ISQA 459 Class 4 Mellie Pullman

Material Requirements Planning

Materials Requirements Planning

Material Requirements Planning (MRP) MRP Logic and Product Structure Trees MRP Example Lot Sizing in MRP Programs

Material Requirements Planning

Materials requirements planning (MRP) is the logic for determining the number of parts, components, and materials needed to produce a product. MRP provides time scheduling information specifying when each of the materials, parts, and components should be ordered or produced. Dependent demand drives MRP. MRP is a software system.

Example of MRP Logic and Product Structure Tree

Given the product structure tree for A and the lead time and demand information below, provide a materials requirements plan that defines the number of units of each component and when they will be needed.
Product Structure Tree for Assembly A Lead Times A 1 day B 2 days C 1 day D 3 days E 4 days F 1 day Demand Day 10 50 A Day 8 20 B (Spares) Day 6 15 D (Spares)

A B(4) D(2) E(1) D(3) C(2) F(2)

First, the number of units of A are scheduled backwards to allow for their lead time. So, in the materials requirement plan below, we have to place an order for 50 units of A in the 9th week to receive them in the 10th week.

Day: A Required Order Placem ent

9 50

10 50

LT = 1 day

Next, we need to start scheduling the components that make up A. In the case of component B we need 4 Bs for each A. Since we need 50 As, that means 200 Bs. And again, we back the schedule up for the necessary 2 days of lead time.
Day: A B R e q u ire d O rd e r P la c e m e n t R e q u ire d O rd e r P la c e m e n t 20 200 20 50 200 1 2 3 4 5 6 7 8 9 10 50

LT = 2 A B(4) D(2) E(1) D(3) C(2) F(2)

Spares
4x50=200

Finally, repeating the process for all components, we have the final materials requirements plan:
Day: A LT=1 B LT=2 C LT=1 D LT=3 E LT=4 F LT=1 Required Order Placement Required Order Placement Required Order Placement Required Order Placement Required Order Placement Required Order Placement 1 2 3 4 5 6 7 8 9 50 200 100 55 55 20 200 200 200 400 300 20 200 400 100 300

10 50

20 20 200

A
Part D: Day 6

B(4) D(2) E(1) D(3)

C(2) F(2)

40 + 15 spares

Material Requirements Planning System

Based on a master production schedule, a material requirements planning system: Creates schedules identifying the specific parts and materials required to produce end items.

Determines exact unit numbers needed.

Determines the dates when orders for those materials should be released, based on lead times.

Firm orders from known customers

Aggregate product plan

Forecasts of demand from estimates

Engineering design changes

Master production schedule (MPS)

Inventory transactions

Bill of material file

Material planning (MRP) Reports

Inventory record file

Bill of Materials (BOM) File A Complete Product Description

Materials Parts Components Production sequence Modular BOM

Planning BOM or kits

Component or Subassemblies BOM create an artificial parent to the BOM used for inexpensive items like washers or pins to group.

Explosion: revealing the requirements for each component.

Coding

If identical items exist at various levels in the BOM:

Item is coded at lowest level at which it occurs D (Level 2 or Level 3) This number identifies the part at the lowest level of usage.

Inventory Records File

Buckets= time units in MRP system

Each inventory item carried as a separate file

Week bucket vs. day bucket

Pegging

Status according to time buckets.

Parent vs. child

Identify each parent item that created demand. Parent= Items above the current level Child = Items below the current level

Primary MRP Reports

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.

Secondary MRP Reports

Planning reports, for example, forecasting inventory requirements over a period of time. Performance reports used to determine agreement between actual and programmed usage and costs. Exception reports used to point out serious discrepancies, such as late or overdue orders.

Additional MRP Scheduling Terminology

Gross Requirements: needed during each period. Scheduled Receipts: Existing orders that arrive at beginning of period. On-hand or available balance:

(depending on software convention, could be at the beginning of each period or end):

Book: Inventory balance at end of each period.

Net requirements: What is need to meet requirements and safety stock. Planned order receipt: arrives at beginning of period. Planned order release: Addresses lead time.

MRP Examples

Closed Loop MRP

Production Planning Master Production Scheduling Material Requirements Planning Capacity Requirements Planning

No Feedback Realistic?

Feedback

Yes
Execute: Capacity Plans Material Plans

Lot Sizing in MRP Programs

Lot-for-lot (L4L) Economic order quantity (EOQ) Least total cost (LTC) Least unit cost (LUC) Part Period Balancing-changing lot sizes to reflect requirements in the future (how many periods should be combined to reduce cost)

Different types of lot sizes

MRP Game

Tinker Toy Lawn Mower