB)

is ______ than the Safety Stock,

then.....

Net Requirement = Safety Stock - PAB,

otherwise

Net Requirement = 0

M.R.P. Worksheet



• Planned Order Receipt

– how much we need to put on order to _______ at the beginning of this planning period

• Planned Order Release

– when we need to ________ the order considering the delay of lead time

M.R.P. Worksheet



Problem 4.2

• Given the following product tree, explode, offset, and calculate the gross and net requirements. All lead times and the quantities required are shown in parenthesis. The master production schedule calls for 70 J’s in week 7. There is a scheduled receipt of 50 K’s in week 3. There are 20 J’s, 100 L’s, and 200 N’s on hand.

J LT = 1 wk

K(2) LT = 2 wk L(1) LT = 1 wk

M(2) LT = 2 wk N(3) LT = 1 wk


Problem 4.2{Insert mba782mrpworksheetho.xls”APICS BSCM Prob. 4.2(c)” here}


Problem 4.2

• An item is available at the __________ of the period

• Proj. Avail. Balance is at the _____ of the period

• Planned order release becomes the gross requirement

at the _____ ________ level

Item Week No.: 1 2 3 4 5 6 7 8Number

Order quantity = L4L Lead time = 1 weeks

Gross requirements: 70Scheduled receipts: Proj. Avail. Balance: 20Net requirements: Planned receipts: Planned releases:

J


• Lot-for-Lot (L4L)

– Order just __________ to meet net requirement

• Fixed Order Quantity (FOQ)

– _____________ lot size

• Least Total Cost

– finds the order quantity that comes closest to _____________ ordering costs with holding costs

• Least Unit Cost

– selects the lot size with the _________ cost per unit

M.R.P. Planning Factors

Lot Sizing Rules


• The MRP logic will

– Gross, net, offset, and explode requirements

– _______ planned orders, and keep priorities current

– Inventory status data

• Action Notes

– __________ new orders

– adjust the due dates of scheduled receipts

– Cancellations or suspensions of open orders

• Capacity Reports

– __________ time-phased labor requirements

M.R.P.

M.R.P. Outputs


• ____________ customer satisfaction due to meeting delivery schedules

• ____________ inventory levels without reduced customer service

• Faster response to market changes

• Improved labor & equipment utilization

• Better inventory planning & scheduling

MRP Benefits


• Distribution Resources Planning (DRP)

– application of M.R.P. concepts to ___________

• Manufacturing Resources Planning (MRP II)

– ties M.R.P. to financial system

– used by managers in _____ functional areas

• Enterprise Resource Planning (ERP)

– encompasses the customer and supplier firms

– operate as if suppliers are ______ of the firm’s own processes

M.R.P.

Resource Planning


MRP in Services

• Can be used when demand for service items

is directly _________ __ or __________ from demand for other services

– restaurant - rolls required for each meal

– hospitals - implements for surgery and availability of personnel


Successful Implementation Requires

• Management ___________

• Computer Support

• ___________ and Realistic Input

– B.O.M.s, M.P.S., Inventory status

– Job Routings and Time Requirements

– Machine Capacity

• _____ Knowledge and Acceptance

M.R.P.

Implementation Issues


• Read Chapter 14

• Concepts / Terminology

• Review Lecture notes

• Recommended Problems

M.R.P.

Chapter Wrap-Up

MBA.782.Mat'l.Reqm'ts.PlanningCAJ9.14.1 Material Requirements Planning (MRP) MRP Logic and Product...

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