Scribd Logo
Upload

Welcome to Scribd!

  • 210 views

    Material Requirements Planning

    Uploaded by

    azharama
    This document provides an overview of material requirements planning (MRP). It begins by explaining the hierarchy of production decisions and how MRP fits within aggregate planning and the master production schedule. It then defines the key inputs and outputs of an MRP system, including bills of materials, inventory data, and production schedules. The document demonstrates how to calculate net material requirements and order timing through a sample MRP calculation for a ladder-back chair. Finally, it defines some key MRP terms like scheduled receipts and lot-for-lot ordering policies.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    Material Requirements Planning

    Uploaded by

    azharama
    210 views40 pages
    This document provides an overview of material requirements planning (MRP). It begins by explaining the hierarchy of production decisions and how MRP fits within aggregate planning and the master production schedule. It then defines the key inputs and outputs of an MRP system, including bills of materials, inventory data, and production schedules. The document demonstrates how to calculate net material requirements and order timing through a sample MRP calculation for a ladder-back chair. Finally, it defines some key MRP terms like scheduled receipts and lot-for-lot ordering policies.

    Original Description:

    Material Requirements Planning lecture guide

    Copyright

    © © All Rights Reserved

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides an overview of material requirements planning (MRP). It begins by explaining the hierarchy of production decisions and how MRP fits within aggregate planning and the master production schedule. It then defines the key inputs and outputs of an MRP system, including bills of materials, inventory data, and production schedules. The document demonstrates how to calculate net material requirements and order timing through a sample MRP calculation for a ladder-back chair. Finally, it defines some key MRP terms like scheduled receipts and lot-for-lot ordering policies.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    210 views40 pages

    Material Requirements Planning

    Uploaded by

    azharama
    This document provides an overview of material requirements planning (MRP). It begins by explaining the hierarchy of production decisions and how MRP fits within aggregate planning and the master production schedule. It then defines the key inputs and outputs of an MRP system, including bills of materials, inventory data, and production schedules. The document demonstrates how to calculate net material requirements and order timing through a sample MRP calculation for a ladder-back chair. Finally, it defines some key MRP terms like scheduled receipts and lot-for-lot ordering policies.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 40

    LESSON 21: MATERIAL REQUIREMENTS

    PLANNING
    Outline

    Hierarchy of Production Decisions


    MRP and its importance
    Input and Output of an MRP system
    MRP Calculation
    Lot Sizing
    Lot Sizing with Capacity Constraint
    1

    Hierarchy of Production Decisions


    The next slide presents a schematic view of the aggregate
    production planning function and its place in the hierarchy of
    the production planning decisions.
    Forecasting: First, a firm must forecast demand for
    aggregate sales over the planning horizon.
    Aggregate planning: The forecasts provide inputs for
    determining aggregate production and workforce levels over
    the planning horizon.
    Master production schedule (MPS): Recall, that the
    aggregate production plan does not consider any real
    product but a fictitious aggregate product. The MPS
    translates the aggregate plan output in terms of specific
    production goals by product and time period. For example,
    2

    Hierarchy of Production Decisions


    F o re c a s t o f D e m a n d
    A g g r e g a t e P la n n in g
    M a s t e r P r o d u c t io n S c h e d u le
    In v e n to ry C o n tro l
    O p e r a t io n s S c h e d u lin g
    V e h ic le R o u t in g

    Hierarchy of Production Decisions


    suppose that a firm produces three types of chairs: ladderback chair, kitchen chair and desk chair. The aggregate
    production considers a fictitious aggregate unit of chair and
    find that the firm should produce 550 units of chairs in April.
    The MPS then translates this output in terms of three
    product types and four work-weeks in April. The MPS
    suggests that the firm produce 200 units of desk chairs in
    Week 1, 150 units of ladder-back chair in Week 2, and 200
    units of kitchen chairs in Week 3.
    Material Requirements Planning (MRP): A product is
    manufactured from some components or subassemblies.
    For example a chair may require two back legs, two front
    legs, 4 leg supports, etc. While forecasting, aggregate plan
    4

