advance mr p

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To Accompany Ritzman & Krajewski Foundations of Operations Management, © 2003 Prentice Hall, Inc. All rights reserved.

Chap ter 15

Resource

Planning




Material Requirements Planning

• Materials requirements planning (MRP) is a means fordetermining the number of parts, components, andmaterials needed to produce a product

• MRP provides time scheduling information specifying

when each of the materials, parts, and componentsshould be ordered or produced

• Dependent demand drives MRP

• It is most valuable in industries where a number ofproducts are made in batches using the sameproductive equipment.

• The theme of MRP is ―getting the right materials to theright place at the right time‖.




Demand Patterns

| | | | | | | | | |

1 5 10

Day

2000 —

1500 —

1000 —

500 —

0

B i c y c l e s

R i m s

R i m s

2000 —

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day

Figure 15.2

(a) (b)




Demand Patterns

| | | | | | | | | |

1 5 10

Day

2000 —

1500 —

1000 —

500 —

0

B i c y c l e s

Reorder point

Figure 15.2

R i m s

R i m s

2000

—

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day(a) (b)




Demand Patterns

2000 —

1500 —

1000 —

500 —

0

R i m s

R i m s

2000 —

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day

| | | | | | | | | |

1 5 10

Day

Order

1000 on

day 3

B i c y c l e s

Reorder point

(a) (b)




Demand Patterns

2000 —

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day

Order

1000 on

day 3

B i c y c l e s

Reorder point

(a) (b)

R i m s

R i m s

2000

—

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day


http://slidepdf.com/reader/full/advance-mr-p 7/60To Accompany Ritzman & Krajewski Foundations of Operations Management, © 2003 Prentice Hall, Inc. All rights reserved.

Demand Patterns

(a) (b)

2000 —

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day

Order

1000 on

day 3

Order

1000 on

day 8

B i c y c l e s

Reorder point

2000 —

1500 —

1000 —

500 —

0

R i m s

R i m s

| | | | | | | | | |

1 5 10

Day



Demand Patterns

(a) (b)

2000 —

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day

Order

1000 on

day 3

Order

1000 on

day 8

B i c y c l e s

Reorder point

2000 —

1500 —

1000 —

500 —

0

R i m s

R i m s

| | | | | | | | | |

1 5 10

Day



Demand Patterns

2000 —

1500 —

1000 —

500 —

0

R i m s

R i m s

2000 —

1500 —

1000 —

500 —

0| | | | | | | | | |

1 5 10

Day(a) (b)

| | | | | | | | | |

1 5 10

Day

Order

1000 on

day 3

Order

1000 on

day 8

B i c y c l e s

Reorder point



Material Requ iremen ts

Plan Inpu ts

Figure 15.4

Bills of

materials

Engineering

and process

designs




Plan Inpu ts

Bills of

materials

Engineering

and process

designs

Other

sources

of demand

Authorized

master production

schedule




Plan Inpu ts

Inventory

transactions

Inventory

records

Bills of

materials

Engineering

and process

designs

Other

sources

of demand

Authorized

master production

schedule




Plan Exp los ion

Inventory

transactions

Inventory

records

Bills of

materials

Engineering

and process

designs

MRP

explosion

Other

sources

of demand

Authorized

master production

schedule




Plan Ou tpu t

Inventory

transactions

Inventory

records

Bills of

materials

Engineering

and process

designs

Material

requirements

plan

MRP

explosion

Other

sources

of demand

Authorized

master production

schedule



Bill of Materials (BOM)

• Indicates all the raw materials, components,subassemblies, and assemblies required toproduce an item

• A structured list of all components, parts, andmaterials of an item

• Shows way a finished product or parent item is put together from individual components



B il l o f Materials

Figure 15.5

Seat cushion

Seat-frame

boards

Front

legs ALadder-back

chair

Back

legs

Leg supports

Back slats



B il l o f Materials

Figure 15.5

Back slats Seat cushion

Seat-frame

boards

Leg supports

FrontlegsBacklegs A

Ladder-back

chairJ (4)

