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Chapter 16 Materials Requirements Planning

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Lot Sizes, Safety Stock and Time Fences. MRP II. MRP Management Issues. 2 ... Types of Time Fences. Frozen. No schedule changes allowed within this window. ... – PowerPoint PPT presentation

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Title: Chapter 16 Materials Requirements Planning


1
Chapter 16Materials Requirements Planning
  • Material Requirements Planning (MRP)
  • Bill of Material
  • MRP Logic and Calculations
  • Lot Sizes, Safety Stock and Time Fences
  • MRP II
  • MRP Management Issues

2
Material Requirements PlanningDefined
  • Materials requirements planning (MRP) is the
    logic for determining the number of parts,
    components, and materials needed to produce a
    product.
  • MRP provides time scheduling information
    specifying when each of the materials, parts, and
    components should be ordered or produced.

3
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 unit numbers needed.
  • Determines the dates when orders for those
    materials should be released, based on lead
    times.

4
4
Firm orders from known customers
Forecasts of demand from random customers
Aggregate product plan
Material planning (MRP)
5
MRP InputBill-of-Material
  • List of components quantities needed to make
    product
  • Provides product structure (tree)
  • Parents
  • Children
  • Shows low-level coding
  • Lowest level in structure item occurs
  • Top level is 0 next level is 1 etc.

6
Bill-of-Material Product Structure Tree
Bicycle(1)
Bicycle(1)
P/N 1000
P/N 1000
Handle Bars (1)
Frame Assy (1)
Handle Bars (1)
Frame Assy (1)
P/N 1001
P/N 1002
P/N 1001
P/N 1002
Wheels (2)
Frame (1)
Wheels (2)
Frame (1)
P/N 1003
P/N 1004
P/N 1003
P/N 1004
7
Product Structure Thinking Challenge
  • The demand for product A is 50. How many of each
    component is needed to satisfy demand?

A
A
B(2)
C(3)
B(2)
C(3)
E(1)
E(3)
F(2)
E(1)
E(3)
F(2)
D(2)
D(2)
G(1)
D(2)
D(2)
G(1)
8
Product Structure Solution
50
A
A
B(2)
C(3)
B(2)
C(3)
E(1)
E(3)
F(2)
E(1)
E(3)
F(2)
D(2)
D(2)
G(1)
D(2)
D(2)
G(1)
9
Lead Times Product Structure
Handle Bars
2 wk.
Lead time
1 wk.
Frame
2 wk.
Bicycle
1 wk.
3 wk.
Frame Assy
Wheels
Time (weeks)
10
MRP Scheduling Terminology
  • Gross Requirements demand for an item from
  • independent demand
  • independent demand
  • dependent demand

11
MRP Scheduling Terminology
  • Scheduled receipts orders that have already
    been released (i.e., an open order) and that are
    scheduled to arrive at the beginning of the
    period.
  • Projected available balance (On-hand) amount of
    inventory at the beginning of a period

12
MRP Scheduling Terminology
  • Net requirements -
  • Planned order receipt -
  • Planned order release -

13
MRP Formulas
  • NRt GRt - OHt SRt (0 if negative)
  • OHt OHt-1 SRt-1 POReceiptt-1 GRt-1 SS

14
MRP Example - One items complete recordStarting
information
Lead time 3 lot policy lot-for-lot (LFL)
on-hand 20 units safety stock 0 units.
15
Low Level Coding
  • What about this?

A
Level 0
B
C
Level 1
Level 2
D
C
E
E
Level 3
16
Low Level Coding - How to
  • Place each item at same level - it simplifies the
    calculations

After
Before
A
A
Level 0
B
C
B
Level 1
Level 2
D
C
E
D
C
E
E
Level 3
17
An MRP Example
Requirements include 95 units (80 firm orders and
15 forecast) of X in week 10 plus the following
spares
18
(No Transcript)
19
Lot Sizing in MRP Programs
  • We need to reflect restrictions which may exist
    in actual practice
  • Lot-for-lot (L4L)
  • Economic order quantity (EOQ)
  • Least total cost (LTC)
  • Least unit cost (LUC)
  • Fixed quantity
  • Minimums
  • Multiples

20
Lot Size Effects
20
Lead Time 3 Lot Size 5 units (or Multiples)
On-Hand 20 Units Safety Stock 0 Units.
21
Using Safety Stock
20 - 2
18
Lead time 3 lot policy lot-for-lot (LFL)
on-hand 20 units safety stock 2 units.
22
MRP Thinking Challenge
  • A master schedule calls for 50 units of F in week
    6, 60 in week 8. On-hand levels are F 0, G
    20, H 60. Another 20 units of G are
    scheduled to be received in week 4. Order
    quantities are lot-for-lot except for H, which
    has a lot size of 50 or multiples of 50.

F(1)
LT 2
G(1)
H(1)
LT 1
LT 2
H(4)
LT 2
23
Product F Solution
24
Component G Solution
25
Component H Solution
26
Another MRP Example
An end item (A) is assembled from 1 sub-component
C, 2 part Ds, and 1 sub-component B Each
sub-component C is assembled from 1 part D and 1
part E Each sub-component B is assembled from 1
part C and 2 part Es The master production
schedule calls for 250 units of A in week 6, 140
in week 8, and 200 in week 9. The following
information is available from the inventory
status file
27
MRP Input Master Production Schedule (MPS)
  • Time-phased plan specifying how many and when the
    firm plans to build each end item.

MPS (Specific End Items)
28
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.

29
Example of Time Fences
30
MRP InputInventory Records File
  • Each inventory item carried as a separate file
  • Status according to time buckets.
  • Pegging
  • Identify each parent item that created demand.

31
MRP OutputsPrimary MRP Reports
  • Planned orders to be released at a future time.
  • Order release notices to execute the planned
    orders.
  • Changes in due dates of open orders due to
    rescheduling.
  • Cancellations or suspensions of open orders due
    to cancellation or suspension of orders on the
    master production schedule.
  • Inventory status data.

32
Closed Loop MRP
Production Planning Master Production
Scheduling Material Requirements
Planning Capacity Requirements Planning
33
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

34
MRP Management Issues
  • System Accuracy
  • System nervousness
  • Integration with Just-in-Time (JIT)
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