    Hierarchy of Production Decisions


    Master Production Schedule
    April
    1
    Ladder-back chair

    Aggregate
    production plan
    for chair family

    150

    150
    200

    Kitchen chair
    Desk chair

    May

    200

    120

    120

    200

    550

    200

    790

    Hierarchy of Production Decisions


    and MPS consider the volume of finished products, MRP
    plans for the components, and subassemblies. A firm may
    obtain the components by in-house production or
    purchasing. MRP prepares a plan of in-house production or
    purchasing requirements of components and
    subassemblies.
    Scheduling: Scheduling allocates resource over times in
    order to produce the products. The resources include
    workers, machines and tools.
    Vehicle Routing: After the products are produced, the firm
    may deliver the products to some other manufacturers, or
    warehouses. The vehicle routing allocates vehicles and
    prepares a route for each vehicle.
    6

    Hierarchy of Production Decisions


    Materials Requirement Planning

    Back
    legs

    Back slats

    Seat cushion

    Leg supports

    Seat-frame
    boards

    Front
    legs

    Material Requirements Planning


    The demands for the finished goods are obtained
    from forecasting. These demands are called
    independent demand.
    The demands for the components or subassemblies
    depend on those for the finished goods. These
    demands are called dependent demand.
    Material Requirements Planning (MRP) is used for
    dependent demand and for both assembly and
    manufacturing
    If the finished product is composed of many
    components, MRP can be used to optimize the
    inventory costs.
    8

    Importance of an MRP System


    Next two slides explain the importance of an MRP
    system. The first one shows inventory levels when an
    MRP system is not used. The next one shows the same
    when an MRP system is used.
    The chart at the top shows inventory levels of the
    finished goods and the chart on the bottom shows the
    same of the components.
    If the production is stopped (like it is at the beginning of
    the chart), the finished goods inventory level decreases
    because of sales. However, the component inventory
    level remains unchanged. When the production
    resumes, the finished goods inventory level increases,
    but the component inventory level decreases.
    9

    Importance of an MRP System


    Inventory
    without
    an MRP
    System

    10

    Importance of an MRP System


    Inventory
    with an
    MRP
    System

    11

    Importance of an MRP System


    Without an MRP system:
    Component is ordered at time A, when the inventory
    level of the component hits reorder point, R
    So, the component is received at time B.
    However, the component is actually needed at time C,
    not B. So, the inventory holding cost incurred between
    time B and C is a wastage.
    With an MRP system:
    We shall see in this lesson that given the production
    schedule of the finished goods and some other
    information (see the next slide), it is possible to predict
    the exact time, C when the component will be required.
    Order is placed carefully so that it is received at time C.

    12

    MRP Input and Output


    MRP Inputs:
    Master Production Schedule (MPS): The MPS of the
    finished product provides information on the net
    requirement of the finished product over time.
    Bill of Materials: For each component, the bill of
    materials provides information on the number of units
    required, source of the component (purchase/
    manufacture), etc. There are two forms of the bill of
    materials:
    Product Structure Tree: The finished product is
    shown at the top, at level 0. The components
    assembled to produce the finished product is
    shown at level 1 or below. The sub-components
    used to produce the components at level 1 is
    13

    MRP Input and Output


    Master
    Production
    Schedule

    Forecasts

    Bill of
    Materials
    file

    MRP
    computer
    program

    Inventory
    file

    To Production

    Reports

    Orders

    To Purchasing
    14

    MRP Input and Output


    shown at level 2 or below, and so on.
    The number in the parentheses shows the
    requirement of the item. For example, G(4)
    implies that 4 units of G is required to produce 1
    unit of B.
    The levels are important. The net requirements of
    the components are computed from the low levels
    to high. First, the net requirements of the
    components at level 1 is computed, then level 2,
    and so on.

    15

    MRP Input and Output


    Bill of Materials: For each item, the name, number,
    source, and lead time of every component
    required is shown on the bill of materials in a
    tabular form.
    Inventory file: For each item, the number of units on
    hand is obtained from the inventory file.
    MRP Output:
    Every required item is either produced or purchased.
    So, the report is sent to production or purchasing.

