PPC MRP

Production Planning and Control
อาจารย์ทวี นาครัชตะอมร
ภาควิชาวิศวกรรมอุตสาหการ คณะวิศวกรรมศาสตร์ มหาวิทยาลัยขอนแก่น
ปี การศึกษาที 2562 ภาคเรียนที 2
Production Planning and Control (MRP) อ.ทวี นาครัชตะอมร
Material Requirement Planning (MRP)

Objectives:
1. To ensure the availability of materials, components,

and products for planned production and for
customer delivery.
2. To maintain the lowest possible level of inventory.
3. To plan manufacturing activities, delivery

schedules, and purchasing activities.
Source: Heizer J. and Render B. (2006) Operations Management, USA.

Introduction
Independent vs. Dependent Demand

Independent Demand
A Dependent Demand
B(4) C(2)
D(2) E(1) D(3) F(2)
Independent demand is uncertain.

Dependent demand is certain.
หน้ า 3
Introduction
Dependent Demand:
 The demand for one item is related to the demand
for another item
 Given a quantity for the end item, the demand for

all parts and components can be calculated
 In general, used whenever a schedule can be

established for an item
 MRP is the common technique

หน้ า 4
Introduction
Product demand for end items comes primarily from

two main sources.
1. Known customers who have placed specific

orders (from sales department, or from
interdepartment transactions). These orders
usually carry promised delivery dates.
2. Forecasted demand
หน้ า 5
Introduction
Before MRP buyers were not synchronized with producers.
MRP Overview
• Push system:
one in which material is loaded based on planning or
forecasts not on current demand.
“MRP is a push system.”
• Pull system:
one in which production occurs in response to the
consumption of finished goods inventory by demand.
Which is better?
หน้ า 6
Introduction
MRP works well:

• when companies involve in assembly operations.
MRP does not work well:

• in companies that produce a low number of units
(e.g. make to-order production).
• in companies producing complex, expensive products

requiring advanced research and design.
• when lead times tend to be too long and too uncertain,

and the product configuration too complex.
When MRP does not work well, what other system can we use ?
หน้ า 7
Introduction
Industry Applications and Expected Benefits of MRP
Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 8

Introduction
Benefits of MRP:
1. Better response to customer orders
2. Faster response to market changes
3. Improved utilization of facilities and labor
4. Reduced inventory levels
หน้ า 9
Master Production Scheduling (MPS)
The master production schedule (MPS) deals with end items (typically finished goods
items sold to customers) and is a major input to the MRP process.
A good master scheduler must:
• Include all demands from product sales, warehouse replenishment,

spares, and interplant requirements.
• Never lose sight of the aggregate plan.
• Be involved with customer order promising.
• Be visible to all levels of management.
• Objectively trade off manufacturing, marketing, and engineering

conflicts.
• Identify and communicate all problems.

หน้ า 10
 Specifies what is to be made and when

 Must be in accordance with the aggregate
production plan
 Aggregate production plan sets the overall level
of output in broad terms
 As the process moves from planning to
execution, each step must be tested for
feasibility
 The MPS is the result of the production
planning process

 MPS is established in terms of specific products

 Schedule must be followed for a reasonable
length of time
 The MPS is quite often fixed or frozen in the
near term part of the plan
 The MPS is a rolling schedule
 The MPS is a statement of what is to be
produced, not a forecast of demand

Can be expressed in any of the following terms:
 A customer order in a job shop (make-to-order)

company
 Modules in a repetitive (assemble-to-stock)
company
 An end item in a continuous (make-to-stock)
company

Aggregate Production Plan
Example: The Aggregate Plan and the Master Production Schedule for amplifiers:
Months January February

Aggregate Production Plan 1,500 1,200
(shows the total
quantity of amplifiers)
Weeks 1 2 3 4 5 6 7 8
Master Production Schedule
(shows the specific type and
quantity of amplifier to be
produced
240 watt amplifier 100 100 100 100
150 watt amplifier 500 500 450 450
75 watt amplifier 300 100

Example: The Aggregate Plan and the Master Production Schedule for Mattresses

Aggregate Production Plan & MPS
Production Marketing Finance

Capacity Customer Cash flow
Inventory demand
Procurement Human resources

Supplier Manpower
performance planning
Management Engineering
Return on Aggregate
production Design
investment completion
Capital plan
Change
production
Master production plan?
schedule (MPS)

MRP
Master production
schedule (MPS) Change
master
Change production
requirements? Material requirements schedule?
plan (MRP)
Change capacity?
Capacity
requirements plan
No Is capacity Is execution
Realistic? plan being meeting the
met? plan?
Yes
Execute capacity
plans
Execute
material plans

