03 - Production Planning MPS MRP

MPS – MRP and Capacity
Management
To accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Fourth Edition 1996 Addison-Wesley
Publishing Company, Inc. All rights reserved.
The Master Schedule is:

• The formal link between production
planning and actual production
• The basis for calculation of resources
needed
• The driving force behind the material
requirements plan
• The primary priority plan for
manufacturing
Information Needed to Develop
an MPS
• Production Plan data
• Forecasts
• Actual customer orders
• Inventory levels
• Capacity constraints
Objectives and Steps for the

MPS
• Objectives –
– Maintain good customer service
– Make effective use of resources
– Maintain effective levels of inventory
• Accomplished by:
– Develop a preliminary MPS
– Check MPS against capacity and
resources
– Reconcile any differences
Rough-cut Capacity Planning
• Establishes whether critical resources
are available
– Bottleneck operations
– Critical labor resources
– Critical material
• Often uses a resource bill for a single
product
MPS Planning Horizon

• Minimum time horizon over which the
master schedule must extend to ensure
complete planning
• Calculated as the longest end-to-end
lead time of the product structure
EXAMPLE - Cumulative Planning
Horizon
• For this product – Minimum Planning Horizon 12
weeks
Figure 3.5 Product structure critical lead time
Delivery Promises
• MPS is a plan for what production can
and will do
• Sales delivery promises can be made
from
– “Consumption” of forecasts – Projected
available balance
– Available to Promise calculations
• MPS values for a given time period left after
actual customer orders are subtracted.
Time Fences
• Points in the planning horizon to define the
flexibility allowed in the MPS
– Frozen Zone (closest to current date)
• Capacity and materials committed to customer orders,
forecast generally ignored
• Senior management approval for changes
– Slushy Zone
• Less commitment of materials and capacity
• Tradeoffs negotiated between marketing and
manufacturing
– Liquid Zone – All changes allowed within limits of
the Production Plan
Wood.Com
Bill of Materials
Back slats Seat cushion
Leg supports Seat-frame

boards
Back Front
legs legs A
Ladder-back
chair
Bill of Materials
A Ladder-back
chair
B (1) C (1) D (2) E (4)

Ladder-back Seat Front Leg
subassembly subassembly legs supports
F (2) G (4) H (1) I (1)

Back legs Back slats Seat frame Seat cushion
J (4)
Seat-frame boards
Master Production Schedule – MPS
April May
1 2 3 4 5 6 7 8
Ladder-back chair
Kitchen chair
Desk chair
Aggregate
production plan 400 400
for chair family
April May
1 2 3 4 5 6 7 8
Ladder-back chair 30 30 30 30 45 45 45 45
Kitchen chair 60 60 50 50
Desk chair 80 80 60 60
Aggregate
production plan 400 400
for chair family
Order Policy: 150 units
Item: Ladder-back chair A Lead Time: 1 week
April May
1 2 3 4 5 6 7 8
Forecast
Customer Orders
(booked)
Projected on hand
Inventory
MPS quantity
MPS start
Master Production Schedule

Item: Ladder-back chair Lead Time: 1 week
April May
Quantity 55
on Hand: 1 2 3 4 5 6 7 8
Forecast 30 30
Customer
orders 38 27
(booked)
Projected
on-hand
inventory
MPS quantity
MPS start
April May

Quantity 55
on Hand: 1 2 3 4 5 556chairs7 8
Inventory = currently
Forecast 30 30 in stock

Customer
orders 38 27 MPS quantity
(booked)
+ (zero for
Projected week 1)
on-hand
inventory

38 chairs already
MPS quantity 0 - promised for = 17 chairs
delivery in week 1
MPS start

April May

Quantity 55
on Hand: 1 2 3 4 5 556chairs7 8

Customer
(booked)
+ (zero for
Projected week 1)
on-hand 17
inventory

38 chairs already
MPS quantity 0 - promised for = 17 chairs
delivery in week 1
MPS start
April May
Quantity 55
on Hand: 1 2 3 4 5 6 7 8
Forecast 30 30
Customer
orders 38 27
(booked)
Projected
on-hand 17
inventory
MPS quantity 0
MPS start

April May

Quantity 55
on Hand: 1 2 3 4 5 176chairs7 8

Customer
(booked)
+ (zero for
Projected week 2)
on-hand 17
inventory

30 chairs already
MPS quantity 0 - promised for = -13 chairs
delivery in week 1
MPS start
April May

