MRP Basics and calculation of MRP explotions
- 2. MRP Material Requirements Planning (MRP)---a computerized information system developed specifically to aid in managing dependent demand and scheduling replenishment orders. 2 Other sources of demand Inventory transactions Inventory records Bills of materials Engineering and process designs Material requirements plan MRP explosion Authorized master production schedule
- 3. MRP Input & Output 3 Data Files Purchasing data BOM Lead times (Item master file) Inventory data Master production schedule Material requirement planning programs (computer and software) Output Reports MRP by period report MRP by date report Planned order report Purchase advice Exception reportsi Order early or late or not needed Order quantity too small or too large
- 4. Master Production Schedule (MPS) ■ Specifies what is to be made and when ■ The MPS is the result of the production planning process ■ MPS is established in terms of specific products ■ The MPS is quite often fixed or frozen in the near term part of the plan ■ The MPS is a statement of what is to be produced. 4
- 5. Inventory record ■ Accurate inventory records are absolutely required for MRP (or any dependent demand system) to operate correctly ■ Generally MRP systems require 99% accuracy ■ Outstanding purchase orders must accurately reflect quantities and scheduled receipts 5
- 6. Lead time ■ The time required to purchase, produce, or assemble an item ■ For production – the sum of the order, wait, move, setup, store, and run times ■ For purchased items – the time between the recognition of a need and the availability of the item for production 6
- 7. Bill of Material (BOM) ■ List of components, ingredients, and materials needed to make a product – Provides product structure – items above a given level are called parents – items below a given level are called children – items may be both a parent and a child 7
- 8. Pictorial example of a ladder back chair BOM Seat cushion Seat-frame boards Front legs A Ladder-back chair Back legs Leg supports Back slats 8
- 9. Product structure example of the same item C (1) Seat subassembly D (2) Front legs B (1) Ladder-back subassembly E (4) Leg supports I (1) Seat cushion H (1) Seat frame G (4) Back slats F (2) Back legs J (4) Seat-frame boards A Ladder-back chair 9
- 10. Block diagram of general example Item A B (2) C (3) D (2) E (2) E (2) F (2) D (2) G (1) 10
- 11. The MRP process begins by determining gross requirements – The production schedule for the end item – 50 units of Item A in week 8 – Using the lead time for the item, determine the week in which the order should be released – a 1 week lead time means the order for 50 units should be released in week 7 – This step is often called “lead time offset” or “time phasing” 11
- 12. Gross Requirements Plan 12 Week 1 2 3 4 5 6 7 8 Lead Time A. Required date 50 Order release date 50 1 week B. Required date 100 Order release date 100 2 weeks C. Required date 150 Order release date 150 1 week E. Required date 200 300 Order release date 200 300 2 weeks F. Required date 300 Order release date 300 3 weeks G. Required date 600 200 Order release date 600 200 1 week
- 13. Gross Requirements Plan 13 Week 1 2 3 4 5 6 7 8 Lead Time A. Required date 50 Order release date 50 1 week B. Required date 100 Order release date 100 2 weeks C. Required date 150 Order release date 150 1 week E. Required date 200 300 Order release date 200 300 2 weeks F. Required date 300 Order release date 300 3 weeks G. Required date 600 200 Order release date 600 200 1 week G. Required date 300
- 14. Gross Requirements Plan 14 Week 1 2 3 4 5 6 7 8 Lead Time A. Required date 50 Order release date 50 1 week B. Required date 100 Order release date 100 2 weeks C. Required date 150 Order release date 150 1 week E. Required date 200 300 Order release date 200 300 2 weeks F. Required date 300 Order release date 300 3 weeks G. Required date 600 200 Order release date 600 200 1 week G. Required date 300 Order release date 300 2
- 17. Net Requirements Plan Continues 17
- 18. MRP Management ■ MRP is a dynamic system ■ Facilitates re-planning when changes occur ■ System nervousness can result from too many changes ■ Time fences put limits on re-planning ■ Pegging links each item to its parent allowing effective analysis of changes ■ Adequate staffing and accurate records are pre-requisites to operational success 18
Editor's Notes
- #18: FPO – Firm Planned Orders also help control re-planning, as well as allowing intentional over-rides.