Seat-frame

boards

C (1)

Seat

subassembly

D (2)

Front

legs

B (1)

Ladder-back

subassembly

E (4)

Leg

supports

A

Ladder-back

chair

I (1)

Seat

cushion

H (1)

Seat

frame

G (4)

Back

slats

F (2)

Back

legs



Master Production Schedule

• Based on actual customer orders and

predicted demand

• Indicates when each ordered item willbe produced

• Time-phased plan specifying how many

and when the firm plans to build eachend item



Master Product ion Schedule

200

Ladder-back chair

Kitchen chair

Desk chair

1 2

April May

670

3 4 5 6 7 8

200

150

120

200

150

200

120

Aggregateproduction planfor chair family

670

Figure 15.6



Inventory Record• Detailed information regarding the

quantity of each item, on hand, on order

committed to use in various time

periods• MRP system using inventory master file

to determine the quantity available for

use in a given period• If sufficient items are not available, the

system includes the item on the planned

order release report



Inventory Reco rd Figure 15.11

Item: CDescription: Seat subassembly

Lot Size: 230 unitsLead Time: 2 weeks

Grossrequirements 150

1

230

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00



Inventory Reco rdItem: CDescription: Seat subassembly



1

230

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

Explanation:

Gross requirements are the total demand for

the two chairs. Projected on-hand inventory

in week 1 is 37 + 230 – 150



Inventory Reco rdItem: CDescription: Seat subassembly



1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

Explanation:

Gross requirements are the total demand for

the two chairs. Projected on-hand inventory

in week 1 is 37 + 230 – 150 = 117 units.




Inventory Reco rd




1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00




Inventory Reco rd




1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

Projected on-hand

inventory balance

at end of week t

Inventory on

hand at end of

week t - 1

Gross

requirements

in week t

Scheduled

or planned

receipts in

week t

= + –




Inventory Reco rd




1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 – 3 – 3 –153 –273 –273

Projected on-hand

inventory balance

at end of week t

Inventory on

hand at end of

week t - 1

Gross

requirements

in week t

Scheduled

or planned

receipts in

week t

= + –







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 –3 – 3 –153 – 273 – 273

Planned Orders

Explanation:Without a new order in week 4,

there will be a shortage of three

units: 117 + 0 + 0 – 120 = – 3

units.







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117

Planned Orders







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 227

230

Planned Orders

Explanation:Adding the planned receipt

brings the balance to

117 + 0 + 230 – 120 = 227 units.







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 227

230

230

Planned Orders

Explanation:Offsetting for a two-week lead time

puts the corresponding planned

order release back to week 2.







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 227

230

230

227 77 –43

Planned Orders

Explanation:The first planned order lasts

until week 7, when projected

inventory would drop to – 43.







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 227

230

230

227 77

230

Planned Orders

Explanation:Adding the second planned

receipt brings the balance to

77 + 0 + 230 – 120 = 187.







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 227

230

230

227 77

230

Planned Orders

Explanation:Adding the second planned

receipt brings the balance to

77 + 0 + 230 – 120 = 187.

187







1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 227

230

230

227 77

230

187

230

Planned Orders

Explanation:The corresponding planned

order release is for week 5.




Planned Orders



Gross

requirements 150

1

230

117

0

2

0

0

3

0

120

4

0

5

0

150

6

0

120

7

0

8

0Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

00

117 117 227

230

230

227 77

230

187

230

187

Additional MRP Scheduling




Additional MRP Scheduling

Terminology

• Gross Requirements-total requirementsfor a component or end product

•

Scheduled receipts-when a purchase orproduct order that has already been

placed will be available

• Planned order release-how many andwhen to produce to meet gross

requirements




Lot Sizing in MRP Programs

• Lot-for-lot (L4L) (producing as much asrequired)

• Fixed order quantity (ordering same

quantity each time an order is issued)

• Periodic order quantity (allows a different

order quantity for each order issued, but

tends to issue the order at predeterminedtime intervals such as every two weeks)

• Economic order quantity (EOQ)




Lo t-Sizing Rule Comparison

The FOQ ru le generates h igh average

invento ry because i t creates remnants.

