7/24/2019 mrpjit

1/72

1

Chapter 13

MRP and ERP

7/24/2019 mrpjit

2/72

2

Material requirements planning (MRP):Computer-based information system (i.e. glorified database)for ordering and scheduling of dependentdemandinentories

!t is a production planning process that starts from thedemand for finished products and plans the production

step by step of subassemblies and parts.

MRP

7/24/2019 mrpjit

3/72

3

!ndependent and "ependent "emand

Independent Demand

A

B(4) C(2)

D(2) E(1) D(3) F(2)

Dependent Demand

Independent demand is uncertain.De endent demand is certain.

Independent demand# "emand for final products.Dependent demand:"emand fort items that are subassemblies or

component parts to be used in production of finished goods.

7/24/2019 mrpjit

4/72

4

$he boo% claims that &the independent demand is continuous 'hile thedependent demand is lumpy. ! do notbeliee in this statement.

!s "ependant "emand lumpier

Time Time

Time Time

Indep.

De

mand

Dep.

Demand

Stable demandLumpy demand

Amountonha

nd

Amountonha

nd

Safety stock

7/24/2019 mrpjit

5/72

5

$he dependent demand is not necessarily anylumpier than the independent demand

* E+ample# ,ay shoe demand rate is pairs per 'ee% at aretailer. $he demand rate for shoe sole is for left and for the right pair. $he demand rate for shoe laces is 1/per 'ee%.

* E+ample continued# 0hat is the demand rate for the shoelace supplier ,till 1/ per 'ee%. ut if the orders for the

laces are placed once a 'ee%2 lace demand is lumpy.

Order once in a week Order twice Order 4 times

Lumpy dependent

demand

Smooth dependent

demand

7/24/2019 mrpjit

6/72

6

MR Inputs MR rocessin! MR "utputs

Master

schedule

#ill of

materials

In$entory

records

MR computer

pro!rams

%han!es

"rder releases

lanned&order

schedules

'(ception reports

lannin! reports

erformance&

control

reports

In$entory

transaction

rimary

reports

Secondary

reports

7/24/2019 mrpjit

7/727

* Master Production ,chedule# MP, $ime-phased plan specifying timing and 4uantity of production for

each end item.

MP, comes from sales and mar%eting

MP, coers about 1-3 months into the future* Must coer cumulatie lead time

Cumulative lead time# $he sum of the lead times thatse4uential phases of a process re4uire2 from ordering of

parts or ra' materials to completion of final assembly. 5rom 6o' until Cumulatie lead time plans are generallyfro7en

* ,ometimes MP, is capacity filtered8 MP, is curtailed afterta%ing the aailable capacity into account.

MRP !nputs# 1. MP,

7/24/2019 mrpjit

8/728

MRP inputs# 9. :M

Bill of materials (BOM)#; listing of all of thera' materials2 parts2 subassemblies2 andassemblies needed to produce one unit of aproduct.

Product structure tree#

7/24/2019 mrpjit

9/729

Product ,tructure $ree

%hair

Seat

Le!s )*+%ross

#ar),+

Side

Rails ),+

%ross

bar

#ack

Supports )-+

Le!Assembly

#ackAssembly

Le$el

/

,

7/24/2019 mrpjit

10/7210

E+plosion E+ample

* =o' many leg assemblies are needed for 1chair

* =o' many Cross bars are needed for > chairs

* Computing ho' many parts are re4uired per afinal product is called :M e+plosion.

* MRP ans'ers these 4uestions by ta%ingproduction lead times into account# 6ot only it

tells ho' many2 but also 'hen.

7/24/2019 mrpjit

11/7211

How many more of each component is needed to make 15 Xs ifthere are 5 of each already in stock?

0

1),+'),+'D)-+

%#),+

ill of Materials E+ample 1

')*

+02/3 #2/43 %243 D2*3 '2 /53 124

7/24/2019 mrpjit

12/7212

How many more of each component is needed to make 15 Xs ifthere are 8 of each already in stock?

0

1),+'),+'D)-+

%#),+

ill of Materials E+ample 9

')*

+0263 #273 %23 D2/3 '2 -53 12

7/24/2019 mrpjit

13/7213

Lead Times

/ , - * 4 7 6 5 8 /

rocurement

1abrication

Subassembly

Assembly

7/24/2019 mrpjit

14/7214

;ssembly $ime Chart

/ , - * 4 7 6 5 8 / //

rocurement of

ra9 material D

rocurement of

ra9 material 1rocurement of

part %

rocurement of

part :

rocurement ofra9 material I

1abricationof part ;

1abrication

of part '

Subassembly A

Subassembly #

1inal assembly

and inspection

ays

7/24/2019 mrpjit

15/7215

MRP input# 3. !nentory leels

* eginning inentory on hand

* ,cheduled receipts

Pipeline inentory not receied yet but it is in theprocess of coming to the inentory. 0e %no''hen this 'ill be aailable for use.

