DEVELOPING MRP II SYSTEMS - A CASE STUDY AT HT COMPANY.

Nguyễn Như Phong*, Trần Võ Thị Thanh Huyền**, Phan Duy Minh***.
Industrial Systems Engineering, Bach Khoa University, VNU.
Email: *nnphong@hcmut.edu.vn, **tvtthuyen@gmail.com, *** 1412308@hcmut.edu.vn.

Abstract: HT is a company specializing in producing electric generators. The resources of the

company have not been planned & controlled effectively, leading to high production costs, high
production lead time, low on-time delivery, sales drop, affecting competitive edge of the company.

The paper effectively developed MRP II system for the company by planning all resources of the
company to reduce production costs, reduce the production lead time, then to increase on-time
delivery rate, and finally improve the competitive edge of the company. The paper integrated all
MRPII functional modules of the companies, including Forecast, Order entry, Production
Planning, MPS, MRP, RRP, RCCP, CRP, VRP. The paper also applied Operations Research
Models in Production Planning to minimize the Production Costs.

Keywords: MRP II, Demand Management, Forecast, Order entry, Production Planning, MPS,
MRP, RRP, RCCP, CRP, SFC, VRP, Forecast Consumption, PAB, ATP.

1. INTRODUCTION
HT is one of the best generator manufacturers in Viet Nam. With their high-quality products, the
company has created a certain position in the marketplace. Therefore, the number of orders is
increasing every year. However, the company is currently experiencing problems with its ability
to meet orders. Frequent delays in ordering leads to reduction of customer service level that greatly
affect the reputation as well as the competitiveness of the company. Using fish bone diagram to
analyze the main causes of late orders.

Unclear material
leadtime
Incorrect MRP Lack of resources
Long waiting time
Inconsistent BOM structure Inexperienced workers

Late orders
Ineffective capacity requirement
controllablity
Purchasing plan was out of control
Improper MPS Lack of capital
Inopproriate production plan
Unspecific forecasting models

Figure 1.1 Fish bone diagram shows the possible causes of late orders
Besides, the company also faces cost problems. An increased cost in resources leads to an
increased cost in production that affects their profits.
Using the FMEA method to identify and prioritize the causes of late orders and increased cost in
production of the company. The result is shown in the following table.
Table 1.1 Analyzing and prioritizing possible causes
No. Causes SEV OCC DET RPN
1 Inappropriate production plan 8 8 6 384
2 Purchasing plan was out of control 8 7 6 336
3 Inefficient capacity requirement controllability 8 7 5 280
4 Improper master production schedule 8 6 5 240
5 Incorrect material requirement planning 7 6 3 126
6 Unspecific forecasting models 8 5 3 120
7 Unclear material lead time 7 5 3 105
8 Inexperienced workers 6 4 3 72
9 Lack of resources 5 3 4 60
10 Long waiting time 4 5 3 60
11 Inconsistent BOM structure 6 3 3 54
12 Lack of capital 7 3 2 42
Synthesizing the RPN of each cause and converting it into a cumulative percentage to form a
Pareto chart that analyzes the main causes for late orders.

Firure 1.2 The Pareto chart analyzes the causes of late orders
The accumulative value line reached 80% when going through the causes from such activities.
Table 1.2 Causes analysis and Solutions
No. Causes Solutions Functional modules
Inappropriate Establish forecasting models that Demand Management
1
production plan matched the historical data (DM)

Inappropriate Establish an optimal production plan Production Planning

2
production plan to meet customer needs (PP)
Establish, adjust and control master
Improper master Master Production Schedule
3 production schedule efficiently to
production schedule (MPS)
meet production plan.
Establish a material requirement
Incorrect material Material Requirement Planning
4 plan to meet master production
requirement planning (MRP)
schedule
Inefficient capacity Establish a feasible capacity Capacity Requirement
5 requirement requirement plan to meet the Planning
controllability material requirement plan (CRP)
Vendor Requirement Planning
Purchasing plan was Classify and establish purchase
6 (VRP)
out of control plans in specific methods

From the table above, the Manufacturing Resource Planning System - MRP II, which consists of
6 functional modules, was designed to reduce late order, increase customer service level and reduce
resource costs, thereby enhance the reputation, profitability and competitiveness of the company.
To achieve the above objectives, this research had built functional modules to.
- Accurately forecast customer demand
- Develop a production plan to minimize cost of resources.
- Schedule the MPS based on production plan and control it according to demand fluctuations.
- Establish a material requirement plan to meet master production schedule
- Establish capacity and purchase plans to meet material requirement plan.
This research was conducted on the production of 10 major models in the company's civil
generators. Aside from using Resource Planning methods, Operations Research models were also
applied with resource constraints and minimum cost objective for production planning.