The POQ rule reduces

average on -hand inventory

because it does a better

job o f match ing order

quant i ty to requ irements.

The L4L rule min im izes

inventory investment

bu t maxim izes the number of orders placed.




MRP Outpu ts

Figure 15.16

MRPexplosion




MRP Outpu ts

Material requirements plan

Action notices Releasing new orders

Adjusting due dates

Priority reports Dispatch lists

Supplier schedules

Capacity reports Capacity requirements planning

Finite capacity scheduling

Input-output control

MRPexplosion




MRP Outpu ts



Adjusting due dates


Supplier schedules




MRPexplosion

Routings

and time

standards




MRP Outpu ts



Adjusting due dates


Supplier schedules




MRPexplosion

Manufacturing resources plan

Performance reports

Routings

and time

standards




MRP Outpu ts



Adjusting due dates


Supplier schedules




MRPexplosion

Manufacturing resources plan

Performance reportsCost and

price data

Routings

and time

standards




MRP Exp losion

Item: Seat subassemblyLot size: 230 units

Lead

time: 2 weeks

Gross

requirements 150

1

230

117

2 3

120

4 5

150

6

120

7 8

Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

37

Week

117 117

0 00 0

0 0 00 00 0

227 227 77 187 187

230230

230230

Figure 15.18




Item: Seat subassembly

Lot size: 230 units

Lead

time: 2 weeks

Gross

requirements150

1 2 3

120

4 5

150

6

120

7 8

Planned

receipts

Planned

order

releases

Week

0 00 0

230

230

230

230

MRP Exp losion





Lot size: 230 units

Lead

time: 2 weeks

Gross

requirements150

1 2 3

120

4 5

150

6

120

7 8

Planned

receipts

Planned

order

releases

Week

0 00 0

230

230

230

230

MRP Exp losion

Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross

requirements

1

0

2 3 4 5 6 7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

40

Week

0 0 0300 00 0

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross

requirements

1

0

2 3 4 5 6 7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

0

Week

0 0 00 00 0





Lot size: 230 units

Lead

time: 2 weeks

Gross

requirements150

1 2 3

120

4 5

150

6

120

7 8

Planned

receipts

Planned

order

releases

Week

0 00 0

230

230

230

230

Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross

requirements0

1

0

2 3 4 5 6 7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

40

Week

230

0 0 0300 00 0

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross

requirements0

1

0

2 3 4 5 6 7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

0

Week

230

0 0 00 00 0

Usage quantity: 1 Usage quantity: 1

MRP Exp losion





Lot size: 230 units

Lead

time: 2 weeks

Gross

requirements150

1 2 3

120

4 5

150

6

120

7 8

Planned

receipts

Planned

order

releases

Week

0 00 0

230

230

230

230

Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross

requirements0

1

0

2 3

0

4 5 6 7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

40

Week

230 2300

0 0 0300 00 0

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross

requirements0

1

0

2 3

0

4 5 6 7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

0

Week

230 2300

0 0 00 00 0

Usage quantity: 1 Usage quantity: 1

MRP Exp losion





Lot size: 230 units

Lead

time: 2 weeks

Gross

requirements150

1 2 3

120

4 5

150

6

120

7 8

Planned

receipts

Planned

order

releases

Week

0 00 0

230

230

230

230

Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross

requirements0

1

0

40

2 3

0

4 5

0

6

0

7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