7/24/2019 mrpjit

16/7216

MPR Processing

* ?ross re4uirements

$otal e+pected demand

* ,cheduled receipts

:pen orders scheduled to arrie

* Planned on hand E+pected inentory on hand at the beginning of each time period

* 6et re4uirements

;ctual amount needed in each time period

* Planned-order receipts @uantity e+pected to receied at the beginning of the period

:ffset by lead time

* Planned-order releases

Planned amount to order in each time period

7/24/2019 mrpjit

17/7217

MRP Processing

* ?ross re4uirements# (5orecasted)"emand period by period

* 6et re4uirements(t)

A?ross re4uirements(t)-ProBected inentory(t-1)

-,cheduled receipt(t)

* !f 6et re4uirement(t)

set Planned order receipts(t)A6et re4uirement(t)

* Planned-order receipts is the production planned

* ProBected inentory(t)

AProBected inentory(t-1)D,cheduled receipt(t)

DPlanned order receipts(t)-?ross re4uirements(t)

* Planned order release(t-$)APlanned-order receipts(t)

7/24/2019 mrpjit

18/7218

MRP e+ample 'ith $A9 and 1 leel

Periods 1 9 3

?ross re4uirements / 11 F

,cheduled receipts 9 3 ProBected on hand 1 /

6et re4uirements 9 F

Planned order receipts 9 F

Planned order releases 9 F

!nputs

Outputs

7/24/2019 mrpjit

19/72

19

5igure 13-

7/24/2019 mrpjit

20/72

20

:ther Considerations

* ,afety ,toc% 6ot much for items 'ith dependent demand

* ot si7ing

ot-for-lot ordering

Economic order 4uantity

5i+ed-period ordering

Part-period model

7/24/2019 mrpjit

21/72

21

MRP e+ample 'ith ot si7eA>2 $A9 and 1 leel

Periods 1 9 3

?ross re4uirements / 11 G

,cheduled receipts 9 3 ProBected on hand 1 / 3 H

6et re4uirements > 1

Planned order receipts > 1

Planned order releases > 1

!nputs

Outputs

7/24/2019 mrpjit

22/72

22

5igure 13-G

7/24/2019 mrpjit

23/72

23

MRP updates

* Regeneratie MRP

"o the planning from scratch

$ime bet'een regenerations is long

:% for stable enironments

* 6et Change MRP

Ipdate the plan according to changes

7/24/2019 mrpjit

24/72

24

MRP :utputs

* Planned orders - schedule indicating the amount and timingof future orders.

* :rder releases - ;uthori7ation for the e+ecution of plannedorders.

* Changes - reisions of due dates or order 4uantities2 orcancellations of orders.

* Performance-control reports

* Planning reports* E+ception reports

7/24/2019 mrpjit

25/72

25

Capacity Planning

Capacity requirements planning# $he processof determining short-range capacity re4uirements.

oad reports# "epartment or 'or% center reportsthat compare %no'n and e+pected future capacityre4uirements 'ith proBected capacity aailability.

!ime fences#,eries of time interals during 'hichorder changes are allo'ed or restricted.

7/24/2019 mrpjit

26/72

26

MRP Planning

De$elop a tentati$e

master production

schedule

De$elop a tentati$emaster production

schedule

7/24/2019 mrpjit

27/72

27

* 5ood catering serice

End items are the catered food

"ependent demands are ingredients foreach recipe2 i.e. bill of materials

* $aco ell menu items

* =otel renoation

;ctiities and materials &e+ploded intocomponent parts

MRP in ,erices

7/24/2019 mrpjit

28/72

28

enefits of MRP

* o' leels of in-process inentories

* ;bility to trac% material re4uirements

* ;bility to ealuate capacity re4uirements

* Means of allocating production time

Eentually it is a database 'ith limited decisionma%ing capability

7/24/2019 mrpjit

29/72

29

Re4uirements of MRP

* Computer and necessary soft'are

* ;ccurate and up-to-date inputs#

Master schedules

ills of materials

!nentory records

* !ntegrity of data

7/24/2019 mrpjit

30/72

30

* E+panded MRP 'ith and emphasisplaced on integration

5inancial planning Mar%eting

Engineering

Purchasing

Manufacturing

MRP !!