2. LITERATURE REVIEW
According to [1], the MRPII is a method for effective planning of all resources of a manufacturing
company. It is made up of a variety of interlinked functions such as Strategic and Business
Planning, Demand Management, Capacity Requirement Planning, Master Production Schedule,
Material Requirement Planning, Shop Floor Control and Purchase Control.
The MRPII is an approach to managerial planning, execution, and control of productive activity.
It integrates with feedback manner, the forecasting of demand, production planning, scheduling
and control, and purchase planning and control.
Furthermore, this study also referred to many articles on MRPII, on forecasting, production
planning, production scheduling, etc. as listed in the references section.

3. ASSESSMENT OF THE CURRENT RESOURCES PLANNING SYSTEM

HT specializes in manufacturing and assembling generators including 2 types: civil generators and
industrial generators. The current MRP II system, now applying in the company, is shown as the
figure below
Business
objective

Customer
Sales plan Historical data
orders

ISR
MPS MRP

BOM

Purchase
Work orders
orders

Figure 3.2 The current planning system in the company

Evaluate the current status of the functional modules of the system and propose improvements to
the system, as shown in the following table.
Table 3.1 Current status of the functional modules of the system

Modules System Status Quo Suggestions for improvement

- Identify the needs based on

experience Develop a forecasting model that is
- No specific mathematical model appropriate for the production
DM is used to forecast production
capacity as well as the consumption
capacity.
characteristics of the product line.
- The order entry process is quite
tight.

The integrated production planning Establish an optimal and feasible

PP
model has not yet been established, production plan to meet demand.
 leading to the inability to optimize
production costs.

- Unreasonable production orders

arrangement.
- No specific mathematical model - Apply the forecast consumption to
is used to schedule the master establish an effective MPS
production plan. - Develop a feasibility assessment
MPS
- No software established to model for all resources.
support the process. - Apply an effective MPS control.
- The feasibility of the MPS has
not been evaluated but have
delivered to the shop floor.

- The MRP process is mainly Establish an efficient material

based on experience requirement plan to meet master
MRP - The product structure is production schedule.
inconsistent
- No safety stock

- The input is the MPS instead of

the MRP.
- The CRP process is mainly - Develop detailed capacity
CRP based on experience requirement plan
- Resources information is not - Control the production capacity to
reliable meet MRP.
- Lack of production capacity in
peak seasons leads to delays in
orders.

- The VRP process is mainly

Vendor based on experience
Requirement - Purchase time is not controlled Establish an effective VRP plan to
Planning (VRP) effectively. meet MRP
- No specific procurement
planning model

4. DESIGN OF MANUFACTURING RESOURCE PLANNING SYSTEM

The MRPII system was designed is as the following diagram [1].
 Order management
process Production cost
information
Historical
demand data
DM Demand plan PP Inventory data
Customer
orders Production capacity
information
Order Production
information plan

Capacity
Working plan MPS information

ISR MRP BOM

Resource
working plan

Resource Material
CRP Material plan VRP
information informaiton

Production
Work stations
process Purchase plan
working plan

Figure 4.1 Manufacturing resource planning model (MRPII)

4.1. Demand Management

Demand management module was designed with the most important function, that is Demand
forecasting. To forecast the demand for generators in 12 months of 2018, generator demand of
2016 and 2017 were collected as shown in the following table.
Table 4.1 Demand of civil generators in 2016 - 2017 (OUM: EA)

