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Chapter 18. Materials Requirements Planning


Outline: Material Requirements Planning (MRP) Master Production Schedule (MPS) Bill of Materials (BOM) Time Fences MRP Logic and Product Structure Trees – PowerPoint PPT presentation

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Title: Chapter 18. Materials Requirements Planning

Chapter 18. Materials Requirements Planning
  • Outline
  • Material Requirements Planning (MRP)
  • Master Production Schedule (MPS)
  • Bill of Materials (BOM)
  • Time Fences
  • MRP Logic and Product Structure Trees
  • MRP Examples
  • MRP and Lot Sizing
  • MRP Capacity Requirements Planning (CRP)

Materials Requirements Planning
  • Materials requirements planning (MRP) is a means
    for determining the number of parts, components,
    and materials needed to produce a product (end
  • Dependent vs. independent demand
  • MRP provides time scheduling information
    specifying when each of the subassemblies, parts,
    and components should be ordered or produced
  • What, when, how many?
  • Dependent demand drives MRP
  • MRP is an information system

Materials Requirements Planning
  • Critical input and data requirements
  • Master Production Schedule (MPS)
  • Bill of Materials (BOM)
  • Inventory database
  • Many outputs primary ones are
  • Planned orders to be released at a future time.
  • Order release notices to execute the planned
  • Changes in due dates of open orders due to
  • Cancellations or suspensions of open orders due
    to cancellation or suspension of orders on the
    master production schedule.
  • Inventory status data. Planned order releases

Master Production Schedule (MPS)
  • MPS One of three primary inputs in MRP
  • Time-phased plan specifying how many and when the
    firm plans to build each end item
  • Developed by disaggregating the aggregate plan

Aggregate Plan (Product Groups)
Bill of Materials (BOM)
  • BOM a listing of all of the raw materials,
    parts, subassemblies, and assemblies needed to
    produce one unit of a product.
  • Product structure tree Visual depiction of the
    requirements in a bill of materials, where all
    components are listed by levels.
  • A simple question For 100 Ms how many

BOM - tree format and low level coding
Low-level coding requires that when an identical
item occur on multiple levels, then it should be
lowered to its lowest level for computational
reasons. The software will complete all level 0
items first, then all level 1 items, etc.
In the original diagram (a) since N appears on
levels 1 2
In the final diagram (b) (after
re-classification) it is lowered to level 2.
Also, note that S under P was on level 3, which
needed to be lowered to level 4
Time Fences
  • Frozen
  • No schedule changes allowed within this window
  • Moderately Firm
  • Specific changes allowed within product groups as
    long as parts are available
  • Flexible
  • Significant variation allowed as long as overall
    capacity requirements remain at the same levels

MRP The System
MRP Example
  • Solved problem 1.
  • MPS 100 units of X for week 10
  • Lead times are on the Excel sheet (given in the
  • Excel time!

Lot Sizing in MRP Programs
  • The default order size is Lot-for-lot (L4L)
  • However, for purchased items or for technical
    reasons, there may be minimum or maximum order
  • Purchased items/subassemblies may require
    multiples of predetermined amounts (e.g.,
    multiples of 50)
  • An example Problem 5. Excel time.
  • Common lot-sizing methods are
  • Economic order quantity (EOQ)
  • Least total cost (LTC)
  • Least unit cost (LUC)
  • Which one to use?
  • The one that is least costly!

MRP, Capacity Requirements Planning, and MRP II
  • Consider the expanded logic flow of MRP II.
  • When utilized cleverly
  • It can be used to lower levels of in-process
    inventories (Lot-sizing?)
  • Ability to track material requirements
  • Ability to evaluate capacity requirements
  • The basic functions of the capacity requirements
    planning (CRP) system are
  • To calculate the capacity needs based on the
    planned orders from MRP schedules
  • To compare the capacity required to the capacity
  • Routing charts show the specific departments that
    each part goes through as well as setup and
    process times in those departments
  • Means of allocating production time
  • Ability to Simulate the manufacturing system

Capacity Requirements Planning (CRP)
  • A small scale CRP example.
  • MPS for item A is
  • 30, 24, 37 units for weeks 7, 8, and 10
  • Lead times for A, , D are
  • 1, 2, 3, and 1 week, respectively.
  • Routing chart for item A is
  • Dept 4 (only)
  • Setup time is 2.0 hours
  • Processing time is 0.25 hours/unit.
  • The complete routing chart is available on the
    Excel file.
  • Group exercise Complete the MRP schedules and
    compute work center load profiles
  • Excel time!