7/24/2019 mrpjit

31/72

31

Market

Demand

roductionplan

roblems>

Rou!h&cut

capacity plannin!

?es @o ?es@o

1inance

Marketin!

Manufacturin!

Adustproduction plan

Master

production schedule

MR

%apacity

plannin!

roblems>Re=uirements

schedules

Ad

ustmasterschedule

MRP !!

7/24/2019 mrpjit

32/72

32

* "nterprise resource planning ("RP):;n e(pandedeffort to integrate standardi7ed record

%eeping that 'ill permit information sharing throughout

the organi7ation* ,trategic considerations

=igh initial cost

=igh cost to maintain

5uture upgrades $raining

* ,ee ERP courses in the course catalog

ERP

7/24/2019 mrpjit

33/72

33

,ummary

* MRP# "ependent s !ndependent demand

!nputs (:M)2

Processing2 :utputs

enefits and re4uirements

* Capacity planning

* MRP-!! and ERP

7/24/2019 mrpjit

34/72

34

Practice @uestions

1. $he master production schedule states 'hich end itemsare to be produced both 'hen and ho' many.

;ns'er# $rue Page# >FF

9.oad reports sho' capacity re4uirements for departmentsor 'or% centers 'hich may be more or less than thecapacity aailable in that 'or% center.

;ns'er# $rue Page# >G3

3.MRP !! permits the simultaneous planning of production2

mar%eting2 and financial resources to support a productionplan.

;ns'er# $rue Page# >G9

7/24/2019 mrpjit

35/72

35

Practice @uestions

* 1. $he output of MRP is#* ;) gross re4uirements

* ) net re4uirements

* C) a schedule of re4uirements for all partsand end items

* ") inentory reorder points

* E) economic order 4uantities and reorder

points* ;ns'er# C Page# >FF

7/24/2019 mrpjit

36/72

36

Practice @uestions

9. $he MRP input listing the assemblies2subassemblies2 parts2 and ra' materials neededto produce one unit of finished product is the#

* ;) master production schedule* ) bill-of-materials

* C) inentory-records

* ") assembly-time chart

* E) net-re4uirements chart

* ;ns'er# Page# >F

7/24/2019 mrpjit

37/72

37

Practice @uestions

* 3. 0hich one of the follo'ing most closely describesnet material re4uirements

* ;) gross re4uirements - amount on-hand -scheduled receipts

* ) gross re4uirements - planned receipts* C) gross re4uirements - order releases D

amount on-hand

* ") gross re4uirements - planned order releases

* E) gross re4uirements - amount on-hand Dplanned order releases

* ;ns'er# ; Page# >1

7/24/2019 mrpjit

38/72

38

Practice @uestions

H.!n MRP2 Jscheduled receiptsJ are#

* ;) identical to Jplanned-order receiptsJ

* ) identical to Jplanned-order releasesJ* C) open orders (that is2 ordered before the

first time buc%et2 but not deliered yet)

* ") Jnet re4uirementsJ

* E) aailable to promise inentory

* ;ns'er# C Page# >9

7/24/2019 mrpjit

39/72

39

Practice @uestions

>. 0hich is true of a net-change system

;) !t is a batch-type system 'hich is updatedperiodically.

) !t is usually run at the beginning of each month.C) $he basic production plan is modified to reflect

changes as they occur.

") !t is used to authori7e the e+ecution of planned

orders.E) !t indicates the amount and timing of future changes.

* ;ns'er# C Page# >

7/24/2019 mrpjit

40/72

40

Chapter 1H

Kust-!n-$ime,ystems

7/24/2019 mrpjit

41/72

41

K!$Lean Production

* #ust$in$time# Repetitie production system in'hich processing and moement of materialsand goods occur Bust as they are needed2