Quantity 55
on Hand: 1 2 3 4 5 176chairs7 8

Customer
(booked)
+ (zero for
Projected week 2)
on-hand 17 -13
inventory

30 chairs already
MPS quantity 0 - promised for = -13 chairs
delivery in week 1
MPS start

April May

Quantity 55
on Hand: 1 2 3 4 5 176chairs7 8

Customer
(booked)
+ (150 for
Projected week 2)
on-hand 17
inventory

30 chairs already
MPS quantity 0 150 - promised for = 137 chairs
delivery in week 1
MPS start
April May

Quantity 55
on Hand: 1 2 3 4 5 176chairs7 8

Customer
(booked)
+ (150 for
Projected week 2)
on-hand 17 137
inventory

30 chairs already
delivery in week 1
MPS start

April May

Quantity 55
on Hand: 1 2 3 4 5 176chairs7 8

Customer
(booked)
+ (150 for
Projected week 2)
on-hand 17 137
inventory

30 chairs already
delivery in week 1
MPS start 150
April May
Quantity 55
on Hand: 1 2 3 4 5 6 7 8
Forecast 30 30 30 30 45 45 45 45
Customer
orders 38 27 24 8 0 0 0 0
(booked)
Projected
on-hand 17 137 107 77 32 137 92 47
inventory
MPS quantity 0 150 0 0 0 150 0 0
MPS start 150 0 0 0 150 0 0 0
Rough-Cut
Capacity
Planning
Wood.Com
Critical
Item Workstation (hr) Total (hr)
A 0.50 0.5
B 1.2 1.2
Week
Item Total
Units
1 2 3 4 5 6 7 8
A 40 25 40 15 20 40 25 40 245
B 20 10 30 20 10 30 20 10 150
Wood.Com
Critical
Item Workstation (hr) Total (hr)
A 0.50 0.5
B 1.2 1.2
Week
Item Total
Hr
1 2 3 4 5 6 7 8
A 20 12.5 20 7.5 10 20 12.5 20 122.5
B 24 12 36 24 12 36 24 12 180
Total
44 24.5 56 31.5 22 56 36.5 32 302.5
Hr
Wood.Com 30%
3 teams * 8h * 52 weeks
0810M
machine
Machine 30%
0900M
0820M
machine
Critical Non-Critical
Workstation Workstation
Critical Noncritical 40%
Item Workstation (hr) Workstation (hr) Total (hr)
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Routings To accompany Krajewski & Ritzman Operations Management: Strategy and Analysis, Fourth Edition 1996 Addison-Wesley
Week
Item Total
Units
1 2 3 4 5 6 7 8
A 150 150 300
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
Critical Noncritical
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
using Overall Factors
Quarter
Load
Factor
Work station 1 2 3 4 Total (%)
0810M 1,140 1,285 1,175 1,300 4,900

0820M 2,130 2,140 2,100 2,180 8,550
Total
critical hrs 3,270 3,425 3,275 3,480 13,450
Total non-
critical hrs 5,200 5,150 5,000 5,300 20,650
Capacity Planning
Quarter
Load
Factor
0810M 1,140 1,285 1,175 1,300 4,900

0820M 2,130 2,140 2,100 2,180 8,550
Total
critical hrs 3,270 3,425 3,275 3,480 13,450
Total non-
critical hrs 5,200 5,150 5,000 5,300 20,650
Capacity Planning
4,900
13,450 Quarter
Load
Factor
0810M 1,140 1,285 1,175 1,300 4,900

0820M 2,130 2,140 2,100 2,180 8,550
Total
critical hrs 3,270 3,425 3,275 3,480 13,450
Total non-
critical hrs 5,200 5,150 5,000 5,300 20,650
Capacity Planning
4,900
= 36%
13,450 Quarter
Load
Factor
0810M 1,140 1,285 1,175 1,300 4,900