Overall of Inputs to a MRP

Bill-of-Materials (BOM) - โครงสร้างผลิตภัณฑ์
Bills of Material (BOM)
 List of components, ingredients, and

materials needed to make product
 Provides product structure

 Items above given level are called parents
 Items below given level are called children

Bill-of-Materials (BOM) - โครงสร้างผลิตภัณฑ์
Example: BOMs of product A and B
Product A Product B
100 (2) 200 300 500
300 400 100 600
300 400
หน้ า 20
Lead Times
Lead Times
 The time required to purchase,

produce, or assemble an item
 For purchased items – the time
between the recognition of a need and
the availability of the item for
production
 For production – the sum of the order,
wait, move, setup, store, and run times

Input and output of MRP
Inputs Outputs
- Master Production Schedule (MPS) - Planned Order Releases
- Bill of Materials (BOM) - Change Notices
- On-Hand Inventory
- Exception Notices
- Scheduled Receipts (SR)
- Ordering Methods (Rules)
o Lot-for-lot
o Fixed order period (FOP)
o Fixed order quantity (FOQ)
o Economic order quantity (EOQ)
หน้ า 22
Input and output of MRP
Data Files Output Reports
MRP by period
BOM Master report
production schedule
MRP by date
report
Lead times
(Item master file) Planned order
report
Inventory data
Purchase advice
Material
requirement
planning programs
(computer and
software) Exception reports
Purchasing data
Order early or late or
not needed
Order quantity too

small or too large

ข้อมูลหลักสําหรับการวางแผนความต้องการวัสดุ
Gross Requirement = ความต้องการรวม

Scheduled Receipts (SR) = ตารางรับสินค้าทีสังแล้ว
Adjusted SR = การปรับตารางรับสินค้าทีสังแล้ว
On-Hand Inventory = สินค้าคงคลังทีเหลือ
Net Requirements = ความต้องการสุทธิ
Planned Order Receipts = แผนการรับสินคา
Planned Order Released = แผนการสังสินค้า
หน้ า 24
Example 1
ตัวอย่างที 1 ปริมาณความต้องการใน 8 สัปดาห์ ของผลิตภัณฑ์ A และ B ซึงมีโครงสร้างดังที

แสดงในรูปที 1 เป็ นดังตารางที 1 และใน ตารางที 2 ตามลําดับ
Week 1 2 3 4 5 6 7 8
Demand of
15 20 50 10 30 30 30 30
Product A
Week 1 2 3 4 5 6 7 8
Demand of
10 15 10 20 20 15 15 15
Product B
หน้ า 25
Example 1
มีตารางรับสินค้าทีสังแล้ว (SR) ปริมาณสินค้าคงคลังทีมีอยู่จริง (On-Hand

Inventory) ตารางการรับสินค้า (SR) กฎการสัง (Ordering Rule) และระยะเวลาในการสัง
(Leadtime) ชองสินค้าทังสองชนิดรวมทังของชินส่วนทังหมด แสดงอยู่ในตารางที 3 ให้สร้าง
MRP ของผลิตภัณฑ์ A ผลิตภัณฑ์ B และของชินส่วน 100 300 และ 500
Product / On-Hand SR Ordering

Leadtime
Part ID Inventory Week Quantity Rule
1 10
Product A 20 2 10 FOP (2) 2 weeks
4 100
Product B 40 - - FOP (2) 2 weeks
100 50 - - lot-for-lot 2 weeks
300 40 2 100 lot-for-lot 1 weeks
500 40 - - lot-for-lot 4 weeks
หน้ า 26
Example 1
Product A (FOP(2), LT=2)

Week 1 2 3 4 5 6 7 8
Gross Requirements 15 20 50 10 30 30 30 30
Scheduled Receipts (SR) 10 10 100
Adjusted SR 0 20 100 0
On-Hand Inventory 20 5 5 55 45 15 0 0 0
Net Requirements 0 0 0 0 0 15 30 30
Planned Order Receipts 45 30
Planned Order Releases 45 30
Product B (FOP(2), LT=2)

Week 1 2 3 4 5 6 7 8
Gross Requirements 10 15 10 20 20 15 15 15
Scheduled Receipts (SR)
Adjusted SR
On-Hand Inventory 40 30 15 5 0 0 0 0 0
Net Requirements 0 0 0 15 20 15 15 15
Planned Order Receipts 35 30 15
Planned Order Releases 35 30 15
หน้ า 27
Example 1
Part 500 (Lot-For-Lot, LT=4)

Week 1 2 3 4 5 6 7 8
Requirement for Product B 35 30 15
Gross Requirements 35 30 15
Adjusted SR
On-Hand Inventory 40 5 5 0 0 0 0 0
Net Requirements 0 25 15
Planned Order Receipts
Planned Order Releases 25* 15
* The 25 pieces to be ordered in week 1 will be one week late.
หน้ า 28
Example 1