usually in small batches

* K!$ is characteristic of lean productionsystems

* K!$ operates 'ith ery little &fat

7/24/2019 mrpjit

42/72

42

K!$ ?oals

* Eliminate disruptions

* Ma%e system fle+ible by reduce

setup and lead times* Eliminate 'aste2 especially e+cess

inentory

7/24/2019 mrpjit

43/72

43

,ources of 0aste

* :erproduction

* 0aiting time

* Innecessary transportation* Processing 'aste

* !nefficient 'or% methods

* Product defects

7/24/2019 mrpjit

44/72

44

* ig K!$ broad focus

7/24/2019 mrpjit

45/72

45

K!$ uilding loc%s

* 1. Product design

* 9. Process design

* 3. PersonnelLorgani7ational

elements* H. Manufacturing

planning and control

7/24/2019 mrpjit

46/72

46

1. Product "esign

* ,tandard parts

* Modular design

* =ighly capable production systems

7/24/2019 mrpjit

47/72

47

9. Process "esign

* ,mall lot si7es

* ,etup time reduction

* Manufacturing cells

* imited 'or% in process

* @uality improement

* Production fle+ibility* ittle inentory storage

7/24/2019 mrpjit

48/72

48

enefits of ,mall ot ,i7es

Reduces in$entory

Less stora!e space

Less re9ork

roblems are more apparent

Increases product fle(ibility

'asier to balance operations

7/24/2019 mrpjit

49/72

49

Production 5le+ibility

* Reduce do'ntime by reducingchangeoer time

* Ise preentie maintenance to

reduce brea%do'ns

* Cross-train 'or%ers to help clearbottlenec%s

* Resere capacity for importantcustomers

7/24/2019 mrpjit

50/72

50

3. PersonnelL:rgani7ational Elements

* 0or%ers as assets

* Cross-trained 'or%ers

* Continuousimproement

* Cost accounting

* eadershipLproBectmanagement

7/24/2019 mrpjit

51/72

51

H. Manufacturing Planning and Control

* eel loading

* Pull systems

*

7/24/2019 mrpjit

52/72

52

PullLPush ,ystems

* Pull system# ,ystem for moing 'or%'here a 'or%station pulls output fromthe preceding station as needed. (e.g.

anban)

* Pus% system# ,ystem for moing 'or%'here output is pushed to the ne+tstation as it is completed

7/24/2019 mrpjit

53/72

53

anban Production Control ,ystem

* &an'an#Card or other deice that communicates demand for'or% or materials from the preceding station

* anban is the Kapanese 'ord meaning &signal or &isiblerecord

* Paperless production control system

* ;uthority to pull2 or produce comesfrom a do'nstream process.

7/24/2019 mrpjit

54/72

54

$raditional ,upplier 6et'or%

BuyerBuyer

SupplierSupplierSupplierSupplier SupplierSupplier SuppilerSuppiler

SupplierSupplier

SupplierSupplier

SupplierSupplier

7/24/2019 mrpjit

55/72

55

$iered ,upplier 6et'or%

SupplierSupplier

SupplierSupplier

SupplierSupplier

SupplierSupplierSupplierSupplier SupplierSupplier

BuyerBuyer

SupplierSupplierFirst Tier Supplier

Second Tier Supplier

Third Tier Supplier

7/24/2019 mrpjit

56/72

56

,ummary K!$ ?oals and uilding loc%s

roduct

Desi!n

rocess

Desi!n

ersonnel

'lements

Manufactur&

in! lannin!

'liminate disruptionsMake the system fle(ible

Reduce setup

and lead times

'liminate 9aste

MinimiBe in$entories

A

balanced

rapid flo9

7/24/2019 mrpjit

57/72

57

Conerting to a K!$ ,ystem

* ?et top management commitment

* "ecide 'hich parts need most effort

* :btain support of 'or%ers

* ,tart by trying to reduce setup times

* ?radually conert operations

* Conert suppliers to K!$

* Prepare for obstacles

: C

7/24/2019 mrpjit

58/72

58

:bstacles to Conersion

* Management may not be committed

* 0or%ersLmanagement may not becooperatie

* ,uppliers mayresist

K!$ i , i

7/24/2019 mrpjit

59/72

59

K!$ in ,erice

The basic !oal of the demand flo9 technolo!y in the ser$ice or!aniBation is topro$ide optimum response to the customer 9ith the hi!hest =uality ser$ice

and lo9est possible cost. Eliminate disruptions

Ma%e system fle+ible

Reduce setup and lead times

Eliminate 'aste

Minimi7e 0!P ,implify the process

K!$ P h i

7/24/2019 mrpjit

60/72

60

* 6e' challenges

Meeting manufacturing re4uirements

Changing from traditional thin%ing and practices

fre4uent on-time deliery of small 4uantities ong term relationships 'ith suppliers as

partners

* =o' about E+change purchasing# ;uctions

K!$ Purchasing

K!$ !!

