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Materials Requirement Planning (MRP)

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Materials Requirement Planning (MRP) The approach to coordinated scheduling for dependent demand items. Introduction to lean * Introduction to lean * References Dave ... – PowerPoint PPT presentation

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Title: Materials Requirement Planning (MRP)


1
Materials Requirement Planning (MRP)
  • The approach to coordinated scheduling for
    dependent demand items.

2
The Responsibility of Manufacturing activities
  • 1. Design requirements and specifications and
    standards.
  • 2. Be manufactured economically and
    environmentally friendly.
  • 3. Build-in quality at each stage.
  • 4. Production methods must be sufficiently
    flexible to respond to changing market demands,
    types of products, production rates, and
    production quantities and to provide on-time
    delivery to the customer.
  • 5. New developments in materials, production
    methods, and computer integration of both
    technological and managerial activities.
  • 6. Safety.

3
Production Planning and Control
  • Planning and control of the flow of materials
    through the manufacturing process
  • 1. Production planning
  • Production must be able to meet the demand
    of the marketplace a). Forecasting
  • b). Master planning
  • c). Material requirements planning
  • d). Capacity planning
  • 2. Implementation and control
  • 3. Inventory management

4
Production Planning System
5
Material Requirements Plan (MRP)
  • The quantities of each product group that must be
    produced in each period.
  • The desired inventory levels.
  • The resources of equipment, labor, and material
    needed in each period.
  • Time

6
  • Example 1.
  • Amalgamated Fish Sinkers makes a product group
    of fresh fish sinkers and wants to develop a
    production plan for them. The expected opening
    inventory is 100 cases, and they want to reduce
    that to 80 cases by the end of the planning
    period. The number of working days is the same
    for each period. There are no back orders. The
    expected demand for the fish sinkers is as
    follows

a). How much should be produced each period? b).
What is the ending inventory for each period? c).
If the cost of carrying inventory is 5 per case
per period based on ending inventory, what is the
total cost of carrying inventory? d). What will
be the total cost of the plan?
7
Period Period 1 2 3 4 5 Total
Forecast (cases) Forecast (cases) 110 120 130 120 120 600
Production Production
Ending Inventory 100
8
Answer a). Total production required 600 80
- 100 580 cases   Production each period
580 / 5 116 cases
Period Period 1 2 3 4 5 Total
Forecast (cases) Forecast (cases) 110 120 130 120 120 600
Production Production 116 116 116 116 116 580
Ending Inventory 100
9
b). Ending inventory opening inventory
production - demand   Ending inventory after
the first period 100 116 - 110 106 cases

-

Period Period 1 2 3 4 5 Total
Forecast (cases) Forecast (cases) 110 120 130 120 120 600
Production Production 116 116 116 116 116 580
Ending Inventory 100 106
10
b). Ending inventory opening inventory
production - demand   Ending inventory after
the first period 100 116 - 110 106 cases
Period Period 1 2 3 4 5 Total
Forecast (cases) Forecast (cases) 110 120 130 120 120 600
Production Production 116 116 116 116 116 580
Ending Inventory 100 106
11
c). The total cost of carrying inventory would
be   (106 102 88 84 80)(5) 2300 d).
Since there were no stockouts and no changes in
the level of production, this would be the
total cost of the plan.
Period Period 1 2 3 4 5 Total
Forecast (cases) Forecast (cases) 110 120 130 120 120 600
Production Production 116 116 116 116 116 580
Ending Inventory 100 106 102 88 84 80
12
Master Scheduling
  • Production plan
  • Families of products
  • Master production schedule (MPS)
  • End items. It breaks down the production plan
    into the requirements for individual end items,
    in each family, by date and quantity. The total
    of the items in the MPS should be equal to the
    total shown on the production plan.

13
Master Scheduling
  • The information needed to develop an MPS
  • The production plan
  • Forecasts for individual end items
  • Actual orders received from customers and for
    stock replenishment
  • Inventory levels for individual end items
  • Capacity restraints

14
  • Example 1.
  • The Hotshot Lightning Rod Company makes a family
    of two lightning rods, Models H and I. It bases
    its production planning on months. For the
    present month, production is leveled at 1000
    units. Opening inventory is 500 units, and the
    plan is to reduce that to 300 units by the end of
    the month. The MPS is made using weekly periods.
    There are four weeks in this month, and
    production is to be leveled at 250 units per
    week. The forecast and projected available for
    the two lightning rods follows. Calculate an MPS
    for each item.

15
  • Answer
  • Production Plan

Period Period 1 2 3 4 Total
Forecast Forecast 300 350 300 250 1200
Projected Available 500 450 350 300 300
Production Plan Production Plan 250 250 250 250 1000
16
  • Forecasts for individual end items , Model H and I

Period 1 2 3 4 Total
Forecast 300 350 300 250 1200
Forecast for H 200 300 100 100 700
Forecast for I 100 50 200 150 500
Opening inventories are Model H 200 Model
I 300
17
  • Master Schedule Model H

Period Period 1 2 3 4 Total
Forecast Forecast 200 300 100 100 700
Projected Available 200 250 200 100 100
MPS MPS 250 250 100
Master Schedule Model I
Period Period 1 2 3 4 Total
Forecast Forecast 100 50 200 150 500
Projected Available 300 200 150 200 200
MPS MPS 250 150
18
  • Master Schedule Model H

Period Period 1 2 3 4 Total
Forecast Forecast 200 300 100 100 700
Projected Available 200
MPS MPS
Master Schedule Model I
Period Period 1 2 3 4 Total
Forecast Forecast 100 50 200 150 500
Projected Available 300
MPS MPS
19
The objectives in developing an MPS
  • To maintain the desired level of customer service
    by maintaining finished-goods inventory levels or
    by scheduling to meet customer delivery
    requirements.
  • To make the best use of material, labor, and
    equipment .
  • To maintain inventory investment at the required
    levels.

