Material Requirements Planning

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1 Period Workcentre Part W1 X Y Total W2 X Total The Original MRP Material Requirements Planning In the beginning (pre-1970's) o There were no computers o Material planning was done independently for each component Then there were computers o And MRP (I) became possible Then there were faster computers o And MRP II became possible Then there were even faster computers And ERP became possible MRP, CRP, and ERP o Bills of Materials o The MRP Record o The MRP Explosion o Vertical Linkage of MRP Records o Validating the MPS o Capacity Requirements Planning Master Schedule o Master schedule: One of three primary inputs in MRP; states which end items are to be produced, when these are needed, and in what quantities. o Cumulative lead time: The sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly.

2 Bill-of-Materials Bill of materials: One of the three primary inputs of MRP; a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product. Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels. BOM's show how parts are combined to create product o Representation may be graphical or indented text X Y A B (2) A A Low-level Coding Determines order of MRP calculations Each BOM level is assigned a number Products are at level 0 Each part is assigned the number of the lowest level at which it appears in any BOM Calculate plans for level 0 first, then level 1, etc.... X Y LEVEL 0 A B (2) A LEVEL 1 A LEVEL 2 Inventory Records Inventory Records: One of the three primary inputs of MRP; includes information on the status of each item by time period Accuracy: is extremely important in that accuracy will determine the success of the production runs.

3 Vertical Linkage Of MRP Records Objective: find material plans [planned order releases] for all parts Data requirements MPS BOMs Inventory records file Gross requirements are ultimately derived from MPS But in calculations, the gross requirements for a part depend only on the planned order releases of the parent parts MRP Processing Gross requirements (demand) Schedule receipts (open orders) Projected on hand Net requirements Planned-order receipts Planned-order releases MRP Outputs Planned orders - schedule indicating the amount and timing of future orders. Order releases - Authorization for the execution of planned orders. Changes - revisions of due dates or order quantities, or cancellations of orders. The MRP Record Objective is to determine future purchasing or production schedule for a component part Gross Requirements demand for part Scheduled Receipts planned completion times for batches of parts which have been already ordered

4 Gross Requirements Projected Available Balance Net Requirements Planned Order Receipts Planned Order Release Planned Order Receipt planned completion times for batches of parts which have not yet been ordered Planned Order Release planned start times for batches of parts which have not yet been ordered Gross Requirements Projected Available Balance Net Requirements Planned Order Receipts Planned Order Release During Period 1: 10 units are disbursed Projected Available Balance Planned Order Release The scheduled receipt is completed Scheduled Receipts Projected Available Balance Planned Order Release

5 The planned order release is released Projected Available Balance Planned Order Release MRP Example Start with MPS for products X and Y Product X: LT=1 Master Production Schedule 8 14 Planned Order Release Product Y: LT=1 Master Production Schedule Planned Order Release Planned order releases for X serve as basis for gross requirements for part B Product X: LT=1 Master Production Schedule 8 14 Planned Order Release Part B: LT=1; EOQ=25 Gross Requirements Part B s record is then completed Part B: LT=1; EOQ=25 Gross Requirements Scheduled Receipts Projected Available Balance Net Requirements Planned Order Receipts Planned Order Releases

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