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Materials Requirement
Planning
This chapter will describe bills of material
(the major building block of material
requirements planning), detail the MRP
process, and explain how the material
requirements plan is used.
But first, some details about the environment
Nature of Demand
in which
There
MRP operatesare two types of demand:
independent and dependent. Independent
demand is not related to the demand for any
other product.
For example, if a company makes wooden
tables, the demand for the tables is
Independent versus Dependent
Demand
• Independent Demand
– Not related to demand for other assemblies or
products, instead from outside sources
– Generally forecasted demand
• Dependent Demand
– Generally related to production of an end
product (as defined on the MPS)
– Can be calculated instead of forecasted
Dependent Demand Approach –
Materials Requirement Planning
(MRP)
• It establishes a schedule (priority plan)
showing the components required at each
level of the assembly and, based on lead
times, calculates the time when these
components will be needed
• MRP is a priority plan for the components
needed to make the products in the MPS
• MPS items are of independent demand
while that in MRP are of dependent
demand
Objectives of MRP:
Determine requirements
Keep priorities current
Determine requirements:
The main objective of any manufacturing
planning and control system is to have the
right materials in the right quantities available
at the right time to meet the demand for the
firm’s products.
Determine requirements must
determine the following:
• What to order
• How much to order
• When to order
• When to schedule delivery
Keep priorities current:
In this ever-changing world, a material
requirements plan must be able to recognize
priorities to keep plans current.
It must be able to add and delete, expedite,
delay, and change orders.
Linkages with other MPC
functions
• MPS drives the MRP
• MRP is a priority plan for the components needed to
make the products in the MPS
• It is valid only if capacity is available when needed to
make the components
• Process of checking capacity against requirements id
called CRP
• MRP drives PAC and purchasing.
• PAC and purchasing must plan and control the
performance of orders to meet the due dates.
Manufacturing planning and control sy
Inputs to MRP
Inventory records
Bills of material
Major Inputs to MRP
• Master Production Schedules quantities
and times.
• Inventory records of all items to be
planned
– Planning factors such as lead times, order
quantities, and safety stock
– Current status of each item
• Bills of material for MPS items
Master Production
schedule
It is a statement of which
end items are to produced,
the quantity of each, and
the dates they are to be
completed. It drives the
MRP system by providing
Inventory Records
A major input to MRP is inventory. When a
calculation is made to find out how many are
needed, the quantities available must be
considered.
Base Top
200 023
B C
LT:2 LT:1
D E
LT:1 LT:1
Planned Orders
• The next step is to move down to level 1 on the product tree and to
repeat the routine followed in step 1. Since B has a low-level code of
1, all requirements for B are recorded, and it can be netted and
exploded. The bill of material for B shows that it is made from a C
and a D.
Figure 4.18 shows the result of netting and exploding the Bs. Part C
has a low-level code of 2, which tells us there are further requirements
for Cs and at this stage they are not netted..
3. Moving down to level 2 on the product tree, we find that
part C has a low-level code of 2. This tells us that all gross
requirements for Cs are accounted for and that we can
proceed and determine its net requirements. Notice there is
a requirement for 30 Cs in week 4 to be used on the As
and a requirement of 20 Cs in week 3 to be used on the Bs.
Looking at its bill of material, we see that it is a purchased
part and no explosion is needed.
What will happen if the gross requirements in week 2 are changed from 50
units to 150? The MRP record will look like the following.
Note that there is a shortage of 100 units in week 2 and
that the planned order release originally in week 2 is now in
week 1. What can the planner do?
One solution is to expedite the scheduled receipt of 300
units from week 3 to week 2. If this is not possible,
the extra 100 units wanted in week 2 must be rescheduled
into week 3.
Also,there is now a planned order release in week 1, and
this order should be released.
• Bottom-up replanning: Action to correct for changed
conditions should occur as low in the product structure
as possible. Suppose the part in the previous example is
a component of another part. The first alternative is to
expedite the scheduled receipt of 300 into week 2. If this
can be done, there is no need to make any changes to
the parent. If the 300 units cannot be expedited, the
planned order release and net requirement of the parent
must be changed.
• Reducing system nervousness:
Sometimes requirements change rapidly
and by small amounts, causing the
material requirements plan to change back
and forth. The planner must judge whether
the changes are important enough to react
to and whether an order should be
released. One method of reducing system
nervousness is firm planned orders.
Points About the MRP Record
Level in tree
A 0
U=1 U=1
Sub assembly I II 1
U=1 U=2
U=1 U=1
4 2
1 2 3 U=1 U=1
U=1 1
b 3
U=1
a
U=Usage a 4
Product tree structure
Level in tree
A 0
U=1 U=1
Sub assembly I II 1
U=1 U=2
U=1 U=1
4 2
1 2 3 U=1 U=1
U=1 1
b 3
U=1
a
U=Usage a 4
ITEM OH LEAD TIME
( WEEKS)
END TIME A 0 1
SUB ASSEMBLY I 40 1
SUB ASSEMBLY II 15 2
PART 1 10 3
PART 2 20 4
PART 3 15 1
PART 4 30 2
RAW MATERIAL aa 10 3
RAW MATERIAL ba 10 3
Product tree structure
Level in tree
A 0
U=1 U=1
Sub assembly I II 1
U=1 U=2
U=1 U=1
4 2
1 2 3 U=1 U=1
U=1 1
b 3
U=1
a
U=Usage a 4
ITEM OH LEAD TIME
( WEEKS)
END TIME A 0 1
SUB ASSEMBLY I 40 1
SUB ASSEMBLY II 15 2
PART 1 10 3
PART 2 20 4
PART 3 15 1
PART 4 30 2
RAW MATERIAL aa 10 3
RAW MATERIAL ba 10 3
MPS for end item A
0 1 2 3 4 5 6 7 8 9 10
GR 0 20 100
OH 0 0 0 0 0 0 0 0
POR 20 100
Part-I lead time 1 week
0 1 2 3 4 5 6 7 8 9
GR 20 100
OH 40 40 40 40 40 40 20 20 0 0
POR 80
0 1 2 3 4 5 6 7 8 9
GR 20 100
OH 15 15 15 15 15 15 0
POR 5 100
PART-2 Lead time 4 week
0 1 2 3 4 5 6 7 8 9
GR 80
OH 20 20 20 20 20 20 20
POR 60
Thank you..