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Material Requirements Planning (MRP)

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Chapter 15 11/7/05 Overview Position of MRP in Operation Management Definitions (MPS, BOM, etc) MRP example MRP II Lot Sizing in MRP Independent vs. Dependent Demand ... – PowerPoint PPT presentation

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Title: Material Requirements Planning (MRP)


1
Material Requirements Planning (MRP)
  • Chapter 15
  • 11/7/05
  • Overview
  • Position of MRP in Operation Management
  • Definitions (MPS, BOM, etc)
  • MRP example
  • MRP II
  • Lot Sizing in MRP

2
(No Transcript)
3
Independent vs. Dependent Demand
Independent Demand (Demand not related to other
items)
Dependent Demand (Derived)
E(1)
6
4
Material Requirements Planning
  • How much of an item is needed?
  • When is an item needed to complete
  • Specified number of units at
  • Specified period of time?
  • Where MRP is most beneficial?

3
5
Introductory Example - Dependent Demand
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
Product Structure Tree for Assembly A
Demand Day 10 50 A Day 8 20 B (Spares) Day
6 15 D (Spares)
Create a schedule to satisfy demand.
4
6
First, the number of units of A are scheduled
backwards to allow for their lead time. So, in
the materials requirement plan below, we have to
place an order for 50 units of A in the 9th
week to receive them in the 10th week.
LT 1 day
5
Irwin/McGraw-Hill
  • The McGraw-Hill Companies, Inc., 1998

7
Next, we need to start scheduling the components
that make up A. In the case of component B
we need 4 Bs for each A. Since we need 50 As,
that means 200 Bs. And again, we back the
schedule up for the necessary 2 days of lead time.
LT 2
Spares
4x50200
6
Irwin/McGraw-Hill
  • The McGraw-Hill Companies, Inc., 1998

8
Finally, repeating the process for all
components, we have the final materials
requirements plan
8
  • The McGraw-Hill Companies, Inc., 2001

9
Master Production Schedule (MPS)
  • Time-phased plan specifying how many and when the
    firm plans to build each end item.

MPS (Specific End Items)
Exhibit 15.4
10
10
Material planning (MRP)
From Exhibit 15.6
  • The McGraw-Hill Companies, Inc., 2001

11
Material Requirements Planning System
  • Based on a master production schedule, a material
    requirements planning system
  • Creates schedules identifying the specific parts
    and materials required to produce end items
  • Determines exact numbers needed
  • Determines the dates when orders for those
    materials should be released, based on lead times

11
12
Bill of Materials (BOM) FileA Complete Product
Description
  • Materials
  • Parts
  • Components
  • Production sequence
  • Planning BOM
  • Modular BOM
  • Subassemblies
  • Super BOM
  • Fractional options

13
13
Parts List Low Level Coding
Single Level A B(4) C(2) B D(2)
E(1) C D(3) F(2)
Indented A B(4) D(2) E(1)
C(2) D(3) F(2)
Parent
Level
Low Level Coding - (Exhibit 15.9)
14
Inventory Status Record ( Exhibit 15.10)
  • Each inventory item carried as a separate file
  • Status Periods - time buckets
  • Information (records)
  • Gross Requirements
  • On-hand
  • Scheduled receipt (to be received in the
    future-it is already paid for)
  • Planned order release (to be released at a future
    time)
  • Planned order receipt (to be received in the
    future based on the planned order release)
  • Pegging
  • Identify each parent item that created demand

14
15
15
Material planning (MRP)
From Exhibit 15.6
  • The McGraw-Hill Companies, Inc., 2001

16
MRP program
Material planning (MRP)
Method of calculation (explosion) - (p586)
When calculations are updated (net change)
Read Example (p595)
17
Work Center Load
  • Revise schedules because of limited capacity
  • Work center used to make different components
    (Fig 15.18)
  • If scheduled work exceeds available capacity,
    what should be done?
  • Available Capacity machines x shifts x
    hrs/shift
  • 2 x
    2 x 10 40 hrs/work center
  • Take into account utilization and efficiency

18
Closed Loop MRP (Exhibit 15.19)
Production Planning Master Production
Scheduling Material Requirements
Planning Capacity Requirements Planning
19
Manufacturing Resource Planning (MRP II)
  • Goal Plan and monitor all resources of a
    manufacturing firm (closed loop)
  • manufacturing
  • marketing
  • finance
  • engineering
  • Simulate the manufacturing system

20
Time Fences in MPS
Exhibit 15.5
21
Types of 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.

22
MRP Example
Requirements include 95 units (80 firm orders and
15 forecast) of X in week 10
23
X
A(2)
It takes 2 As for each X
24
X
B(1)
A(2)
It takes 1 B for each X
25
X
A(2)
B(1)
C(3)
It takes 3 Cs for each A
26
X
A(2)
B(1)
C(2)
C(3)
It takes 2 Cs for each B
27
X
A(2)
B(1)
D(5)
C(2)
C(3)
It takes 5 Ds for each B
28
Lot Sizing in MRP Programs
  • Lot sizes are the part quantities issued in the
    planned order receipt (or release) in MRP
  • It increases complexity of MRP
  • Several techniques are available
  • Lot-for-lot (L4L)
  • Economic order quantity (EOQ)
  • Least total cost (LTC)
  • Least unit cost (LUC)

29
Lot for Lot
  • Set planned order to match net requirement
  • Produces whatever is needed each week w/o
    carrying over to future period
  • Does not take into account setup costs (high) or
    capacity limitations
  • Minimize carrying cost

15
30
EOQ for MRP
  • Same formula for inventory
  • EOQ batch size
  • Setup cost order cost
  • Holding costs are charged at ending inventory of
    each period (different from regular EOQ?)

15
31
Home Work 8
  • Due Date 11/14/05
  • You may work in groups of TWO
  • Solve problems 12, 14, and 17 (from the problems
    at the end of this Chapter 15 - pp 610)
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