    16

    Bill of Materials: Product Structure Tree


    Level 0

    Level 1

    Level 2

    Level 3

    17

    Bill of Materials

    Item
    B
    C
    D
    E

    BILL OF MATERIALS
    Product Description: Ladder-back chair
    Item: A
    Component
    Quantity
    Source
    Required
    Description
    Ladder-back
    1
    Manufacturing
    Front legs
    2
    Purchase
    Leg supports
    4
    Purchase
    Seat
    1
    Manufacturing

    18

    Bill of Materials

    Item
    H
    I

    BILL OF MATERIALS
    Product Description: Seat
    Item: E
    Component
    Quantity
    Required
    Description
    Seat frame
    1
    Seat cushion
    1

    Source
    Manufacturing
    Purchase

    19

    On Hand Inventory and Lead time


    Component

    Units in
    Inventory

    Lead
    time
    (weeks)

    Seat
    Subassembly

    25

    Seat frame

    50

    Seat frame
    boards

    75

    20

    MRP Calculation
    Now, the MRP calculation will be demonstrated with an
    example.
    Suppose that 150 units of ladder-back chair is required.
    The previous slide shows a product structure tree with
    seat subassembly, seat frames, and seat frame boards.
    For each of the above components, the previous slide
    also shows the number of units on hand.
    The net requirement is computed from top to bottom.
    Since 150 units of ladder-back chair is required, and
    since 1 unit of seat subassembly is required for each unit
    of ladder-back chair, the gross requirement of seatsubassembly is 1501 =150 units. Since there are 25
    units of seat-subassembly in the inventory, the net
    requirement of the seat-subassembly is 150-25 = 125
    21

    MRP Calculation
    units. Since 1 unit of seat frames is required for each
    unit of seat subassembly, the gross requirement of the
    seat frames is 1251 = 125 units. (Note that although it
    follows from the product structure tree that 1 unit of seat
    frames is required for each unit of ladder-back chair, the
    gross requirement of seat frames is not 150 units
    because each of the 25 units of seat-subassembly also
    contains 1 unit of seat frames.) Since there are 50 units
    of seat frames in the inventory, the net requirement of
    the seat frames is 125-50 = 75 units. The detail
    computation is shown in the next two slides.
    A similar logic is used to compute the time of order
    placement.
    22

    MRP Calculation

    Quantity of ladder-back chairs to be produced


    Gross requirement, seat subassembly
    Less seat subassembly in inventory
    Net requirement, seat subassembly
    Gross requirement, seat frames
    Less seat frames in inventory
    Net requirement, seat frames
    Gross requirement, seat frame boards
    Less seat frame boards in inventory
    Net requirement, seat frame boards

    Units
    150
    25

    50

    75

    Assume that 150 units of ladder-back chairs are to be produced


    at the end of week 15
    23

    MRP Calculation: Time of Order Placement


    Week
    Complete order for seat subassembly
    Minus lead time for seat subassembly
    Place an order for seat subassembl y
    Complete order for seat frames
    Minus lead time for seat frames
    Place an order for seat frames
    Complete order for seat frame boards
    Minus lead time for seat frame boards
    Place an order for seat frame boards

    14
    2

    Assume that 150 units of ladder-back chairs are to be


    produced at the end of week 15 and that there is a one-week
    lead time for ladder-back chair assembly

    24

    MRP Calculation: Some Definitions


    Scheduled Receipts:
    Items ordered prior to the current planning period
    and/or
    Items returned from the customer
    Lot-for-lot (L4L)
    Order quantity equals the net requirement
    Sometimes, lot-for-lot policy cannot be used. There
    may be restrictions on minimum order quantity or
    order quantity may be required to multiples of 50, 100
    etc.

    25

    MRP Calculation
    Example 1: Each unit of A is composed of one unit of B, two
    units of C, and one unit of D. C is composed of two units of
    D and three units of E. Items A, C, D, and E have on-hand
    inventories of 20, 10, 20, and 10 units, respectively. Item B
    has a scheduled receipt of 10 units in period 1, and C has
    a scheduled receipt of 50 units in Period 1. Lot-for-lot (L4L)
    is used for Items A and B. Item C requires a minimum lot
    size of 50 units. D and E are required to be purchased in
    multiples of 100 and 50, respectively. Lead times are one
    period for Items A, B, and C, and two periods for Items D
    and E. The gross requirements for A are 30 in Period 2, 30
    in Period 5, and 40 in Period 8. Find the planned order
    releases for all items.
    26

    MRP Calculation

    Level 0

    Level 1

    Level 2

    27

    MRP Calculation
    Period
    1
    Item Gross
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    prior period
    Net
    requirements
    Q= Time-phased Net
    Requirements
    Planned order
    releases
    Planned order
    delivery

    10

    28

    MRP Calculation
    Period
    1 2 3
    Item Gross
    30
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    20
    prior period
    1
    Net
    WK requirements
    Q= Time-phased Net
    Requirements
    L4L Planned order
    releases
    Planned order
    delivery
    All the information above are given.

