Workbook on MRP

Introduction

In this workbook, you will apply some of the MRP concepts you have learnt by
working through a question that is a similar level to ones that could be found on exam
papers.
First some definitions:
MRP - Material Requirements Planning
MPS - Master Production Schedule
BOM - Bill of Materials

Question

Below is the MPS for a Table over a period of 10 weeks:

Demand
Available
Required
On Hand

1
10
20
0

2
10
10
0

3
10
0
0

4
10
0
10

Week Number
5
6
7
15
15
15
0
0
0
15
15
15

8
15
0
15

9
20
0
20

10
20
0
20

30

The product structure for the table is below:

Table

Leg
(4 off)

Side Panels
(3 off per drawer)

Level 0

Top
(1 off)

Level 1

Drawer
(2 off)

Handle
(1 off per drawer)

Front Panel
(1 off per drawer)

The inventory levels and lead-times for the component parts are shown below:
Part
Leg
Top
Drawer
Side Panel
Front Panel
Handle

Stock
50
20
70
60
40
30

lead-time (weeks)
3
2
2
1
2
5

Level 2

Using the three steps in the MRP process of Exploding, Netting and Offsetting,
develop a material requirements plan for the table and its components to meet the
demand stated in the MPS.

3
3.1

Solution
Exploding The BOM

This is how the MRP system works out which parts will be needed to meet the MPS.
This gives the gross material requirement.
Explode the BOM to get the gross material requirement:

Level

Part

No.
Per
Table

Week Number
1

10

Table

10

15

15

15

15

20

20

Leg

40

60

60

60

60

80

80

Top

Drawer
Side
Panel
Front
Panel
Handle

2
2
2

6
2
2

All the remaining figures are calculated by

multiplying the number of tables needed by
the number per table column

3.2

Number of tables
required from MPS

Netting

Having determined the gross requirement, MRP subtracts any parts or material held in
stores to find the net requirement the quantities that must be manufactured, or
ordered from suppliers, in order to the meet the MPS.
First some definitions:
Demand
- combination of known sales orders and forecast for the part
Available
- number of completed parts expected to be in stock
Required
- number of parts that must be manufactured
On Hand
- number of parts in stock at start of period

So a MPS must be generated for each of the parts required for the assembly of the
table:
This line comes
Table Net Requirements are as the MPS given in question.
from Exploded
BOM
Leg Net Requirements:

Exploded BOM
Available
Required
On Hand

1
0
50
0

2
0
50
0

3
0
50
0

4
40
10
0

Week Number
5
6
60
60
0
0
50
60

7
60
0
60

8
60
0
60

9
80
0
80

10
80
0
80

50
To calculate the numbers on the "Available" and
"Required" Lines:

Number In
Stock

Week 1: X = "On Hand", Y = Exploded BOM,

If X-Y > 0 put X-Y in "Available" and 0 in "Required"
If X-Y < 0 put Y-X in "Required" and 0 in "Available"
Week 2: X = Week 1 "Available", Y =Exploded BOM
If X-Y > 0 put X-Y in "Available" and 0 in "Required"
If X-Y < 0 put Y-X in "Required" and 0 in "Available"

Top Net Requirements:

1

Week Number
4
5
6
7

10

Week Number
4
5
6
7

10

Exploded BOM
Available
Required
On Hand

Drawer Net Requirements:

1
Exploded BOM
Available
Required
On Hand

Side Panel Net Requirements:

1

Week Number
5
6
7

10

Week Number
4
5
6
7

10

Week Number
4
5
6
7

10

Exploded BOM
Available
Required
On Hand
Front Panel Net Requirements:
1

Exploded BOM
Available
Required
On Hand
Handle Net Requirements:
1

Exploded BOM
Available
Required
On Hand
3.3

Offsetting

Based on lead times for manufacturing or ordering parts, the MRP system is able to
work out when each part in the net requirement should be ordered so that they will be
available in time.
This line comes
from Net
Requirements
Table Lead Time = 1 Week

Required

1
0

2
0

3
0

Week Number
4
5
6
7
10
15
15
15

Release Order

10

15

15

15

15

8
15

9
20

20

20

10
20

This line offsets the Net

Requirements by the length
of the lead time + the lead for
parts on previous levels
Leg Lead Time = 3 Weeks (+1 week table)
1

Week Number
5
6

10

Week Number
5
6

10

10

10

10

Required
Release Order
Top Lead Time = 2 Weeks (+1 week table)
1

Required
Release Order
Drawer Lead Time = 2 Weeks (+1 week table)
1

Week Number
5
6

Required
Release Order
Side Panel Lead Time = 1 Week (+1 week table + 2 weeks drawer)
1

Week Number
5
6

Required
Release Order
Front Panel Lead Time = 2 Weeks (+1 week table + 2 weeks drawer)
1

Week Number
5
6

Required
Release Order
Handle Lead Time = 5 Weeks (+1 week table + 2 weeks drawer)
Week Number

Required
Release Order
Please comment on the results:

10