40

Week

110 110

230 2300 0

0 0 0300 00 0

110 180 180 180 180

300

300

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross

requirements0

1

0

0

2 3

0

4 5

0

6

0

7 8

Scheduledreceipts

Projected

on-hand

inventory

Planned

receipts

Planned

order

releases

0

Week

0 0

230 2300 0

0 0 00 00 0

0 0 0 0 0

230

230

230

230

MRP Exp losion




Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross

requirements

1 2 3 4 5 6 7 8

Planned

receipts

Planned

order

releases

Week

300

300

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross

requirements

1 2 3 4 5 6 7 8

Planned

receipts

Planned

order

releases

Week

230

230

230

230

0 0 0 0230 2300 00 0 0 0230 2300 0

Gross

requirements

1

0

2 3 4 5 6 7 8

Scheduled

receipts

Planned

receipts

Planned

order

releases

200

Week

0 0 00 00 0

Projected

on-hand

inventory

Item: Seat-frame boards

Lot size: 1500 units

Lead

time: 1 week

MRP Exp losion




Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross

requirements

1 2 3 4 5 6 7 8

Planned

receipts

Planned

order

releases

Week

300

300

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross

requirements

1 2 3 4 5 6 7 8

Planned

receipts

Planned

order

releases

Week

230

230

230

230

0 0 0 0230 2300 00 0 0 0230 2300 0

Gross

requirements0

1

0

2 3

1200

4 5

0

6

0

7 8

Scheduled

receipts

Planned

receipts

Planned

order

releases

200

Week

0 00 0

0 0 00 00 0

Projected

on-hand

inventory



Lead

time: 1 week

Usage quantity: 4

MRP Exp losion




Item: Seat frames

Lot size: 300 units

Lead

time: 1 week

Gross

requirements

1 2 3 4 5 6 7 8

Planned

receipts

Planned

order

releases

Week

300

300

Item: Seat cushion

Lot size: L4L

Lead

time: 1 week

Gross

requirements

1 2 3 4 5 6 7 8

Planned

receipts

Planned

order

releases

Week

230

230

230

230

0 0 0 0230 2300 00 0 0 0230 2300 0

Gross

requirements0

1

0

200

2 3

1200

4 5

0

6

0

7 8

Scheduled

receipts

Planned

receipts

Planned

order

releases

200

Week

200 200

0 00 0

0 0 00 00 0

500 500 500 500 500

1500

1500

Projected

on-hand

inventory



Lead

time: 1 week

MRP Exp losion




Solved Prob lem 1

Figure 15.21

LT = 2 LT = 3

LT = 3

A

B (3) C (1)

LT = 1

G (1)

LT = 3 LT = 6

LT = 3

LT = 1

D (1)D (1) E (2) F (1)




Solved Prob lem 2

Figure 15.22

A

B (1) C (2)

D (1)

LT = 2

LT = 1 LT = 2

LT = 3

I nventory Record Data

ITEM

DATA CATEGORY B C D

Lot-sizing rule POQ (P =3) L4L FOQ = 500 units

Lead time 1 week 2 weeks 3 weeksScheduled receipts None 200 (week 1) None

Beginning (on-hand) 20 0 425

inventory

Table 12.1




Solved Prob lem 2

Item: B Lot size: POQ (P = 3)Description: Lead time: 1 week

Gross

requirements 100

1

20

2 3 4 5 6 7 8

Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

20

Week

200 200

200

0 0 240 60 0

280

9 10

120 180 60

0 0

360

280 360




Solved Prob lem 2

Item: C Lot size: L4LDescription: Lead time: 2 weeks

Gross

requirements 200

1

200

2 3 4 5 6 7 8

Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

0

Week

0 0

400

200

0 0 0 0 0

400

9 10

240 360 120

0 0

240 360 120

400 240 360 120



Solved Prob lem 2

Item: D Lot size: FOQ = 500 unitsDescription: Lead time: 3 weeks

Gross

requirements 400

1

425

2 3 4 5 6 7 8

Scheduled

receipts

Projected

on-hand

inventory

Planned

receipts

Planned order

releases

425

Week

25 25

240

285 425 305

500

9 10

360 120

500

360305 305 305

500 500

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