Chapter 18. Materials Requirements PlanningOutline:Material Requirements Planning (MRP)Master Production Schedule (MPS)Bill of Materials (BOM)Time FencesMRP Logic and Product Structure TreesMRP ExamplesMRP and Lot SizingMRP & Capacity Requirements Planning (CRP)

Materials requirements planning (MRP) is a means for determining the number of parts, components, and materials needed to produce a product (end item)

Dependent vs. independent demandMRP provides time scheduling information

specifying when each of the subassemblies, parts, and components should be ordered or produced What, when, how many?

Dependent demand drives MRPMRP is an information system

Materials Requirements Planning

Materials Requirements Planning

Critical input and data requirements: Master Production Schedule (MPS) Bill of Materials (BOM) Inventory database

Many outputs – primary ones are: Planned orders to be released at a future time. 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 suspension of orders on the master production schedule.

Inventory status data. Planned order releases

Master Production Schedule (MPS) MPSMPS: One of three primary

inputs in MRP Time-phased plan

specifying how many and when the firm plans to build each end item

Developed by disaggregating the “aggregate plan”

Aggregate Plan(Product Groups)

Aggregate Plan(Product Groups)

MPS(Specific End Items)

Week

Bill of Materials (BOM)

BOM: a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product.

Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels.

A simple question: For 100 “M”s how many…

BOM - tree format and low level coding

Low-level coding requires that when an identical item occur on multiple levels, then it should be “lowered” to its lowest level for computational reasons. The software will complete all level 0 items first, then all level 1 items, etc.

In the original diagram (a) since N appears on levels 1 & 2

In the final diagram (b) (after re-classification) it is lowered to level 2.Also, note that S under P was on level 3, which needed to be lowered to level 4

Frozen No schedule changes allowed within this

window Moderately Firm

Specific changes allowed within product groups as long as parts are available

Flexible Significant variation allowed as long as overall

capacity requirements remain at the same levels

Time Fences

MRP – The System

MRP Example

Solved problem 1. MPS: 100 units of X for week 10 Lead times are on the Excel sheet (given

in the book) Excel time!

A (1 ) B (2 )

Y (2 )

A (2 ) C (4 )

Z (3 )

X

Lot Sizing in MRP ProgramsThe default order size is Lot-for-lot (L4L)However, for purchased items or for technical

reasons, there may be minimum or maximum order sizes

Purchased items/subassemblies may require multiples of predetermined amounts (e.g., multiples of 50)

An example: Problem 55. Excel time.Common lot-sizing methods are:Economic order quantity (EOQ)Least total cost (LTC)Least unit cost (LUC)Which one to use?

The one that is least costly!

MRP, Capacity Requirements Planning, and MRP II Consider the expanded logic flow of MRP II.

When utilized cleverly: It can be used to lower levels of in-process

inventories (Lot-sizing?) Ability to track material requirements Ability to evaluate capacity requirements The basic functions of the capacity

requirements planning (CRP) system are: To calculate the capacity needs based on

the planned orders from MRP schedules To compare the capacity required to the

capacity available Routing charts show the specific departments

that each part goes through as well as setup and process times in those departments

Means of allocating production time Ability to Simulate the manufacturing system

Forecast

AggregatePlan

Rough-cutcapacity plan

OK ?

MPS

MRP

CRP

OK ?

Release orders

adjust

Capacity Requirements Planning (CRP)

A small scale CRP example. MPS for item A is:

30, 24, 37 units for weeks 7, 8, and 10

Lead times for A, …, D are: 1, 2, 3, and 1 week, respectively.

Routing chart for item A is: Dept 4 (only) Setup time is 2.0 hours Processing time is 0.25 hours/unit.

The complete routing chart is available on the Excel file.

Group exercise: Complete the MRP schedules and compute work center load profiles

Excel time!

A

B(2)

C(2)

C(4)

D(5)