0820M 2,130 2,140 2,100 2,180 8,550
Total
critical hrs 3,270 3,425 3,275 3,480 13,450
Total non-
critical hrs 5,200 5,150 5,000 5,300 20,650
Capacity Planning
4,900
= 36%
13,550Quarter
Load
Factor
Work station 1 8,5502 3 4 Total (%)
13,450
0810M 1,140 1,285 1,175 1,300 4,900
0820M 2,130 2,140 2,100 2,180 8,550
Total
critical hrs 3,270 3,425 3,275 3,480 13,450
Total non-
critical hrs 5,200 5,150 5,000 5,300 20,650
Capacity Planning
4,900
= 36%
13,450 Quarter
Load
Factor
Work station 1 8,5502 = 64%
3 4 Total (%)
13,450
0810M 1,140 1,285 1,175 1,300 4,900
0820M 2,130 2,140 2,100 2,180 8,550
Total
critical hrs 3,270 3,425 3,275 3,480 13,450
Total non-
critical hrs 5,200 5,150 5,000 5,300 20,650
Capacity Planning
Quarter
Load
Factor
0810M 1,140 1,285 1,175 1,300 4,900 36

0820M 2,130 2,140 2,100 2,180 8,550 64
Total
critical hrs 3,270 3,425 3,275 3,480 13,450 100
Total non-
critical hrs 5,200 5,150 5,000 5,300 20,650
Capacity Planning
Week
Item Total
Units
1 2 3 4 5 6 7 8
A 150 150 300
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
using Overall Factors Load Profile Worksheet
0810M - 36%
Week 0820M - 64%
Item Total
Units
1 2 3 4 5 6 7 8
A 150 150 300
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
0810M - 36%
Week
Item 0820M - 64%
Total
Units
1 2 3 4 Week
5 61 7 8
150 (1.60)
A 150 150 300
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
0810M - 36%
Week
Item 0820M - 64%
Total
Units
1 2 3 4 Week
5 61 7 8
150 (1.60) + 50 (6.07)
A 150 150 300
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
0810M - 36%
Week
Item 0820M - 64%
Total
Units
1 2 3 4 Week
5 61 7 8
150 (1.60) + 50 (6.07)+75 (5.04)
A 150 150 300
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
0810M - 36%
Week
Item 0820M - 64%
Total
Units
1 2 3 4 Week
5 1 6 7 8
150 (1.60) + 50 (6.07) +75 (5.04) = 921.5
A 150 150 300
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
0810M - 36%
Week
Item 0820M - 64%
Total
Units
1 2 3 4 Week
5 1 6 7 8
150 (1.60) + 50 (6.07) +75 (5.04) = 921,5
A 150 150 300
For 0810M
.36 (921.5)  332
B 50 50 50 50 50 50 50 50 400
C 75 75 75 75 300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
0810M - 36%
Week 0820M - 64%
Item Total
Units
1 2 3 4 Week
5 1 6 7 8
150 (1.60) + 50 (6.07) +75 (5.04) =921,5
A 150 150 300
For 0810M
.36 (921.5)  332
B 50 50 50 50 50 50 50 50 400
For 0820M
C 75 75 75 75
.64 (921.5)  590
300
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
Week 0810M - 36%
Total
Item 0820M - 64%
Units
1 2 3 4 5 6 7 8
Week 1
150 (1.60) + 50 (6.07) +75 (5.04) =921,5
A 150 150 300
For 0810M
B 50 50 50 50 50 50 .36 50  332
50(921.5) 400
C 75 75 75 For 0820M
75 300
.64 (921.5)  590
A 1.60 0.00 1.60
B 6.07 8.00 14.07
C 5.04 4.00 9.04
Capacity Planning
Load Profile Worksheet
using Overall Factors Week 0810M - 36%
0820M - 64%
Workstation 1 2 3 4 5 6 7 8 Total
Week 1
0810M (36%) 150 (1.60) + 50 (6.07) +75 (5.04) =921,5
0820M (64%)
For 0810M
Total critical .36 (921.5)  332
hours
For 0820M
Total non- .64 (921.5)  590
critical hours
Total labor
hours
Capacity Planning
Load Profile Worksheet
Week
0810M - 36%
Workstation 1 2 3 4 5 0820M
6 -7 64%8 Total
0810M (36%) 332 Week 1

