material requirement planning presentation
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TRANSCRIPT
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Material Requirement Planning (MRP)
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Contributors to MRP• Joseph Orlicky
• George Plossl
• Oliver Wight
• American Production and Inventory Control Society
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What is MRP?• Computerized Inventory Control
• Production Planning System
• Management Information System
• Manufacturing Control System
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When to use MRP• Job Shop Production
• Complex Products
• Assemble-to-Order Environments
• Discrete and Dependent Demand Items
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What can MRP do?
• Reduce Inventory Levels• Reduce Component
Shortages• Improve Shipping
Performance• Improve Customer
Service• Improve Productivity• Simplified and Accurate
Scheduling
• Reduce Purchasing Cost• Improve Production
Schedules• Reduce Manufacturing
Cost• Reduce Lead Times• Less Scrap and Rework• Higher Production
Quality
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What can MRP do?• Improve
Communication• Improve Plant
Efficiency• Reduce Freight Cost• Reduction in Excess
Inventory
• Reduce Overtime• Improve Supply
Schedules• Improve Calculation of
Material Requirements• Improve Competitive
Position
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Three Basic Steps of MRP
• Identifying Requirements
• Running MRP – Creating the Suggestions
• Firming the Suggestions
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Step 1: Identifying the Requirements
• Quantity on Hand
• Quantity on Open Purchase Order
• Quantity in/or Planned for Manufacturing
• Quantity Committed to Existing Orders
• Quantity Forecasted
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Step 1: Important InformationMRP is…..
• Company Sensitive
• Location Sensitive
• Date Sensitive
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Step 2: Running MRP – Creating the Suggestions
• Critical Items
• Expedite Items
• Delay Items
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Step 3: Firming the Suggestions
• Manufacturing Orders
• Purchasing Orders
• Various Reports
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Overview of the MRP System
Product Structure
File
Master Production Schedule
Inventory Master File
Material Requirements
Planning
Manufacturing Orders
Purchase Orders
Various Reports
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MRP Inputs• Product Structure File
• Master Production Schedule
• Inventory Master File
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Product Structure File
• Bill of Materials
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Master Production Schedule
• Schedule of Finished Products
• Represents Production, not Demand
• Combination of Customer Orders and Demand Forecasts
• What Needs to be Produced
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Inventory Master File• On-Hand Quantities
• On-Order Quantities
• Lot Sizes
• Safety Stock
• Lead Time
• Past-Usage Figures
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MRP Process• Schedules the Production of all items using
an MRP Matrix
Item: Low-Level Code:
Lot Size: Lead Time: PD 1 2 3 4 5Gross Requirements
Scheduled Receipts
Projected on Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
MRP Matrix
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Terms Defined
• Item – name or number for the item being scheduled
• Low-Level Code – the lowest level of the item on the product structure file
• Lot Size – order multiples of quantity• Lead Time – the time from when an order is
placed to when it is received• PD – Past Due Time Bucket, orders behind
schedule
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Terms Defined
• Gross Requirements – demand for an item by time period
• Scheduled Receipts – material already ordered• Projected on Hand – expected ending inventory• Net Requirements – number of items to be
provided and when• Planned Order Receipts – net requirements
adjusted for lot size• Planned Order Releases – planned order receipts
offset for lead times
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Example of the MRP ProcessItem: A Low-Level Code: 1
Lot Size: 25 Lead Time: 1PD 1 2 3 4 5
Gross Requirements 10 15 25 25 30
Scheduled Receipts 25
Projected on Hand 20
Net Requirements
Planned Order Receipts
Planned Order Releases
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Example of the MRP ProcessItem: A Low-Level Code: 1
Lot Size: 25 min Lead Time: 1PD 1 2 3 4 5
Gross Requirements 10 15 25 25 30
Scheduled Receipts 25
Projected on Hand 20 10 20 20 20 15
Net Requirements 5 5 10
Planned Order Receipts 25 25 25
Planned Order Releases 25 25 25 30 25
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MRP Outputs• Manufacturing Orders
• Purchasing Orders
• Various Reports
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Hubbell Lighting Case
• Manufactures Industrial Lighting Products
• Good-Quality Products
• Poor at Meeting Due Dates
• Work is Specialized for Each Customer
• Job Shop Environment
• Complex Products
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Hubbell Lighting Case
Before MRP Implementation
• Less than 75% of orders completed on time
After MRP Implementation
• 97% of orders completed on time
• 2% of orders completed with 1 to 2 days after due date
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Summary of MRPMRP is a…..• Computerized Inventory Control• Production Planning Systemthat…..• Schedules Component Items as Neededwhich will…..• Track Inventory and…..• Help you in many other aspects of business
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ReferencesRussell, Roberta S., and Bernard W. Taylor III. Operations Management. 3rd
Edition: Prentice Hall, 2000
Grubbstrom, Robert W. Material Requirements Planning and Manufacturing Resource Planning. 03/12/2002. http://www.itbp.com/opsmanagement/iebm/material_requirements.htm.
Vormittag Associates, Inc. System 2000 MRP. 03/12/2002. http://www.vaihome.com/s2000mrp.htm.
Inventory Solutions. What is MRP?. 03/12/2002. http://www.inventorysolutions.org/def_mrp.htm.