Week 1 2 3 4 5 6 7 8
Requirement for Product A 2x45 2x30
Requirement for Part 500 25 15
Gross Requirements 25 15 90 60
Adjusted SR
On-Hand Inventory 50 25 10 10 0 0
Net Requirements 0 0 80 60
Planned Order Receipts
หน้ า 29
Example 1

Week 1 2 3 4 5 6 7 8
Requirement for Product B 35x1 30x1 15x1
Requirement for Part 100 80x1 60x1
Scheduled Receipts (SR) 100
Adjusted SR
On-Hand Inventory 50 50 35 35 0 0 0
Net Requirements 0 0 0 55 0 15
Planned Order Receipts 55 15
หน้ า 30
WU1 Production Planning and Control (MRP) อ.ทวี นาครัชตะอมร
Example 1
What if the ordering rule of Part #300 has changed to FOQ and the lead time has changed to 2 weeks?
Part 300 (FOQ=50, LT=2)

Week 1 2 3 4 5 6 7 8
Requirement for Product B 35x1 30x1 15x1
Requirement for Part 100 80x1 60x1
Scheduled Receipts (SR) 100
Adjusted SR
On-Hand Inventory 50 50 35 35 0 0 0
Net Requirements 0 0 0 55 0 15
Planned Order Receipts 100
Planned Order Releases 100
หน้ า 31
Slide 31
WU1 Windows User, 3/27/2019

MRP
MRP Management:
 MRP is a dynamic system

 Facilitates replanning when changes occur
 System nervousness can result from too
many changes
 Time fences put limits on replanning
 Pegging links each item to its parent
allowing effective analysis of changes

MRP II
Material Requirements Planning II
 Once an MRP system is in place, inventory

data can be augmented by other useful
information
 Labor hours
 Material costs
 Capital costs
 Virtually any resource
 System is generally called MRP II
or Material Resource Planning

Enterprise Resource Planning (ERP)
 An extension of the MRP system to tie in

customers and suppliers
1. Allows automation and integration of many
business processes
2. Shares common data bases and business
practices
3. Produces information in real time
 Coordinates business from supplier
evaluation to customer invoicing

ERP modules include
 Basic MRP
 Finance
 Human resources
 Supply chain management (SCM)
 Customer relationship management (CRM)

ERP and MRP

PPC MRP

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PPC MRP

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Production Planning and Control

Material Requirement Planning (MRP)

1. To ensure the availability of materials, components,

2. To maintain the lowest possible level of inventory.

3. To plan manufacturing activities, delivery

Source: Heizer J. and Render B. (2006) Operations Management, USA.

Independent vs. Dependent Demand

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

Independent demand is uncertain.

 Given a quantity for the end item, the demand for

 In general, used whenever a schedule can be

 MRP is the common technique

Product demand for end items comes primarily from

1. Known customers who have placed specific

Before MRP buyers were not synchronized with producers.

MRP works well:

MRP does not work well:

• in companies producing complex, expensive products

• when lead times tend to be too long and too uncertain,

Industry Applications and Expected Benefits of MRP

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 8

A good master scheduler must:

• Include all demands from product sales, warehouse replenishment,

• Never lose sight of the aggregate plan.

• Be involved with customer order promising.

• Be visible to all levels of management.

• Objectively trade off manufacturing, marketing, and engineering

• Identify and communicate all problems.

Master Production Scheduling (MPS)

 Specifies what is to be made and when

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 11

Master Production Scheduling (MPS)

 MPS is established in terms of specific products

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 12

Master Production Scheduling (MPS)

Can be expressed in any of the following terms:

 A customer order in a job shop (make-to-order)

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 13

Aggregate Production Plan

Months January February

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 14

Master Production Scheduling (MPS)

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 15

Aggregate Production Plan & MPS

Production Marketing Finance

Procurement Human resources

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 16

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 17

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 18

Bills of Material (BOM)

 List of components, ingredients, and

 Provides product structure

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 19

Example: BOMs of product A and B

100 (2) 200 300 500

300 400 100 600

 The time required to purchase,

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 21

Data Files Output Reports

Order quantity too

Source: Heizer J. and Render B. (2006) Operations Management, USA. หน้ า 23

Gross Requirement = ความต้องการรวม

ตัวอย่างที 1 ปริมาณความต้องการใน 8 สัปดาห์ ของผลิตภัณฑ์ A และ B ซึงมีโครงสร้างดังที

มีตารางรับสินค้าทีสังแล้ว (SR) ปริมาณสินค้าคงคลังทีมีอยู่จริง (On-Hand