Year/Month 1 2 3 4 5 6 7 8 9 10 11 12
2016 64 170 62 132 151 250 234 238 326 248 189 91
2017 148 152 176 162 261 293 225 232 255 116 130 144
After the analyzing process, the result shown that this data set was both trend and seasonal.
Therefore, the proposed models were: “Holt-Winters Seasonal” Method and “Time Series:
Multiplicative Model” Method.
Minitab software was used to determine the level coefficient (α), trend coefficient (β) and seasonal
coefficient (γ) in “Holt-Winters Seasonal” Method. We had the following result with α = 0.5; β =
0.4; γ = 0.1. With “Time Series: Multiplicative Model” Method, Minitab shown us the following
result.
Figure 4.3 Demand forecast for civil generators by“Time Series: Multiplicative Model” Method
in 2018.
The comparison of forecast errors in two methods was shown in the following table.

Table 4.2 Comparison of forecast errors in two methods

Error
Method
MAPE MAD MSE
Holt-Winters 23,67 34,24 1555,72
Multiplicative Model 27,26 33,81 1976,86
From the above table, “Holt-Winters Seasonal” Method with smaller errors should be selected.
The forecast results were as follows.
Table 4.3 Demand of civil generators in 2018 (OUM: EA)

Month 1 2 3 4 5 6 7 8 9 10 11 12

Demand 109 174 132 172 250 345 304 323 415 268 245 186
The product models of civil generators family are SH7500, HK16000SDX (SP), SH 3100, HG
7500, HK7500 DX, HG16000SDX, HK7500, SH4500, HG7500SE, HG4500. To determine the
demand forecast of each model, the demand ratio of all models were collected in 2017. Since the
collected data was random, not trending, we proposed 3 forecasting methods: Naive Method,
Moving Average and Single Exponential Smoothing. These methods were used to forecast the
demand of each product. The selected method was the method with the smallest forecast error. The
table below illustrated the findings of the forecasting ratio for each model in civil generators line
in 2018.
Table 4.5 The forecasting ratio for each model in civil generators line in 2018
 HK16 HG16 HG
HK75
SH 000S SH HG 000S HK SH HG
Model 00 7500
DX DX
7500 3100 7500 7500 4500 4500
DX SE
(SP) (SP)
Forecasting
25% 18% 17% 10% 9% 7% 6% 3% 3% 2%
ratio
4.2. Production Planning
Production plan was planned with constraints on demand, production capacity, inventory,
backorder, subcontract, etc., to minimize the cost of using the resources [1]. Production planning
model, according to [9], is as follows.
Objective function.
Min U= ∑𝑇𝑡=1(𝑤𝑋(𝑡) + 𝑣𝑌(𝑡) + 𝑠𝐼(𝑡) + 𝑏𝐵(𝑡) )
The decision variables used in this model were given below:
- X(t): number of products produced in regular hour in time period t
- Y(t): number of products produced in overtime hour in time period t
- I(t): number of products inventoried in time period t
- BO(t): number of products in back order in time period t
The parameters used in this model formulation were defined:
- T: time period (t = 1 ÷ 12)
- w: Regular hour production cost per unit
- v: Overtime production cost per unit
- s: Inventory cost per unit
- b: Backorder cost per unit
- D(t): demand in time period t
Constraints:
- Demand constraint: X(t) + Y(t) + I(t-1) – I(t) + BO(t) – BO(t-1) = D(t)
- Regular hour production capacity constraint: X(t) ≤ Regular hour production capacity
- Overtime production capacity constraint : Y(t) ≤ Overtime production capacity
- Inventory constraint: 0 ≤ I(t) ≤ 50
- Backorder constraint: 0 ≤ BO(t) ≤ (X + Y)*20%
- Non-negativity restrictions : X(t), Y(t), I(t), BO(t) ≥ 0
The demand of generators was determined in Table 4.3. Regular hour and overtime production
capacity per month in 2018 are collected as shown in the following table.
Table 4.6 Production capacity in 2018 (UOM: EA)

Month 1 2 3 4 5 6 7 8 9 10 11 12
Regular time 290 290 290 290 290 290 290 290 290 290 290 290
Overtime 80 80 80 80 80 80 80 80 80 80 80 80
The initial inventory is 7 (EA). Costs were estimated as shown in the following table.
 Cost Value
w (VND/EA) 17,630,000
v (VND/EA) 20,915,000
s (VND/EA*Month) 3,869,000
b (VND/EA*Month) 1,934,500
Applying OpenSolver Add-in in Excel, we get the result of the production plan as follows:
Table 4.7 Production planning in 2018 (UOM: EA)

Month 1 2 3 4 5 6 7 8 9 10 11 12
X 102 174 132 172 250 290 290 290 290 290 223 192
Y 0 0 0 0 0 55 14 33 80 0 0 0
I 0 0 0 0 0 0 0 0 0 0 0 0
B 0 0 0 0 0 0 0 0 45 23 45 38
The minimum cost was: 51,621,498,889 VND
4.3. Master Production Schedule
The MPS module schedules production orders for each product to meet the production plan of a
product family. MPS must be tested for feasibility and controlled by Projected Available Balance
(PAB) and Available To Promise (ATP) [1].
a. Master Production Schedule
MPS were scheduled on a daily basis for one month period, for the SH7500 model which had the
highest quantity in the civil generator family. Did the same for other products. The month chosen
to be scheduled is January 2018. According to the production plan in Table 4.7, the demand of
generator was 102 in January, and based on the forecasting ratio in Table 4.5, the demand of
SH7500 was 26 in January.
The initial MPS was equally distributed for the days of the month. Along with the initial MPS
were the demand forecast and the customer orders as compares in the following table.

Week 1 Week 2 …
Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun …
Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 …
Demand forecast 1 1 1 1 1 1 0 1 1 1 1 1 1 0 …
Customer orders 2 2 1 1 1 0 0 1 0 0 2 1 1 0 …
The forecast consumption model, see [1], which applied backward forecast consumption first,
forward forecast consumption later and number of days for the consumption were 5 days, was used
to adjust the MPS to have the following results.
Table 4.8 The forecast consumption model SH7500 in January 2018 (UOM: EA)

Week 1 Week 2 …
Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun …
Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 …
Demand forcast 1 1 1 1 1 1 0 1 1 1 1 1 1 0 …
Customer orders 2 2 1 1 1 0 0 1 0 0 2 1 1 0 …
Consumption 1 1 0 0 0 1 0 0 0 1 1 0 0 0 …
Unconsumed forecast 0 0 0 0 0 0 0 0 1 0 0 0 0 0 …
Abnormal demand 1 …
Revised demand plan 2 2 1 1 2 0 0 1 1 0 2 1 1 0 …
The revised demand plan for SH7500 model on a daily basis in January 2018 was shown in the
following table.
Table 4.9 The revised MPS of SH7500 in January 2018 (UOM: EA)

January
Day Mon Tue Wed Thu Fri Sat Sun
Date 1 2 3 4 5 6 7
Revised demand plan 2 2 1 1 2 0 0
Date 8 9 10 11 12 13 14
Revised demand plan 1 1 0 2 1 1 0
Date 15 16 17 18 19 20 21
Revised demand plan 1 1 1 1 1 1 0
Date 22 23 24 25 26 27 28
Revised demand plan 0 1 1 1 2 1 0
Date 29 30 31
Revised demand plan 2 1 1
Similarly, we schedule for the remaining products of the civil generator on a daily basis in January
2018 as follows.
Table 4.10 The revised MPS of all models in civil generator family in January 2018
(UOM:EA)
 Week 1 Week 2
Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun …
Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 …
SH7500 2 2 1 1 2 0 0 1 1 0 2 1 1 0 …
HK16000SDX(SP) 1 2 1 2 0 0 0 1 1 2 1 1 1 0 …

... ... ... ... ... ... ... ... ... ... ... ... ... ... ... …

HG7500SE 1 1 0 0 0 2 0 0 0 0 0 1 0 0 …

HG4500 1 1 1 0 0 1 0 0 0 0 0 0 0 0 …
b. MPS feasibility check
Applying the Resource Profiles method, see [11], to check the feasibility of the MPS. The
generator production process consists of 9 stations. According to machine utilizations, the critical
station in the process was the assembly station with station profiles as follows.
Table 4.12 Available working hours of the assembly station

Hour/shift
Shift/ Machine/ Day/planning U E ST QT MT WT
Station Regular
day station Overtime period (%) (%) (g) (g) (g) (g)
time
Assembly 1 1 8 0 1 98 95 0,5 0 0 0

Available capacity of the assembly station:

CA = h*E*U = 8*0,95*0,98 ≈ 7,45 (hour) = 447 (minute)
The assembly time of each product was as follows.
Table 4.13 The assembly time of each product in the civil generator (UOM: Minute)

Model The assembly time

SH7500 43

HK16000SDX(SP) 65

SH3100 43

HG7500 35

HK7500DX 40

HG16000SDX(SP) 65
 HK7500 35

SH4500 43

HG7500SE 40

HG4500 35

The required capacity in January 2018 to meet the MPS in table 4.9 was shown in the following
table.
Table 4.14 Required capacity in January 2018 (UOM: Minute)

Week 1 Week 2 ...

Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun ...
Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ...
SH7500 86 86 43 43 86 0 0 43 43 0 86 43 43 0 ...
HK16000SDX(SP) 65 130 65 130 0 0 0 65 65 130 65 65 65 0 ...
SH3100 43 86 0 43 43 43 0 43 43 43 43 43 86 0 ...
HG7500 35 35 35 70 0 70 0 35 35 35 35 0 0 0 ...
HK7500DX 40 0 40 40 80 40 0 40 40 40 40 40 0 0 ...
HG16000SDX(SP) 65 65 65 65 130 0 0 65 0 0 0 0 0 0 ...
HK7500 35 0 70 35 35 35 0 0 0 0 0 35 0 0 ...
SH4500 43 43 43 0 86 43 0 0 0 43 43 0 0 0 ...
HG7500SE 40 40 0 0 0 80 0 0 0 0 0 40 0 0 ...
HG4500 35 35 35 0 0 35 0 0 0 0 0 0 0 0 ...
CR 487 520 396 426 460 346 0 291 226 291 312 266 194 0 ...
Station load report of the assembly station were as follows.
Table 4.15 Assembly station load report in January 2018 (UOM: Minute)

Week 1 Week 2 ...

Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun ...
Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ...
CA 447 447 447 447 447 447 0 447 447 447 447 447 447 0 ...
CR 487 520 396 426 460 346 0 291 226 291 312 266 194 0 ...
OL -40 -73 51 21 -13 101 0 156 221 156 135 181 253 0 ...
As we could see, there were several days, like day 1, the station was overloaded. The MPS was
adjusted again to change the required capacity, CR ', so that the station was not overloaded. The
result was shown in the following table.
Table 4.16 Required capacity adjustment, CR’ in January 2018 (UOM: Minute)
 Week 1 Week 2 ...
Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun ...
Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ...
CA 447 447 447 447 447 447 0 447 447 447 447 447 447 0 ...
CR 487 520 396 426 460 346 0 291 226 291 312 266 194 0 ...
CC -40 -73 51 21 -13 101 0 156 221 156 135 181 253 0 ...
CR' 447 447 447 447 447 400 0 291 226 291 312 266 194 0 ...
CC' 0 0 0 0 0 47 0 156 221 156 135 181 253 0 ...
The feasible MPS for the required capacity did not exceed the available capacity was shown in the
following table.
Table 4.17 The revised MPS in January 2018 (UOM: EA)

Week 1 Week 2 ...

Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun ...
Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ...
SH7500 2 2 1 1 2 0 0 1 1 0 2 1 1 0 ...
HK16000SDX(SP) 1 2 1 2 0 0 0 1 1 2 1 1 1 0 ...
SH3100 1 2 0 1 1 1 0 1 1 1 1 1 2 0 ...
HG7500 1 1 1 2 0 2 0 1 1 1 1 0 0 0 ...
HK7500DX 1 0 1 1 2 1 0 1 1 1 1 1 0 0 ...
HG16000SDX(SP) 1 1 1 1 2 0 0 1 0 0 0 0 0 0 ...
HK7500 1 0 2 1 1 1 0 0 0 0 0 1 0 0 ...
SH4500 1 1 1 0 1 2 0 0 0 1 1 0 0 0 ...
HG7500SE 0 0 1 0 0 2 0 1 0 0 0 1 0 0 ...
HG4500 0 0 1 0 0 2 0 1 0 0 0 0 0 0 ...

c. MPS control
In order to control the MPS, Projected Available Balance (PAB) and Available To Promise (ATP)
was determined by the models in [1]. With projected on hand of SH7500 were 2, demand time
fence were 5 days and planning time fence were 25 days, the MPS control for SH7500 was
illustrates in the following table. And the other products do the same.

Table 4.18 The MPS control for SH7500 (UOM: EA)

Week 1 Week 2 …
Day Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun …
Date 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 …
MPS 2 2 1 1 2 0 0 1 1 0 2 1 1 0 …
Forecast 1 1 1 1 1 1 0 1 1 1 1 1 1 0 ...
CO 2 2 1 1 1 0 0 1 0 0 2 1 1 0 …
ATP 2 2 2 2 2 3 3 3 3 4 4 4 4 4 4 …
PAB 2 2 2 2 2 3 2 2 2 2 1 1 1 1 1 ...

4.4. Material Requirement Planning

MRP module determines the requirement of material based on the Bill Of Material and Inventory
Status Records in order to meet the MPS [1]. SH7500 was selected as the representative to do the
MRP, other products did the same. The MPS of SH7500 had been shown in table 4.9 above. The
SH7500 consists of the following materials.
SH7500
(_,1)

Honda Mecc Radiators Frames Genset

GX390T2 S20W-95/A (1,1) (1,1) controller (1,1)
engine alternatoe
(1,1) (1,1)
Argo Base frame Round tube Electric
Bas (1,1) ATS (1,1)
rubber (2,1) (1,1) steel (4,2) Taplo (1,1)

Rhombus
Steel
-shaped Bas taplo PO Plate Round Clock Wire Rheostat
Plate Role (1,1)
Grid (2,1) (0.6,2) Cos (4,1) Volt (1,1) (2.2,1) (1,1)
(0.6,2)
(1,1)

Figure 4.7 BOM of SH7500

Inventory Status Records of materials with Lot size Q, Leadtime LT, Projected on-hand OH, Safety
stock SS, Allocated AL, Scheduled receipt SR was shown in the following table.
Table 4.19 Inventory Status Records of materials of SH7500 in January 2018

Level
Material code Material UOM Q LT OH SS AL SR
code
5000007500100 SH7500 0 EA 1 1 2 0 0 0
Honda
40103900230 GX390T2 1 EA 1 1 0 0 0 0
engine
Mecc S20W-
411000601210 95/A 1 EA 1 1 0 0 0 0
alternatoe
…
48000001200 Wire 3 Meter 5 1 2 0 0 0
20340000010 Rheostat 3 EA 5 1 0 0 0 0
20340000812 Role 3 EA 5 1 0 0 0 0
(Source: Materials profiles _ Planning Department _ Huu Toan Company)
From the BOM and ISR, using the MRP Add-ins in Excel to plan the material requirement that
meet the MPS. The results were as follows.
Table 4.20 MRP of SH7500 in January 2018

Date UOM 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 ...

SH7500 EA 0 0 0 0 0 2 1 1 2 0 1 0 1 0 2 ...
Honda GX390T2 engine EA 0 0 0 2 0 1 1 2 0 0 2 0 0 2 1 ...
Mecc S20W-95/A alternator EA 0 0 0 2 0 1 1 2 0 0 2 0 0 2 1 ...
... ... ... ... ... ... ... ... ... ... ... ... ... ...
Wire Meter 0 0 2,4 4,4 0 4,4 0 0 2,2 2,2 4,4 0 2,2 2,2 0 ...
Rheostat EA 0 0 2 2 0 2 0 0 1 1 2 0 1 1 0 ...
Role EA 0 0 2 2 0 2 0 0 1 1 2 0 1 1 0 ...
Did the same for the remaining products, we had the MRP plan for all products of the civil
generator line in 1/2018. The findings were shown in the following table.
Table 4.21 MRP for the generator line in January 2018

Date UOM 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 ...

Honda GX390T2 engine EA 0 0 0 2 0 1 1 2 0 0 2 0 0 2 1 ...
Kohler CH680 engine EA 0 0 0 3 0 1 2 0 0 0 2 0 2 1 1 ...
... ... ... ... ... ... ... ... ... ... ... ... ... ...
Mecc S20W-95/AC alternator EA 0 0 0 3 0 6 5 5 6 0 7 0 2 4 4 ...
Mecc S16W-90/BA alternator EA 0 0 0 2 0 2 0 1 4 0 1 0 1 1 0 ...
Radiators Set 0 0 0 11 0 9 9 11 0 8 11 0 7 6 4 ...
Frames Set 0 0 0 11 0 10 9 9 11 0 13 0 6 7 6 ...
... ... ... ... ... ... ... ... ... ... ... ... ... ...
Rheostat EA 0 3 8 19 0 9 11 0 8 5 13 0 6 4 0 ...
Role EA 0 3 8 19 0 9 11 0 8 5 13 0 6 4 0 ...
4.5. Capacity Requirement Planning
CRP module is based on the Routing file, Shop calendar, Planned order releases and Work center
profile to plan capacity for all stations in the production process to meet the requirements for
materials assembled in the workshop [1].
Civil generator production process includes the following stations.
CNC Sandblasting
CNC lathe punching Cuting Folding Grinding Polishing Assembly Test
and painting
presses

Engine

Alternatoe

Steel Plate

Rhombus-
shaped
Grid

Bas taplo

PO Plate

Round tube
steel

Round Cos

Volt Clock

Wire

Rheostat

Role

Figure 4.8 Civil generator production process

Each processing material assembled in the workshop has a specific routing file. A routing file for
a radiator is as follows.
Table 4.22 Routing file of a radiator

Process Time
No. of Conduct
Description Tool Set up Total
process Station Machine Hour/ Hour/
(Hour) Hour/EA (Hour)
Meter Sheet
Keep Bas
Taplo.
Lathed the
CNC Tweezer,
CNC upper and
1 lathe hammer, 0,5 0,25 0,37 0,00 1.12
lathe lower
machine wrench
angles.
Check the
size.
CNC Keep the
CNC Tweezer,
puching steel plate.
2 puching hammer, 0,5 0,00 0,00 0,50 1.00
presses Press the
presses wrench
machine plate flatly
… … … … … … … … … …

Select the CNC Lathe station to do the CRP, other stations do the same. Shop calendar of CNC
Lathe was as follows.
Hour/shift Maintenance
Planning
Shift/ Period U E ST QT MT WT
Station Machine Regular Over period Time
date (%) (%)(Hour) (Hour) (Hour) (Hour)
time time (Day) (Time/ (Hour)
month)
CNC
1 6 8 0 1 1 4 83,33 95 0,5 0 0 0
lathe
Based on the MRP plan in table 4.20, together with the resource information above, load report of
the CNC lathe station were performed as follows.
Table 4.23 CNC lathe load report (UOM: Hour)

Date 1 2 3 4 5 6 7 8 9 10 11 12 13 14 …
Released load 0 0 0 0 0 0 0 0 0 0 0 0 0 0 …
Planned load 22,8 27,8 0,5 20,3 12,9 32,7 0 15,4 10,4 0,5 12,9 12,9 25,3 0 ...
Total load 22,8 27,8 0,5 20,3 12,9 32,7 0 15,4 10,4 0,5 12,9 12,9 25,3 0 …
Rated Capacity 38 38 38 38 38 38 0 38 38 38 38 38 38 0 …
Overload -15 -10 -37 -18 -25 -5,3 0 -23 -28 -37 -25 -25 -13 0 …
The result shows that the capacity requirement planning of this station was feasible.
4.6. Vendor Requirement Planning
VRP module was based on MRP plan to schedule purchase orders of all materials from outside to
meet material requirements from the MRP [1]. Purchasing materials, including 2 types classified
by time of purchase:
- Long purchasing leadtime from overseas suppliers.
- Short purchasing leadtime from domestic suppliers.
Materials that have long purchasing leadtime, such as the Honda GX390T2 engine with LT = 60
days, would be purchased in advance of the forecasting demand. They would immidiately be taken
from the warehouse to the workshop when required.
Materials that have purchasing leadtime were divided into three types by value, including high
value, medium value, and low value. High value materials, such as the S20W-95 / A Mecc
alternator, would be ordered with Lot For Lot LFL method. The result was shown in the following
table.
Table 4.24 VRP plan for alternators (UOM: EA)

Sep 2017 December 2017 ...

Date 29 30 1 2 3 4 5 6 7 8 9 10 ...
Mecc S20W-95/AC alternators 3 0 6 5 5 6 0 7 0 2 4 4 ...
Mecc S16W-90/BA alternators 2 0 2 0 1 4 0 1 0 1 1 0 ...

Medium value materials, such as Steel plate, will be ordered with Fix Order Quantity FOQ method.
Steel plate has Q = 50 sheets, LT = 2 days. Purchase plan for Steel plate was shown in the following
table.
Table 4.25 Purchase plan for the Steel plate (UOM: Sheet)

December 2017
Date 27 28 29 30 31
Order quantity 50 0 0 0 0
Date 1 2 3 4 5 6 7
Order quantity 0 50 0 0 0 0 0
Date 8 9 10 11 12 13 14
Order quantity 0 50 0 0 0 0 0
Date 15 16 17 18 19 20 21
Order quantity 0 0 0 50 0 0 0
Date 22 23 24 25 26 27 28
Order quantity 0 0 0 0 0 0 0
Date 29 30 31
Order quantity 0 0 0
Similarly, the purchase plan for the remaining medium value materials were conducted in the
following table.
Table 4.26 The purchase plan for the medium value materials

Dec 2017 January 2018

Date UOM 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ...
Steel plate Sheet 50 0 0 0 0 0 50 0 0 0 0 0 0 50 0 0 0 0 0 ...
PO plate Sheet 0 20 0 0 0 0 0 20 0 0 0 20 0 0 0 0 0 0 0 ...
Bas Taplo EA 0 0 50 0 0 0 0 0 50 0 0 0 0 0 0 0 0 50 0 ...
Volt clock EA 0 0 100 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 0 ...
Rheostat EA 0 50 0 0 0 0 0 50 0 0 0 0 0 0 0 0 0 0 0 ...
Role EA 0 50 0 0 0 0 0 50 0 0 0 0 0 0 0 0 50 0 0 ...
Low value materials, such as Rhombus-shaped grid, round tube steel, round cos and wire, would
be ordered with Period Order Quantity POQ method, selected as weekly and performed in the
following table.
Table 4.27 The purchase plan for the low value materials

Dec 2017 January 2018

Date UOM 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ...
Rhombus-shaped grid Meter 0 0 0 0 0 86 0 0 0 0 0 0 58 0 0 0 0 0 0 ...
Round tube steel Meter 0 0 0 0 0 184 0 0 0 0 0 0 120 0 0 0 0 0 0 ...
Round cos EA 0 0 0 0 0 184 0 0 0 0 0 0 120 0 0 0 0 0 0 ...
Wire Meter 0 0 0 0 0 101 0 0 0 0 0 0 66 0 0 0 0 0 0 ...

5. CONCLUSION
This research had evaluated the status quo and developed a MRP II system for HT Company with
functional modules such as forecasting, order management, production planning, master
production schedule, material planning, capacity planning, and purchasing planning. Thus,
designing and integrating these functions with the aim of reducing production costs, improving
customer service levels and reducing late orders.
This study has the following advantages.
- Applied forecasting techniques to accurately forecast customer demand
- Applied the operations research method to minimize the cost of using resources when doing
production planning.
- Used the forecast consumption method to adjust the MPS. Checked the feasibility and
controlled the MPS through PAB, ATP models.
- Established material plans, capacity plans and purchase plans that met the MPS.
However, this research still had disadvantages, that it only studied and implemented on a specific
product line, and just stopped at the planning level. It had not been performed in practical
environment to test and evaluate the effectiveness of the system. These restrictions are intended
for further research, to further improve the system and towards the ERP system.
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