Mrp

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Independent vs. Dependent Demand

Independent Demand (Demand for the final end-

product or demand not related to other items)

Dependent

Demand

(Derived demand

items for

component parts,

subassemblies,

raw materials, etc)

Finished

product

Component parts

DEFINITION

Material Requirements Planning (MRP)

• A computer-based information system that translates the finished product requirements of the master schedule into time-phased requirements for subassemblies, component parts and raw materials, working backward from the due date using lead times.

MRP is designed to answer questions:

WHAT HOW MUCH

WHEN IT

OVERVIEW OF MRP

MRP Inputs MRP Outputs

Master Schedule

Bill of Materials

Inventory Records

MRP INPUTS

• Referred to as the master production schedule

• States which end items are to be produced, when they are needed, and in what quantities

• These quantities come from different sources: -Customer orders

-Forecasts

-Order from warehouses

The Master Schedule

Go back to OVERVIEW OF MRP

• Contains a listing of all of the assemblies, subassemblies, parts and raw materials that are needed to produce one unit of a finished product

• Listing is hierarchical

The Bill of Materials

BOM: Product Structure Tree

BOM: Indented BOM

Level 0

Level 1

Level 2

Chair

Leg Assembly

Legs (2)

Cross bar

Seat

Back Assembly

Side Rails (2)

Cross bar

Back supports (3)

• Stored information on the status of each item by time period called time buckets

•Gross requirements

•Scheduled receipts

•Expected amount on hand

•Supplier

• Lead time

• Lot size policy

Inventory Records

MRP Processing Terms in spreadsheet

Period Beg. Inventory 1 2 3 4

Quantity

Component LT Beg. Inventory 1 2 3 4

Gross Requirements

Scheduled Receipts

Projected on hand

Net Requirements

Planned-order receipts

Planned-order releases

Total expected demand for an item or raw material in a time period

Open orders scheduled to arrive from vendors or elsewhere in the pipeline

Expected amount of inventory that will be on hand at the beginning of each period

Actual amount needed in each time period

Quantity expected to be received by the beginning of the period which it is shown indicates timing of receipts of quantities

Planned amount to order in each time period; planned-order receipts offset by lead time

Net requirements = Gross requirements – Available inventory

Available inventory = Projected on hand – Safety stock – Inventory allocated to other items

Net requirements = Gross requirements – Projected on-hand inventory

MRP OUTPUTS 1. Planned orders

•Schedule indicating the amount and timing of future orders

2. Order releases

•Authorization for the execution of planned orders

3. Changes

•Revisions of due dates or order quantities of cancellations of orders

Other Considerations

Safety Stock Lot Sizing - Choosing of a lot size for ordering or production

• Lot-for-lot ordering

• Lot size ordering

BENEFITS AND REQUIREMENTS OF MRP

BENEFITS 1. Low work-in-process inventories. 2. Provides a better picture of material requirements. 3. Provides a better handle on needed capacities at all process centers. 4. Provides a better means of allocating production time. 5. Ability to easily determine inventory usage by backflushing.

BENEFITS AND REQUIREMENTS OF MRP

REQUIREMENTS 1. Computer and software. 2. Accurate and current - Master Production Schedule - Bills of Materials - Inventory records. 3. Data Integrity.

Backflushing

• Exploding an end item’s BOM to determine the quantities of the components that were used to make the item

Example 1

Product X is made of two units of Y and three of Z. Y is made of one unit of A and two units of B. Z is made of two units of A and four units of C.

Lead time for X is one week; Y, two weeks; Z, three weeks; A, two weeks; B, one week; and C, three weeks.

a.Draw the bill of materials (product structure tree)

b.If 100 units of X are needed in week 10, develop a planning schedule showing when each item should be ordered and in what quantity.

X

Y (2)

A (1) B (2)

Z (3)

A (2) C (4)

Solution: a.

3 4 5 6 7 8 9 10

X LT = 1 100 100

Y LT = 2 200 200

Z LT = 3 300 300

A LT = 2 600 200 600 200

B LT = 1 400 400

C LT = 3 1200 1200

•Solution: b.

Example 2

A(2) B(1)

D(5) C(2)

X

C(3)

Item On-Hand Lead Time (Weeks)

X 50 2

A 75 3

B 25 1

C 10 2

D 20 2

Requirements include 95 units (80 firm orders and 15 forecast) of X

in week 10

A(2)

X

Day: 1 2 3 4 5 6 7 8 9 10

X Gross requirements 95

LT=2 Scheduled receipts

Proj. avail. balance 50 50 50 50 50 50 50 50 50 50

On- Net requirements 45

hand Planned order receipt 45

50 Planner order release 45

A Gross requirements 90


Proj. avail. balance 75 75 75 75 75 75 75 75




B Gross requirements 45






C Gross requirements 45 40


Proj. avail. balance 10 10 10 10 10

On- Net requirements 35 40

hand Planned order receipt 35 40

10 Planner order release 35 40

D Gross requirements 100


Proj. avail. balance 20 20 20 20 20 20 20




It takes 2 A’s for each X

Day: 1 2 3 4 5 6 7 8 9 10































B(1) A(2)

X

It takes 1 B for each X

A(2) B(1)

X

C(3)

Day: 1 2 3 4 5 6 7 8 9 10































It takes 3 C’s for each A

A(2) B(1)

C(2)

X

C(3)

Day: 1 2 3 4 5 6 7 8 9 10































It takes 2 C’s for each B

A(2) B(1)

D(5) C(2)

X

C(3)

Day: 1 2 3 4 5 6 7 8 9 10































It takes 5 D’s for each B

Date post:	20-Oct-2014
Category:	Technology
View:	1,906 times
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Mrp

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