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Material Requirement Planning MRP

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Determine requirements for subassemblies, components, and raw material ... Rivets (2) Clip Assembly (1) Pressboard (1) 7. Major Inputs to MRP Process: ... – PowerPoint PPT presentation

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Title: Material Requirement Planning MRP


1
Material Requirement Planning (MRP)
  • Chapter 16
  • Feb 9, 2006

2
Material Requirement Planning (MRP)
  • ______________________________________
  • ______________________________________
  • Key Outputs of MRP
  • Calculate demand for component items
  • Determine requirements for subassemblies,
    components, and raw material
  • Determine when they are needed
  • Generate work orders and purchase order
  • Consider lead time

3
When to use MRP
  • ___________________________________
  • ___________________________________
  • ___________________________________
  • ___________________________________

Dependent / Independent Demand?
4
Demand Characteristics
Demand Characteristics for Finished Products and
Their Components
Dependent demand
Independent demand
100 x 1 100 tabletops
100 tables
100 x 4 400 table legs
400 300 200 100
Discrete demand
Continuous demand
400 300 200 100
No. of tables
No. of tables
1 2 3 4 5 Week
M T W Th F M T W Th F
5
MRP Input Output
6
Major Inputs to MRP Process1. Bill of Material
  • Product structure file
  • Determines which component items need to be
    scheduled

7
Major Inputs to MRP Process2. Master Production
Schedule (MPS)
  • Drives MRP process with a schedule of finished
    products
  • Quantities represent production not demand
  • Quantities may consist of a combination of
    customer orders demand forecasts
  • Quantities represent what needs to be produced,
    not what can be produced
  • Example

PERIOD MPS ITEM 1 2 3 4 5 Clipboard 85 95 1
20 100 100 Lapdesk 0 50 0 50 0 Lapboard 75 120 4
7 20 17 Pencil Case 125 125 125 125 125
8
Major Inputs to MRP Process3. Inventory Record
  • _________________________________________________
  • Contains an extensive amount of information on
    every item that is produced, ordered, or
    inventoried in the system
  • _________________________________________________

DESCRIPTION INVENTORY POLICY
Item Pressboard Lead time 1 Item no. 734 Annual
demand 5000 Item type Purch Holding
cost 1 Product/sales class Comp Ordering/setup
cost 50 Value class B Safety stock
0 Buyer/planner RSR Reorder point 39 Vendor/drawi
ng 07142 EOQ 316 Phantom code N Minimum order
qty 100 Unit price/cost 1.25 Maximum order
qty 500 Pegging Y Multiple order
qty LLC 1 Policy code 3
9
MRP Processes 4 Basic Steps
  • Exploding the bill of material
  • ___________________________________
  • Netting out inventory
  • ___________________________________
  • ___________________________________
  • Lot sizing rule How many units
  • ___________________________________
  • ___________________________________
  • ___________________________________
  • Time-phasing requirements
  • ___________________________________

10
Lot Sizing Rule Comparison
  • The FOQ rule ___________ _______________________
  • The POQ rule ___________ _______________________
  • _______________________
  • _______________________
  • The L4L rule ___________ _______________________
  • _______________________
  • _______________________

11
MRP Matrix
  • Gross Requirement
  • Derived from planned order releases of the parent
  • Actual / estimated demand, in case of final
    product
  • Schedule Receipts
  • Items on order
  • Scheduled to arrive in the future time period
  • Projected on hand
  • Current inventory, or anticipated inventory at
    the end of period

Inventory on-hand at end of period t - 1
Scheduled / planned receipts in period t
Gross requirements in period t
Projected on-hand Inventory at end of period t


-
12
MRP Matrix
  • Net requirements
  • Actual quantity to produce based on projected on
    hand and on-order quantity
  • Planned Order Receipts
  • Quantity, when orders need to be received
  • Consider lot sizing rule
  • Planned Order Release
  • When order need to be placed to receive on time
  • Consider lead time

13
MRP Matrix (You can download the template from
our class webpage)
14
Example MRP Matrix
15
MRP Example 1
  • Given the following information, determine when
    orders should be released for A, C, and D and the
    size of those orders

16
MRP Example 2
  • Given the following information, determine when
    orders should be released for A, B, C, and D and
    the size of those orders.

17
Evolution of MRP
  • MRP (material requirements planning) was the
    precursor to ERP
  • Primarily a production planning and control
    system
  • MRP evolved to MRP II (manufacturing resource
    planning)
  • ERP (Enterprise Resource Planning) and ERP II
    continue to extend the links through all business
    processes

18
Enterprise Resource Planning (ERP)An Overview
  • Organizes and manages a companys business
    processes by sharing information across
    functional areas
  • Connects with supply-chain and customer
    management applications
  • ERP in the nutshell
  • Client server software
  • Integrates majority of business processes
  • Processes majority of transactions
  • Enterprise wide database
  • Real time data access
  • adapted from e-courseware, MIT Sloan

19
ERP Modules Figure 12.1 Organizational Data
Flow
20
ERP ModulesFigure 12.2 ERPs Central Database
ERP Data Repository
21
ERP Implementation Process
  • First step is to analyze business processes
  • Which processes have the biggest impact on
    customer relations?
  • Which process would benefit the most from
    integration?
  • Which processes should be standardized?
  • Use of Internet portals can aid implementation
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