    5
    30

    10

    40

    29

    MRP Calculation
    Period
    1 2 3 4 5 6
    Item Gross
    30
    30
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    20 20
    prior period
    1
    Net
    WK requirements
    -Q= Time-phased Net
    Requirements
    L4L Planned order
    releases
    Planned order
    delivery
    20 units are just transferred from Period 1 to 2.

    10

    40

    30

    MRP Calculation
    Period
    1 2 3 4 5 6 7 8 9 10
    Item Gross
    30
    30
    40
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    20 20
    prior period
    1
    Net
    WK requirements
    -- 10
    Q= Time-phased Net
    10
    Requirements
    L4L Planned order
    10
    releases
    Planned order
    10
    delivery
    The net requirement of 30-20=10 units must be ordered in week 31
    1.

    MRP Calculation
    Period
    1 2 3 4 5 6
    Item Gross
    30
    30
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    20 20 0 0 0
    prior period
    1
    Net
    WK requirements
    -- 10
    Q= Time-phased Net
    10
    Requirements
    L4L Planned order
    10
    releases
    Planned order
    10
    delivery
    On hand in week 3 is (20+10)-30=0 unit.

    10

    40

    32

    MRP Calculation
    Period
    1 2 3 4 5 6 7 8 9 10
    Item Gross
    30
    30
    40
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    20 20 0 0 0
    prior period
    1
    Net
    30
    WK requirements
    -- 10
    Q= Time-phased Net
    30
    10
    Requirements
    L4L Planned order
    30
    10
    releases
    Planned order
    10
    30
    delivery
    The net requirement of 30-0=30 units must be ordered in week 4.33

    MRP Calculation
    Period
    1 2 3 4 5 6 7 8 9 10
    Item Gross
    30
    30
    40
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    20 20 0 0 0
    0 0 0
    prior period
    1
    Net
    30
    40
    WK requirements
    -- 10
    Q= Time-phased Net
    30
    40
    10
    Requirements
    L4L Planned order
    30
    40
    10
    releases
    Planned order
    10
    30
    40
    delivery
    The net requirement of 40-0=30 units must be ordered in week 7.34

    MRP Calculation
    Period
    1 2 3 4 5 6 7 8 9 10
    Item Gross
    30
    30
    40
    Requirements
    A Scheduled
    receipts
    LT= On hand from
    20 20 0 0 0 0 0 0 0 0
    prior period
    1
    Net
    30
    40
    WK requirements
    -- 10
    Q= Time-phased Net
    30
    40
    10
    Requirements
    L4L Planned order
    30
    40
    10
    releases
    Planned order
    10
    30
    40
    delivery
    The net requirement of 40-0=30 units must be ordered in week 7.35

    MRP Calculation
    Period
    1
    Item Gross
    Requirements
    B Scheduled
    receipts
    LT= On hand from
    prior period
    Net
    requirements
    Q= Time-phased Net
    Requirements
    Planned order
    releases
    Planned order
    delivery

    Exercise
    8

    10

    36

    MRP Calculation
    Period
    1
    Item Gross
    Requirements
    C
    Scheduled
    receipts
    LT= On hand from
    prior period
    Net
    requirements
    Q= Time-phased Net
    Requirements
    Planned order
    releases
    Planned order
    delivery

    Exercise
    8

    10

    37

    MRP Calculation
    Period
    1
    Item Gross
    Requirements
    D
    Scheduled
    receipts
    LT= On hand from
    prior period
    Net
    requirements
    Q= Time-phased Net
    Requirements
    Planned order
    releases
    Planned order
    delivery

    Exercise
    8

    10

    38

    MRP Calculation
    Period
    1
    Item Gross
    Requirements
    E
    Scheduled
    receipts
    LT= On hand from
    prior period
    Net
    requirements
    Q= Time-phased Net
    Requirements
    Planned order
    releases
    Planned order
    delivery

    Exercise
    8

    10

    39

    READING AND EXERCISES


    Lesson 21
    Reading:
    Section 7.1 pp. 355-364 (4th Ed.), pp. 346-358 (5th
    Ed.)
    Exercise:
    4 and 9 pp. 364-366 (4th Ed.), pp. 356-358 (5th Ed.)

    40

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy