Material Requirements Planning

MRP :A system of planning and scheduling the time-phased materials requirement for production operations Reactive system ( What should I do now ) to what will I be needing in the future how much and when?

Material Requirements Planning (MRP)

Key

to successful production and operations management is balancing of requirements and capacities Objectives
Inventory
MRP

reduction

enables the manager to produce that component as it is needed avoiding costs of excessive inventory
Reduction

in production and delivery lead time Realistic Commitments Increased efficiency

reduces

unplanned interruption

Material Requirements Planning

MRP
A

requires

system for accurate inventory and product build up information A realistic master production schedule Discipline and commitment by schedulers, supervisors, managers and shop floor employees to make the system work Keep the system honest accurate and believable

Material Requirements Planning

Demand
Degree

dependency

to which the demand for some item is associated with the demand for another item Thus if one is known the other can be predicted (if the demand for the end product is known the demand for sub components can be predicted)
Independent
Demand

demand

for one item is unrelated to the demand for others

Reactive

inventory control system (order quantity reorder point systems) ignore the distinction between dependent and independent demand

Material Requirements Planning

MRP

is more beneficial for dependent demand components

No

requirement for Large safety stocks Accumulation of cycle stocks

Operations planning and scheduling system

Business plan

Output Planning

Operations

Capacity planning

Aggregate output Aggregate output planning Planning Master Production Scheduling MRP Loading

Aggregate Capacity Planning Rough cut capacity planning Detailed capacity planning

Sequencing

Detailed scheduling

Shop Floor Control

Short term capacity control

Expediting

Material Requirements Planning

MRP system components
Master Production Schedule (MPS)

Inventory Status File

MRP Processing Logic

Bill Of Material File

Order release requirement (Orders to be released now)

Orders rescheduling (expedite deexpedite cancel open orders)

Planned Order (Futures)

Material Requirements Planning

MPS
Input

to the MRP system Developed from firm customer orders or demand forecast Identifies the quantity of each end product and when it needs to be produced during each future period in the production planning horizon Orders for replacement (service) components are also entered as end items in MPS Provides focal information for the MRP

Material Requirements Planning

BOM

- provides build up structure

A End Products (Upper Level Items) D

Components

2F
E

(Lower Level Items)

3G

2H

Material Requirements Planning

Precisely

identifying levels in product structure brings out the relationship among components Each item is given a unique identification number Thus scheduling and time phasing the orders for correct lower level components in the product structure becomes possible

Material Requirements Planning

Inventory

Status file

Provides

accurate information about the availability of every item controlled by MRP system Contains the following information on each component
the

identification number Quantity on hand Safety stock level Quantity disbursed / allocated Lead time

Material Requirements Planning

MRP

Processing Logic

Accepts

the master schedule and determines the component schedule for successively lower level items of the product structure It calculates for each item in each product structure and for each time period (typically one week ) in the planning horizon how many of that item are needed ( gross requirements ) How much inventory is available Planned order receipts Planned order releases

Material Requirements Planning

Planned
The

Order Receipts

quantity of an item that is planned to be ordered so that it will be received at the beginning of the time period to meet net requirements for the period. The order has not yet been placed
Planned

order release

Quantity

of an item that is planned to be ordered and the planned period for releasing this order that will result in the order being received when needed Planned order receipt offset in time by the items lead time. When this order is placed (released), It becomes a scheduled receipt and is delete from planned order receipts and planned order releases.

Material Requirements Planning

When

the order is placed (released) it becomes a scheduled release and is deleted from planned order receipts and planned order releases
Scheduled
The

Receipts

quantity of an item that will be received from suppliers as a result of orders that have been placed (open orders) Net requirements
Net

quantity of an item that must be acquired to meet the scheduled output for the period calculated as gross requirements minus scheduled receipt for the period minus amounts available from the previous period

Material Requirements Planning

Terminology Allocated Quantity
The

quantity of an item in inventory that has been committed for use and is not available for future requirements
Gross

Requirements

Over all quantity of an item needed at the end of a period to meet planned output levels. Planned output for end items is obtained from the MPS. Planned output for the lower level items is obtained from the MRP system
Schedule
The

Receipts

quantity of an item that will be received at the beginning of a time period from suppliers as a result of orders that have been placed (open orders)

Material Requirements Planning

Available
The

Quantity

quantity of an item expected to be available at the end of a time period for meeting requirements in the succeeding periods. Calculated as
receipts + planned order receipts gross requirements for the period + amounts available from the previous period
Scheduled

Material Requirements Planning

Information
MRP

processing Sequence

processing logic is applied first to the high level items (end products) in the product structure and then to items in the next lower level. It continues downwards level by level until it has determined the requirement for all items in the product structure.
Indented

Bill Of Material

Provides

information about the end items relationsip to all its components

Material Requirements Planning

Product
To

Explosion / BOM explosion

create a parent item we often need multiple units of a lower level item . e.g one unit of H requires four units of E Hence the planned order release of 450 units of H in week 7 must be multiplied by four (4 X 450 = 1800 ) to determine the gross requirement of E in week 7
Low

level Coding

Often

a single item exists in several levels of the product structure. e.g. Item E for example exists at both levels 1 and 2 for end time H. To improve efficiency of calculations MRP assigns the item to the lowest level E is treated as level 2 item gross requirements are determined from the planned order releases of its parent item F,G and H

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Material Requirements Planning

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Material Requirements Planning

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Material Requirements Planning

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Material Requirements Planning

Material Requirements Planning

Material Requirements Planning