Material%20Requirements%20Planning

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Material Requirements Planning
Chapter 4
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MRP

• Computerized inventory control production
  planning system
• used to avoid missing parts
• establishes a schedule
• shows components required at each level of
  assembly
• calculates time components are needed

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Nature of Demand

• Independent
• Not related to the demand of any other product
• E.g. a wooden table by itself is an independent
  demand item
• Must be forecasted
• Only independent items are in the MPS
• Dependent
• Related to the demand of another item
• E.g the legs of the wooden table ot the table top
  would be consider dependent demand, unless it was
  a replacement
• Must be calculated
• Sometimes both

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Objectives of MRP

• Determine requirements
• Right materials in the right quantities available
  at the right time, to meet demand
• What to order
• How much to order
• When to order
• When to schedule delivery
• Keep priorities current
• Monitor all aspects of production to see where
  problems might affect delivery

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Grand Scheme of Things
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Inputs to MRP System

• 1) Master Production Schedule
• Schedule of end items produced
• This drives the MRP system
• 2) Inventory Records
• Planning factors
• Order quantities, lead times, safety stock and
  scrap
• Status of each item
• Quantity, allocation, availability
• Inventory record file
• Also called the part master file (or item master
  file)
• 3) Bills of Material (BOMs)
• Most important document

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Bill Of Material (BOM)

• According to APICS, BOM is
• a listing of all the subassemblies,
  intermediates, parts, and raw materials that go
  into making the parent assembly showing the
  quantities of each required to make an assembly.
• Three important aspects
• BOM shows all the parts required to make one of
  the item
• Each part has only one part number
• A part is defined by its form, fit and function.
  If any of these change then the part number must
  change

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BOM Structure

• Formats
• Product Tree
• Parent / component relationship

Parent
Component
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BOM Structure

• Formats
• Multilevel bill

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BOM Structure

• Formats
• Multiple bill

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BOM Structure

• Formats
• Single-level bill

Parent
Component
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BOM Structure

• Formats
• Indented bill

LEVEL ITEM Unit of Measure Quantity 0 - - -
- Clipboard Ea 1 - 1 - - - Clip Assembly Ea 1 -
- 2 - - Top Clip Ea 1 - - - 3 - Sheet
Metal In2 8 - - 2 - - Bottom Clip Ea 1 - - - 3
- Sheet Metal In2 8 - - 2 - - Pivot Ea 1 - - -
3 - Iron Rod In 3 - - 2 - - Spring Ea 1 - - - 3
- Spring Steel In 10 - 1 - - - Rivet Ea 2 - 1 -
- - Board Ea 1 - - 2 - - Press Board Ea 1 - -
2 - - Finish Oz 2
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BOM Structure

• Formats
• Summarized parts list

Part Number Description Quantity Required
203 411 622 023 722 Wooden Leg Wooden Ends Wooden Sides Table Top Hardware Kit 4 2 2 1 1
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Uses of BOM

• Product definition
• Specifies the components needed to make a product
• Engineering change control
• record and control engineering changes
• Service parts
• Ids replacement parts
• Planning
• Material/component purchasing scheduling
• Order entry
• price the product based on options selected
• Manufacturing
• Lists parts assemblies needed
• Costing
• determines direct material, direct labor, and
  distributing costs

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MRP Planning Process

• The following will be discussed
• 1. Exploding and offsetting
• 2. Gross and net requirements
• 3. Releasing orders
• 4. Low-level coding and netting

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Exploding Offsetting

• Lead Time
• The time needed to perform a task

Planning Horizon gt 12 wks
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Exploding Offsetting

• Exploding
• The process of multiplying requirements by usage
  quantity recording appropriate requirements
  throughout the product tree
• Offsetting

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Time-phase (example)
Lead time 3 weeks Weekly demand
forecast 20 units Safety stock 30
units Order quantity 100 units An order of
100 units is scheduled for receipt in Week 2 On
hand quantity 40 units
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• When will quantity fall below the safety stock
  (30) level?
• Week 6
• An order release must be planned for Week 3 to
  have a scheduled receipt in Week 6

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Releasing an order means that authorization
(planned release date) is given to purchasing to
buy the necessary material or to manufacturing to
make the component. Remember Lead Time is a
critical factor here!
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Released Orders

• Scheduled receipts
• Are orders on manufacturing or on a vendor and
  represent a commitment to make or buy
• Necessary materials are committed
• Work-center capacity is allocated
• Shows quantity ordered and when they expect
  completion and availability
• Open Orders
• Scheduled Receipts

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The Big Picture
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Basic MRP Record Structure

• Period
• Vary in length from a day to a week or longer,
  also
  referred to as the time bucket
• Planning horizon number of periods in record
• Gross requirements
• Anticipated future demand of usage for an item
• Scheduled receipts
• Quantities that have already been ordered and
  when we expect them to be completed
• On hand
• Projected balance after replenishment orders have
  been received and the gross requirement has been
  satisfied (at the end of the period)
• Planned order releases
• Planned replenishment orders for an item (at the
  beginning)

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• Low-level Code Netting
• The lowest level on which a part resides in a BOM
• (Work through procedure)

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Multiple Bills of Materials

• Work Example

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MRP Summary

• Used to produce the right components at the right
  time
• Must have accurate BOMs and Inventory data
• Normally a computer-based software system