04 chap016 aquino chase

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McGraw-Hill/Irwin 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

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The McGraw-Hill Companies, Inc., 2004

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McGraw-Hill/Irwin

Chapter 16Materials

RequirementsPlanning


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Material Requirements Planning(MRP)

MRP Logic and Product StructureTrees

Time Fences

MRP Example MRP II and Lot Sizing

OBJECTIVES


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Material Requirements

Planning

Materials requirements planning (MRP)is a means for determining the numberof parts, components, and materials

needed to produce a product MRP provides time scheduling

information specifying when each ofthe materials, parts, and components

should be ordered or produced Dependent demand drives MRP

MRP is a software system


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Example of MRP Logic and

Product Structure Tree

(4)

E(1)D(2)

C(2)

F(2)D(3)

A

Product Structure Tree for Assembly A Lead Times

A 1 day

B 2 days

C 1 day

D 3 days

E 4 days

F 1 day

Total Unit Demand

Day 10 50 A

Day 8 20 B (Spares)

Day 6 15 D (Spares)

Given theproduct structure tree for A and the lead time anddemandinformation below, provide a materials requirements

plan that defines thenumberofunits ofeach component and

when theywill beneeded


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LT = 1 day

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

A Required 50

Order Placement 50

First, thenumberofunits ofA are scheduled

backwards to allowfor their lead time. So,in thematerials requirement plan below,we have to place

anorderfor 50 units ofA on the 9th day toreceive

themonday 10.


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Next,weneed to start scheduling the components that makeup

A. In the caseofcomponent B weneed 4 Bs foreach A.

Sinceweneed 50 As, that means 200 Bs. And again,we back

the scheduleup for thenecessary 2 days oflead time.

D a y : 1 2 3 4 5 6 7 8 9 1 0

A R e q u i re d 5 0

O rd e r P la c e m e n t 5 0

B R e q u i re d 2 0 2 0 0

O rd e r P la c e m e n t 2 0 2 0 0

B(4)

E(1)D(2)

C(2)

F(2)D(3)

A

SparesLT = 2

4x50=200


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

A Required 50LT=1 Order Placement 50

B Required 20 200

LT=2 Order Placement 20 200

C Required 100

LT=1 Order Placement 100

D Required 55 400 300

LT=3 Order Placement 55 400 300

E Required 20 200

LT=4 Order Placement 20 200

F Required 200

LT=1 Order Placement 200

B(4)

E(1)D(2)

C(2)

F(2)D(3)

A

40 + 15 spares

Part D: Day 6

Finally,repeating the process for all components,we have the

final materials requirements plan:


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Master Production Schedule (MPS)

Time-phased plan specifying how

manyand when the firm plans to build

each end item

Aggregate Plan

(Product Groups)

MPS

(Specific End Items)


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Types of Time Fences

Frozen No schedule changes allowed within

this window

Moderately Firm

Specific changes allowed withinproduct groups as long as parts areavailable

Flexible

Significant variation allowed as longas overall capacity requirementsremain at the same levels


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Example of Time Fences

8 15 26

Weeks

FrozenModerately

Firm Flexible

Firm Customer Orders

Forecast and availablecapacity

Capacity

Exhibit 15.5


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Material Requirements Planning System

Based on a master production schedule, amaterial 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, basedon lead times


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From Exhibit 15.6

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Firm orders

from known

customers

Forecasts

of demand

from random

customers

Aggregate

product

plan

Bill of

material

file

Engineering

design

changes

Inventory

record file

Inventory

transactions

Master production

Schedule (MPS)

Primary reportsSecondary reports

Planned order schedule for

inventory and production

control

Exception reports

Planning reports

Reports for performance

control

Material

planning

(MRP

computer

program)


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Bill of Materials (BOM) File

A Complete Product Description

Materials

Parts

Components Production sequence

ModularBOM

Subassemblies SuperBOM

Fractional options


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Inventory Records File

Each inventory item carried as a

separate file

Status according to time buckets

Pegging Identify each parent item that created

demand


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Primary MRP Reports

Planned orders to be released at a futuretime 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 suspensionof orders on the master production

schedule Inventory status data


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Secondary MRP Reports

Planning reports, for example,forecasting inventoryrequirements over a period of time

Performance reports used todetermine agreement betweenactual and programmed usageand costs

Exception reports used to pointout serious discrepancies, suchas late or overdue orders


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Additional MRP Scheduling Terminology

Gross Requirements

Scheduled receipts

Projected available balance

Net requirements

Planned order receipt

Planned order release


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MRP Example

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


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Closed Loop MRP

Production Planning

Master Production Scheduling

Material Requirements Planning

Capacity Requirements Planning

Realistic?No

Feedback

Execute:

Capacity Plans

Material Plans

Yes

Feedback


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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


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Lot Sizing in MRP Programs

Lot-for-lot (L4L)

Economic order quantity (EOQ)

Least total cost (LTC) Least unit cost (LUC)

Which one to use?

The one that is least costly!


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McGraw-Hill/Irwin

End of Chapter 16

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