MRP and ERP

Lecture Note
Fahmy Radhi
 MRP
 MRP - a computer-based information
system designed to handle ordering and
scheduling of dependent-demand
inventories. It is designed to answer:
what, how much, and when is it needed.
 MRP Design
– MRP Inputs
– MRP Processing
– MRP Outputs
MRP Design
 MRP Inputs
 Master Schedule - contains which end items
are to be produced and when these are
needed, and in what quantities.
 Bill of Materials (BOM) - contains a listing
all of the assemblies, subassemblies, part, and
raw materials that are needed to produced one
unit of finished product.
 Inventory Record File - contains information
on the status of each item by time period
 MRP Processing
MRP Processing involves taking the end-
item requirements specified by the
master schedule and exploding them into
time-phased requirement of
reassembles, parts, and raw materials
using the bill of material offset by lead
times.
 MRP Processing
Some terms used in MRP processing:
 Gross Requirement (GR) - Total expected demand for
an items of raw material during each time period
 Schedule Receipts (SR) - open orders scheduled to
arrive from vendors or else where in the pipeline
 Projected On Hand (BOP) - expected amount of
inventory that will be on hand at the beginning of each
time period. BOP = SR + Inv. Last Period
 Net Requirement (NR) - The actual amount needed
in each time period
 Planned-order receipts (POR) - quantity expected to
be received by the beginning of the period in which it is
shown
 Planned-order Releases (PORs) - planned amount
order in each time period
 MRP Processing
 Lot-for-Lot Ordering (LFLO) - order
size equal to net requirement
 Lot-Size Ordering (LSO) - order
unequal to net requirement
 Safety Stock (SS) - stock that must be
available on hand during period time
 Formulas:
– BOP = SR + Inv. available from last period
– NRt = GRt - BOPt + SS
 MRP Outputs
 Primary Reports concern production and inventory
planning and control:
– planned orders - the amount and timing of future orders
– orders release - the execution of planned order
– changes - the revision of due dates or order quantities as
well as cancellations of orders
 Secondary reports - concern such things as
performance control, planning, and exceptions:
– performance control reports - evaluation of system
operation, including deviations from plans and cost
information
– planning reports - data useful for assessing future materials
requirements
– exception report - data on any major discrepancies
encountered
Product Structure Tree
 MRP Problem
 A firm that produced wood shutters and bookcases has
received two orders for shutters; one for 100 shutters
and one for 150 shutters. The 100-unit orders are due to
at the start of week 4 of the current schedule, and 150-
unit order is due for delivery at the start of week 8.
Each shutter consists of four slated wood section and
two frames. The wood section is made by firm, and
fabrication takes one week. The frames are ordered, and
lead time is two weeks. Assembly of the shutters
required one week. There is a scheduled receipt of 70
wood sections in week 1.
 Determine the size and timing of planned-order releases
necessary to meet delivery requirement under each of
these conditions:
– Lot-for-Lot Ordering
– Lot-size Ordering with a lot size of 320 units for frames and 70
units for wood sections
 Develop a Master Schedule

Week 1 2 3 4 5 6 7 8
Number

Quantity 100 150

 A Product Structure Tree

Shutter

Frame (2) Sections (4)

An Assembly Time Chart