7/24/2019 mrpjit

61/72

61

* K!$ !!# the practice of allo'ing endorsto manage some aspects of buying theirproducts or serices for the buyer

K!$ !!

fit f K!$ , t

7/24/2019 mrpjit

62/72

62

enefits of K!$ ,ystems

* Reduced inentory leels* =igh 4uality

* 5le+ibility

* Reduced lead times

* !ncreased productiity

fit f K!$ , t ( tNd)

7/24/2019 mrpjit

63/72

63

enefits of K!$ ,ystems (contNd)

* !ncreased e4uipment utili7ation

* Reduced scrap and re'or%

* Reduced space re4uirements

* Pressure for good endor relationships

* Reduced need for indirect labor

El t f K!$

7/24/2019 mrpjit

64/72

64

* ,mooth flo' of 'or% (the ultimate goal)* Elimination of 'aste

* Continuous improement

* Eliminating anything that does not addalue

* ,imple systems that are easy to manage

* Ise of product layouts to minimi7e moing

materials and parts* @uality at the source

Elements of K!$

El t f K!$ ( tNd)

7/24/2019 mrpjit

65/72

65

* Po%a-yo%e fail safe tools and methods* Preentatie maintenance

* ?ood house%eeping

* ,et-up time reduction

* Cross-trained employees

* ; pull system

Elements of K!$ (contNd)

7/24/2019 mrpjit

66/72

66

Case ,tudy based on a trip on 6o 1G2 9

6IMM!

7/24/2019 mrpjit

67/72

67

=istoryLProducts

* ate FNs oil crisis* ?M closes 5remont2 C; plant firing / in 1G9

* $oyota approaches ?M to set up $oyota production systemat a ?M plant2 Inited ;uto 0or%ers accepts the deal

* ?M and $oyota put together OHM in 1GH. ?M o'ns theinfrastructure2 $oyota is the tenant.

* 6ummi A 6e' Inited Motor Manufacturing2 !nc is born in1GH as the uni4ue e+ample of a $oyota ?M Boint enture

* Products# $oyota Corolla2 $acoma $ruc%s2 Pontiac

7/24/2019 mrpjit

68/72

68

0or%ers

* 6ummi has about H> unioni7ed 'or%ers* 0or%ers are under t'o types#

Production2 high school graduates

Maintenance

* 0or%ers 'or% in teams of H-/

* 0or%ers in a team rotate the tas%s eery 1-3 hours

* $eam leader is responsible for the rotation.

* $eam leader 'ithdra's parts from the inentory (eery 1-9 hours) and proides the tools as necessary

* 0or%ers ma%e O1F per hour

7/24/2019 mrpjit

69/72

69

Capacity

* 6ummi has a cycle time of / seconds for Corolla2 1 body

9 seconds for $acoma2 3 bodies (only cabin isproduced at 6ummi2 the bottom and the bac% are

bought from suppliers)* 6ummi 'or%s in t'o shifts

!# /#-1H#32 !!# 1/#3-1#

Each shift has 1 hour lunchLdinner brea%

,tarting the first shift at /# 'or%ers aoid heaymorning traffic

$'o hours bet'een shifts ! and !! is to allo' foroertime after the first shift 'hen necessary

7/24/2019 mrpjit

70/72

70

0or% 5lo'

* ,tamping# 5orming metal (side2 bac%2 front) panels 'ith presses* ody 0eld# Putting panels together

* Paint# Paint inspection is the current bottlenec%

Primer body paint applied by robots (chemically ha7ardous

tas%) "oor Bambs painted manually

* Plastics# Ma%ing bumpers2 inside panels

* ;ssembly# Putting in tires2 engine2 seats2 bumpers2 harnessing.

Cars 2 truc%s on 9 %m 2 . %m coneyors* Cars contain uilding manifest A :M A !ngredients list at eery

step of these operations

7/24/2019 mrpjit

71/72

71

Kust in time

* ai7en# continuous improement

* anban# replenishment eery 1-9 hours

* Kido%a# ;ssure 1Q 4uality. :ther'ise pull the ;ndonchord 1 times per shift

GQ of line stops are longer than 3 seconds

ine stops longer than an hour once eery month

* Muda# 0aste to be eliminated

* ?enchi ?enbutsu# ?o to the source to learn and to solethe problems

* $his Kapanese terminology is all oer the boards in theplant

7/24/2019 mrpjit

72/72

Creatie $ool L 0or% Place "esign

* "ie change at the stamping in 3 hours* $ilted storage bins for ease of access

* Collapsing storage bo+es 'hen empty

$o reduce the empty bo+ storage re4uirements intruc%s returning to suppliers2 say in !ndiana

$hese bo+es sae about O1M annually

$he 'or%er 'ho suggested the bo+es earned seeral

thousand points. 1 point A O1.* More info '''.nummi.com