4/4: Material Requirements Planning

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4/4 Material Requirements Planning

• Dependent inventory model
• For in-house inventory planning

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Requirements of MRP

• Master production schedule
• when to make what
• Bill of Materials how to make the product
• Lead times
• how long it takes to get various components
• Inventory availability
• Scheduled receipts on-hand inventory

3
Master Production Schedule

• Tells us what is required to meet the production
  plan.
• Statement of what is to be produced, NOT a
  forecast of demand.

4
Bill of Materials

• A list of quantities of components, ingredients,
  or materials to make a final product.
• Provides the product structure.

EX A Blast em, dude audio kit (A) is made of
2 small tweeter boxes (B) and 3 large woofer
boxes (C). Each tweeter is made of two speakers
(D) and two shipping boxes (E). Each woofer
consists of two boosters (F) and two shipping
boxes (E). Each booster is made of a circuit
board (G) and a speaker (D).
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EX A Blast em, dude audio kit (A) is made of
2 small tweeter boxes (B) and 3 large woofer
boxes (C). Each tweeter is made of two speakers
(D) and two shipping boxes (E). Each woofer
consists of two boosters (F) and two shipping
boxes (E). Each booster is made of a circuit
board (G) and a speaker (D).
A 2B 3C
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EX A Blast em, dude audio kit (A) is made of
2 small tweeter boxes (B) and 3 large woofer
boxes (C). Each tweeter is made of two speakers
(D) and two shipping boxes (E). Each woofer
consists of two boosters (F) and two shipping
boxes (E). Each booster is made of a circuit
board (G) and a speaker (D).
A 2B 3C 2D 2E

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EX A Blast em, dude audio kit (A) is made of
2 small tweeter boxes (B) and 3 large woofer
boxes (C). Each tweeter is made of two speakers
(D) and two shipping boxes (E). Each woofer
consists of two boosters (F) and two shipping
boxes (E). Each booster is made of a circuit
board (G) and a speaker (D).
A 2B 3C 2D 2E
2F 2E
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EX A Blast em, dude audio kit (A) is made of
2 small tweeter boxes (B) and 3 large woofer
boxes (C). Each tweeter is made of two speakers
(D) and two shipping boxes (E). Each woofer
consists of two boosters (F) and two shipping
boxes (E). Each booster is made of one circuit
board (G) and one speaker (D).
A 2B 3C 2D 2E
2F 2E G
D
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EX A Blast em, dude audio kit (A) is made of
2 small tweeter boxes (B) and 3 large woofer
boxes (C). Each tweeter is made of two speakers
(D) and two shipping boxes (E). Each woofer
consists of two boosters (F) and two shipping
boxes (E). Each booster is made of one circuit
board (G) and one speaker (D).
Note that the numbers here are only relevant to
the level above them!
A 2B 3C 2D 2E
2F 2E G
D
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Exploded Product Structure

• Items above a level are PARENTS
• Items below a level are COMPONENTS or CHILDREN.

A 2B 3C 2D 2E
2F 2E G
D
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Exploded Product Structure 4 levels.
A 2B 3C 2D 2E
2F 2E G
D
Level 0 level 1 level 2 level 3
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Lead times

• Time required to acquire (purchase, produce, or
  assemble) an item.
• Manufactured part lead time made of move, setup,
  and assembly or run times for each component.
• Purchased part lead time made of difference
  between when part is ordered and when it is
  received.

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Time-Phased Product Structure

• Rotate BOM below and reflect lead times with
  time as the X axis.

Lead times A 1 wk. B 2 C 1 D 1 E 2 F 3 G 2
A 2B 3C 2D 2E
2F 2E G
D
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Time-Phased Product Structure
8 7 6 5 4 3 2 1 0

• Rotate BOM and reflect lead times on X axis.

2D
2B
Lead times A 1 wk. B 2 C 1 D 1 E 2 F 3 G 2
2E
A
G
2F
D
3C
2E
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Gross Material Requirements

• Assume we need 50 Blast em, dude speaker kits
  in eight weeks.
• We need to calculate when and how many of each
  component we need to start making.

Go to spreadsheet
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Lot sizing

• lot-for-lot (L4L) order exactly the amount you
  want.
• Lot size required order in certain amounts (ex.
  a dozen eggs).

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Scheduled Receipts On-Hand Inventory

• Scheduled Receipts
• Units (of any component) that you have already
  scheduled to come in at a particular time.
• On-Hand Inventory
• Units (of any component) that you already have in
  stock (at the beginning).

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Gross Req. vs. Net Req.

• Gross required is the total amount of a component
  you need.
• Net required is (Gross)
• - (On-hand inventory)
• - (Scheduled receipts)

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Planned Order Receipts Releases

• Planned Order Receipts
• When you PLAN to RECEIVE what you ORDERED.
• Planned Order Releases
• When you PLAN to RELEASE what in an ORDER.

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MRP What you need to know

• Master Schedule
• Bill of Materials
• Lead times
• Lot sizes
• Scheduled receipts on-hand inventory

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Group ExerciseCreate an MRP

• You make the PalmPointer, a handy PDA. You have
  received an order for 200 units to be shipped in
  12 hours. A PalmPointer is made of a LCD screen,
  4 buttons, 1 toggle button, and a motherboard.
  The motherboard is made of 3 processors, 2 clock
  batteries, and a circuit board. Assembly time
  for the assemblies are as follows All parts are
  L4L except the batteries, which must be ordered
  in packs of 40. You already have 50 motherboards
  and 100 processors.
• PalmPointer 2 hours LCD screen 1
• buttons 2 toggle button 3
• motherboard 6 processors 2
• batteries 1 circuit board 3
• Create an MRP schedule to determine when to begin
  assembling each component.

Go back to spreadsheet
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Homework due 4/11

• Download handout at http//adbook.net/teach022/305
  /hmwk4-4.xls
• There are two problems to be answered.
• Print out problems and turn in ON PAPER no
  email submissions.