Materials Requirement Planning

1
Materials Requirement Planning

• Selected Slides from Jacobs et al, 9th Edition
• Operations and Supply Management
• Chapter 18
• Edited, Annotated and Supplemented by
• Peter Jurkat

2
Master Production Scheduling (MPS)
18-2

• Time-phased plan specifying how many and when the
  firm plans to build each end item

Aggregate Plan (Product Groups)
3
Aggregate Production Plan
Figure 14.2
4
Master Production Schedule (MPS)
Can be expressed in any of the following terms

• A customer order in a job shop (make-to-order)
  company
• Modules in a repetitive (assemble-to-order or
  forecast) company
• An end item in a continuous (stock-to-forecast)
  company

See MPSLotSizing.xls
5
Additional MRP Scheduling Terminology
18-5

• Gross Requirements
• Scheduled receipts
• Projected available balance
• Net requirements
• Planned order receipt
• Planned order release

6
BOM Example
7
Bills of Material

• List of components, ingredients, and materials
  needed to make product
• Planning Bills (Pseudo Bills) A
• Created to assign an artificial parent to the BOM
• Used to group subassemblies to reduce the number
  of items planned and scheduled
• Used to create standard kits for production
• Modular Bills B C
• Modules are not final products but components
  that can be assembled into multiple end items
• Can significantly simplify planning and
  scheduling

• Phantom Bills
• Describe subassemblies that exist only
  temporarily
• Are part of another assembly and never go into
  inventory
• Low-Level Coding D, E, G
• Item is coded at the lowest level at which it
  occurs
• BOMs a reprocessed one level at a time
• Provides product structure
• Items above given level are called parents
• Items below given level are called children

8
BOM Example
9
BOM Example
Required Part A 50 Part B 2 x number of
As (2)(50) 100 Part C 3 x number of As
(3)(50) 150 Part D 2 x number of Bs 2
x number of Fs (2)(100) (2)(300) 800 Part
E 2 x number of Bs 2 x number of Cs
(2)(100) (2)(150) 500 Part F 2 x number of
Cs (2)(150) 300 Part G 1 x number of Fs
(1)(300) 300
10
Material Requirements Planning
18-10

• Materials requirements planning (MRP) is a means
  for determining the number of parts, components,
  and materials needed to produce a product
• Number determined by counting
• if 3 widgets are needed for every framit
• then the number of widgets needed is 3 times the
  number of framits
• this is not rocket science - except when hundreds
  of assemblies and thousands of parts are involved
• MRP provides time scheduling information
  specifying when each of the materials, parts, and
  components, all with maybe different lead times,
  should be ordered or produced
• Dependent demand drives MRP
• MRP implemented by software systems

11
Example of MRP Logic and Product Structure Tree
18-11
Given the product structure tree for A and the
lead time and demand information below, provide a
materials requirements plan that defines the
number of units of each component and when they
will be needed
Product Structure Tree for Assembly A
Lead Times A 1 day B 2 days C 1 day D 3
days E 4 days F 1 day
Total Unit Demand Day 10 50 A Day 8 20 B
(Spares) Day 6 15 D (Spares)
Number in parenthesis is number of child parts
needed for every parent part
12
18-12
First, the number of units of A are scheduled
backwards to allow for their lead time. So, in
the materials requirement plan below, we have to
place an order for 50 units of A on the 9th day
to receive them on day 10.
13
18-13
Next, we need to start scheduling the components
that make up A. In the case of component B
we need 4 Bs for each A. Since we need 50 As,
that means 200 Bs. And again, we back the
schedule up for the necessary 2 days of lead time.
LT 2
Spares
4x50200
14
18-14
Finally, repeating the process for all
components, we have the final materials
requirements plan
See MRPScheduleWorksheet.xls and
MRPScheduleWorksheet.doc
15
Types of Time Fences
18-15

• Frozen
• No schedule changes allowed within this window
• Moderately Firm
• Specific changes allowed within product groups as
  long as parts are available
• Flexible
• Significant variation allowed as long as overall
  capacity requirements remain at the same levels

16
Material Requirements Planning System
18-16

• Based on a master production schedule, a material
  requirements planning system
• Creates schedules identifying the specific parts
  and materials required to produce end items
• Determines exact unit numbers needed
• Determines the dates when orders for those
  materials should be released, based on lead times
  
• Generates reports

17
18-17
18
Additional MRP Scheduling Terminology
18-18

• Gross Requirements
• Scheduled receipts
• Projected available balance
• Net requirements
• Planned order receipt
• Planned order release

19
Closed Loop MRP
18-19
Production Planning Master Production
Scheduling Material Requirements
Planning Capacity Requirements Planning

• With addition of
• Purchasing
• other manufacturing functions
• dispatching, and
• scheduling
• MRP became MRP II, also often called
  Manufacturing Requirements Planning
• Then expansion to ERP came naturally if not easily