0820M (64%) 590 150 (1.60) + 50 (6.07) +75 (5.04) =921,5
Total critical For 0810M

hours 922 .36 (921.5)  332
For 0820M
Total non- .64 (921.5)  590
critical hours
Total labor
hours
Capacity Planning
Week
Workstation 1 2 3 4 5 6 7 8 Total
0810M (36%) 332 109 245 109 245 196 245 109 1590
0820M (64%) 590 194 436 194 436 349 436 194 2829
Total critical
hours 922 303 681 303 681 545 681 303 4419
Total non-
critical hours
Total labor
hours
Capacity Planning
700
600
500
400
300
200
100
0
1 2 3 4 5 6 7 8
0810A (36%) 0820B (64%)
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)
• Major Objectives of MRP
– Determine Requirements – Calculated to
meet product requirements defined in the
MPS
• What to order
• How much to order
• When to order
• When to schedule delivery
– Keep Priorities Current
Links To Other Plan Functions
Figure 4.2 Manufacturing planning and control systems
Major Inputs to MRP

• Master Production Schedule 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
Bill of Material Points
• The BOM shows all parts to make one
of the item
• Each part has one, and only one, part
number
• A part is defined by form, fit, and
function – any change requires a new
part number
Major Uses for Bills of Material

• Defines the product
• Provides method for design change
control
• Planning – What is needed and when
• Order entry – order configuration and
pricing
• Production – Parts needed to assemble
a product
• Costing – material cost of goods sold
Some Key Terms
• Lead time – span of time for a process
• Exploding – process of multiplying
requirements by usage to get BOM
requirements
• Offsetting – Placing requirements in the
proper period based on lead time
• Planned orders – Orders planned during the
explosion, but not yet released for processing
• Low-level code – lowest level on which a part
resides on the Bill of Materials
Some Key Terms, Continued

• Scheduled receipts – Open orders released
for processing (production or purchase)
scheduled to be received at a defined time.
• Gross Requirements – Total of a component
needed to meet requirements not taking any
existing inventory into account
• Net Requirements – Actual amount of a
component needed to meet requirement after
existing requirements taken into account
Points About the MRP Record
• Current time – beginning of first period (often
called time buckets)
• Items considered available at beginning of
period
• Quantity in Projected Available row
considered at end of period
• Current period often called action bucket –
action should be taken to avoid a future
problem
Planner Responsibilities for

MRP
• Launch Orders – Production or
Purchasing
• Reschedule orders as required
• Reconcile errors and search for causes
• Solve critical material shortages
– Replan
– Expedite
• Coordinate with other functions to
resolve problems
Other Key Terms
• Firm Planned orders – Orders not yet
released, but “frozen” in quantity and time to
reduce system “nervousness”
• Exception messages – messages generated
by the computer signaling planner action
needed
• Bottom-up replanning – actions to correct for
changed conditions made as low as possible
in the product structure
Material Requirement Planning
How
Much?
When!
MRP Processing
Item: Lot Size:
Description: Lead Time:
Safety Stock:
Week
1 2 3 4 5 6 7 8
Gross
requirements
Scheduled
receipts
Projected
on-hand
inventory
Planned
receipts
Planned order
releases
MRP Processing
Item: C Lot Size: 230 units
Description: Seat subassembly Lead Time: 2 weeks
Safety Stock: 50 units
Week
1 2 3 4 5 6 7 8
Gross
requirements
Scheduled
receipts
Projected
on-hand
inventory
Planned
receipts
Planned order
releases
MRP Processing Week
Item: C 1 2 3Lot Size:

4 230
5 units
6 7 8
Description: Seat subassembly
Ladder-back Lead Time: 2 weeks
150 150
chair
Kitchen
120 120
chair Week
1 2 3 4 5 6 7 8
Gross
requirements
Scheduled
receipts
Projected
on-hand
inventory
Planned
receipts
Planned order
releases
MRP Processing Week
Item: C 1 2 3Lot Size:

4 230
5 units
6 7 8
Description: Seat subassembly
Ladder-back Lead Time: 2 weeks
150 Safety Stock: 150
50 units
chair
Kitchen
120 120
chair Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts
Projected
on-hand
inventory
Planned
receipts
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47
inventory
Planned
receipts
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47
inventory
Planned
receipts
47 + 230 + 0 - 150 = 127
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127
inventory
Planned
receipts
47 + 230 + 0 - 150 = 127
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127
inventory
Planned
receipts
47 + 230 + 0 - 150 = 127
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127
inventory
Planned
receipts
127 + 0 + 0 - 0 = 127
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0
Projected
on-hand 47 127 127 127
inventory
Planned
receipts
127 + 0 + 0 - 0 = 127
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0
Projected
on-hand 47 127 127 127
inventory
Planned
receipts
127 + 0 + 0 - 0 = 127
Planned order
releases
MRP Processing
127 + 0 + 0 - 120 = 7
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0
Projected
on-hand 47 127 127 127
inventory
Planned
receipts
Planned order
releases
MRP Processing
127 + 0 + 0 - 120 = 7
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0 0
Projected
on-hand 47 127 127 127 7
inventory
Planned
receipts
Planned order
releases
MRP Processing
127 + 0 + 0 - 120 = 7
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0 0
Projected
on-hand 47 127 127 127 7
inventory
Planned
receipts
Planned order
releases
MRP Processing
127 + 0 + 230 - 120 = 237
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0 0
Projected
on-hand 47 127 127 127 237
inventory
Planned
receipts 230
Planned order
releases
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0 0
Projected
on-hand 47 127 127 127 237
inventory
Planned
receipts 230
Planned order
releases 230
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0 0
Projected
on-hand 47 127 127 127 237
inventory
Planned
receipts 230
Planned order
releases 230
MRP Processing
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 0 0 120 0 150 120 0
Scheduled
receipts 230 0 0 0 0 0 0 0
Projected
on-hand 47 127 127 127 237 237 87 197 197
inventory
Planned
receipts 230 230
Planned order
releases 230 230
Lot
Sizing
Rules
MRP - POQ Rule

Item: C Lot Size: P = 3
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127
inventory
Planned
receipts
Planned order
releases
MRP - POQ Rule
POQ = (120 + 0 + 150) + 50 - 127
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127
inventory
Planned
receipts
Planned order
releases
MRP - POQ Rule

193 = (120 + 0 + 150) + 50 - 127
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127
inventory
Planned
receipts 193
Planned order
releases
MRP - POQ Rule
127 + 0 + 193 - 120 = 200
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127 200
inventory
Planned
receipts 193
Planned order
releases
MRP - POQ Rule

Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127 200 200 50 50 50
inventory
Planned
receipts 193 120
Planned order
releases 193 120
MRP - L4L Rule
Item: C Lot Size: L4L
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127
inventory
Planned
receipts
Planned order
releases
MRP - L4L Rule

120 + 50 - 127 = 43
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127
inventory
Planned
receipts
Planned order
releases
MRP - L4L Rule
120 + 50 - 127 = 43
Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127
inventory
Planned
receipts 43
Planned order
releases
MRP - L4L Rule

Week
1 2 3 4 5 6 7 8
Gross
requirements 150 120 0 150 120 0
Scheduled
receipts 230
Projected
on-hand 47 127 127 127 50 50 50 50 50
inventory
Planned
receipts 43 150 120
Planned order
releases 43 150 120
MRP Explosion
A Level 0 B
C (1) Level 1 D (4)
D (1) Level 2
MRP Explosion
MPS for A MPS for B
Item: A Item: B
Lead Time: 2 weeks Lead Time: 1 week
Week Week
23 A24 25 26 27 Level
28 29 0 23 24 25 B
26 27 28 29
MPS quantity 100 75 90 MPS quantity 5 10 15
MPS start 100 75 90 MPS start 5 10 15
C (1) Level 1 D (4)
D (1) Level 2
MRP Explosion
MPS for A MPS for B
Item: A Item: B
Week Week
23 A24 25 26 27 Level
28 29 0 23 24 25 B
26 27 28 29
Item: C
C (1) Level 1 D (4)
Week
23 24 25 26 27 28 29
Gross
100 75 90
requirements
Scheduled
receipts
D (1)
150 Level 2
Projected
on-hand 15 65 65 140 140 50 50 50
inventory
Planned
receipts 150
Planned order
150
releases
MRP Explosion
MPS for A MPS for B
Item: A Item: B
Week Week
23 A24 25 26 27 Level
28 29 0 23 24 25 B
26 27 28 29
Service
Item: C
C (1) Level 1 D (4) Part Order:
20 units in
week 29
Week
23 24 25 26 27 28 29
Item: D
Gross
100 75 90
requirements
Scheduled
receipts
D (1)
150 Level 2 Week
Projected 23 24 25 26 27 28 29
on-hand 15 65 65 140 140 50 50 50
inventory
Gross
Planned requirements 170 40 60 20
receipts 150
Planned order
150
releases
MRP Outputs
MRP
explosion
Material requirements plan
Action notices Priority reports Capacity reports

• Releasing new orders • Dispatch lists • CRP
• Adjusting due dates • Supplier schedules • Input–output control
Routings
and time
standards
Manufacturing resources plan

Cost and
Performance reports price data
Item A MPS Order Policy 50 unit

Qty on hand 55 Lead Time 1 week
1 2 3 4 5 6 7 8 9 10
Forecast 20 10 40 10 0 0 30 20 40 20
Customer 30 20 5 8 0 2 0 0 0 0
order
Projected
on hand
inventory
MPS Qty
MPS Start
Item A MPS Order Policy 50 unit
1 2 3 4 5 6 7 8 9 10
Forecast 20 10 40 10 0 0 30 20 40 20
Customer 30 20 5 8 0 2 0 0 0 0
order
Projected 25 5 15 5 5 3 23 3 13 43
on hand
inventory
MPS Qty 0 0 50 0 0 0 50 0 50 50
MPS Start 50 50 50 50
Item B MRP Order Policy POQ 3

1 2 3 4 5 6 7 8 9 10
Gross
Requirem
ent
Scheduled
receipts
Projected
on hand
inventory
OF
Receipts
OF
Releases
Item B MRP Order Policy POQ 3
1 2 3 4 5 6 7 8 9 10
Gross 150 150 150 150
Requirem
ent
Scheduled
receipts
Projected 180 30 30 30 30 180 180 30 30
on hand
inventory
OF 300 150
Receipts
OF 300 150
Releases
Item C MRP Order Policy L4L

1 2 3 4 5 6 7 8 9 10
Gross 50 50 50 50
Requirem
ent
Scheduled 200
receipts
Projected 120 270 270 270 270 220 220 170 120
on hand
inventory
OF
Receipts
OF
Releases
Item D MRP Order Policy FOQ 500
1 2 3 4 5 6 7 8 9 10
Gross 300 150
Requirem
ent
Scheduled
receipts
Projected 425 425 425 425 125 125 125 475 475 475
on hand
inventory
OA 500
Receipts
OA 500
Releases

03 - Production Planning MPS MRP

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03 - Production Planning MPS MRP

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MPS – MRP and Capacity

The Master Schedule is:

Objectives and Steps for the

MPS Planning Horizon

Figure 3.5 Product structure critical lead time

Back slats Seat cushion

Leg supports Seat-frame

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

F (2) G (4) H (1) I (1)

Master Production Schedule – MPS

Master Production Schedule

Master Production Schedule

Master Production Schedule

Master Production Schedule

Master Production Schedule

MPS quantity 0 150 0 0 0 150 0 0

MPS start 150 0 0 0 150 0 0 0

A 20 12.5 20 7.5 10 20 12.5 20 122.5

A 150 150 300

0810M 1,140 1,285 1,175 1,300 4,900

0810M 1,140 1,285 1,175 1,300 4,900

0810M 1,140 1,285 1,175 1,300 4,900

0810M 1,140 1,285 1,175 1,300 4,900

0810M 1,140 1,285 1,175 1,300 4,900 36

A 150 150 300

A 150 150 300

0810M (36%) 332 Week 1

Total critical For 0810M

0810A (36%) 0820B (64%)

Dependent Demand Approach –

Figure 4.2 Manufacturing planning and control systems

Major Inputs to MRP

Major Uses for Bills of Material

Some Key Terms, Continued

Planner Responsibilities for

Material Requirement Planning

Item: C 1 2 3Lot Size:

MRP Processing Week

Item: C 1 2 3Lot Size:

MRP - POQ Rule

MRP - POQ Rule

MRP - POQ Rule

MRP - L4L Rule

MRP - L4L Rule

C (1) Level 1 D (4)

MPS quantity 100 75 90 MPS quantity 5 10 15

MPS start 100 75 90 MPS start 5 10 15

C (1) Level 1 D (4)

MPS quantity 100 75 90 MPS quantity 5 10 15

MPS start 100 75 90 MPS start 5 10 15

MPS quantity 100 75 90 MPS quantity 5 10 15

MPS start 100 75 90 MPS start 5 10 15

Material requirements plan

Action notices Priority reports Capacity reports

Manufacturing resources plan

Item A MPS Order Policy 50 unit

Item B MRP Order Policy POQ 3

Item C MRP Order Policy L4L

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