20
MRP Process
  • MRP Process uses four basic techniques
  • Exploding and offsetting
  • Gross and net requirements
  • Releasing orders
  • Low-level coding and netting
  • The most important thing to consider before
    making any decisions is lead time

21
MRP Process
  • Exploding requires a planner determine actual
    material required by multiplying usage by the
    quantity needed. Information is collected from
    the product tree.
  • Offsetting takes information from explosion and
    plans production based upon lead-time and
    relationship to parent.

22
MRP Process
  • Planned order composes of two elements
  • Planned order receipt.
  • Planned order release.
  • Gross and Net requirements
  • Net Gross requirements Available inventory

23
  • Example 2 
  • Using the product tree and lead times shown in
    figure below, determine the planned order
    receipts and releases. There are 50 As required
    in week 5. Suppose there are 10 Bs available as
    well as the 20 As.

24
Part Week Week Week Week Week
Part 1 2 3 4 5
A Gross Requirements Projected Available 20 Net requirements Planned Order Receipt Planned Order Release 20 30 50 0 30 30
B Gross Requirements Projected Available 10 Net requirements Planned Order Receipt Planned Order Release
C Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release
D Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release
E Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release
25
Part Week Week Week Week Week
Part 1 2 3 4 5
A Gross Requirements Projected Available 20 Net requirements Planned Order Receipt Planned Order Release 20 30 50 0 30 30
B Gross Requirements Projected Available 10 Net requirements Planned Order Receipt Planned Order Release 20 10 30 0 20 20
C Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release 30 30 0 30 30
D Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release
E Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release
26
Part Week Week Week Week Week
Part 1 2 3 4 5
A Gross Requirements Projected Available 20 Net requirements Planned Order Receipt Planned Order Release 20 30 50 0 30 30
B Gross Requirements Projected Available 10 Net requirements Planned Order Receipt Planned Order Release 20 10 30 0 20 20
C Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release 30 30 0 30 30
D Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release 20 20 0 20 20
E Gross Requirements Projected Available Net requirements Planned Order Receipt Planned Order Release 20 20 0 20 20
27
MRP Process
  • Scheduled Receipts
  • Promised materials
  • Become available to use immediately
  • Open Orders
  • Incomplete orders that have not been fully
    satisfied
  • Example, we completed the production of markers
    but do not have packaging
  • Net Requirements (Modified) gross requirements-
    scheduled receipts available inventory

28
  • Example 3 
  • Complete the following table. The lead time for
    the item is two weeks, and the order quantity is
    200. What action should be taken?

Week 1 2 3 4
Gross Requirements Scheduled Receipts Projected Available 150 Net requirements Planned Order Receipt Planned Order Release 50 250 200 100 50
29
Answer
Week 1 2 3 4
Gross Requirements Scheduled Receipts Projected Available 150 Net requirements Planned Order Receipt Planned Order Release 50 100 250 200 100 50
Week 1 2 3 4
Gross Requirements Scheduled Receipts Projected Available 150 Net requirements Planned Order Receipt Planned Order Release 50 100 250 200 50 100 50
30
Answer
Week 1 2 3 4
Gross Requirements Scheduled Receipts Projected Available 150 Net requirements Planned Order Receipt Planned Order Release 50 100 250 200 50 100 50 50? 50
X
Week 1 2 3 4
Gross Requirements Scheduled Receipts Projected Available 150 Net requirements Planned Order Receipt Planned Order Release 50 100 200 250 200 50 100 150 50 200 50
31
Example 1 of MRP
Given the following product tree, explode,
offset, and determine the gross and net ret
requirements. All lead times are one week, and
the quantities required are shown in parentheses.
The master production schedule calls for the
completion of 100 As in week 5. There is
scheduled receipt of 100 Bs in week 1. There are
also 200 Fs available.
32
Example 2 of MRP
Given the following product tree, explode,
offset, and determine the gross and net ret
requirements. All lead times are one week, and
the quantities required are shown in parentheses.
The master production schedule calls for the
completion of 100 As in week 4 and 50 in week 5.
There are 300 Bs scheduled to be received in week
1 and 200 Ds in week 3. There are also 20 As
available. The ordering quantity for all parts is
lot-for lot.
33
Example 3 of MRP
Given the following product tree, explode,
offset, and determine the gross and net ret
requirements. All lead times are one week, and
the quantities required are shown in parentheses.
The master production schedule calls for the
completion of 100 As in week 4 and 50 in week 5.
There are 100 Cs scheduled to be received in week
2. Lot size for part E is 500. Other parts are
all lot-for lot.
34
References
  • Dave Dixon (2004), The truce between lean and IT,
    IE Industrial Engineer, 36(6), 42-45.
  • Charles M. Parks (2003), The Bare Necessities of
    Lean, IE Industrial Engineer, 35(8), 39-42.
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