Mrp by HAROON UR RASHEED

Introduction to Materials Management Chapter 4 â&#x20AC;&#x201C; Material Requirements Planning

Independent versus Dependent Demand 

Independent Demand 

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Not related to demand for other assemblies or products, instead from outside sources Generally forecasted demand

Dependent Demand 

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Generally related to production of an end product (as defined on the MPS) Can be calculated instead of forecasted

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Dependent Demand Approach – Materials Requirement Planning (MRP) 

Major Objectives of MRP 

Determine Requirements – Calculated to meet product requirements defined in the MPS    

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What to order How much to order When to order When to schedule delivery

Keep Priorities Current

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Links To Other MPC Functions

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Major Inputs to MRP 

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Master Production Schedule quantities and times Inventory records of all items to be planned 

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Planning factors such as lead times, order quantities, and safety stock Current status of each item

Bills of material for MPS items

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Sample Bill of Materials

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Bill of Material Points 

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The BOM shows all parts to make one of the item Each part has one, and only one, part number A part is defined by form, fit, and function – any change requires a new part number

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Sample Product Tree for the BOM

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Breaking Down the BOM into More Detail â&#x20AC;&#x201C; the Multilevel Bill

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Indented BOM – Use Indentation to Show Parent-Component Relationships

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Planning Bills of Material 

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Artificial grouping of components for Planning Purposes Used to simplify   

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Forecasting Planning Master Scheduling

Represent an average, not buildable product

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Sample Planning BOM

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Where-Used and Pegging 

Where-used reports - shows the parents for a component (contrast with a

bill of materials that show the components for a parent) 

Pegging report – shows the parents for a component, but only those parents where there is an existing requirement

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Major Uses for Bills of Material  

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Defines the product Provides method for design change control Planning – What is needed and when Order entry – order configuration and pricing Production – Parts needed to assemble a product Costing – material cost of goods sold

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Basic MRP Record

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Some Key Terms  

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Lead time – span of time for a process Exploding – process of multiplying requirements by usage to get BOM requirements Offsetting – Placing requirements in the proper period based on lead time Planned orders – Orders planned during the explosion, but not yet released for processing Low-level code – lowest level on which a part resides on the Bill of Materials

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Some Key Terms, Continued 

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Scheduled receipts – Open orders released for processing (production or purchase) scheduled to be received at a defined time. Gross Requirements – Total of a component needed to meet requirements not taking any existing inventory into account Net Requirements – Actual amount of a component needed to meet requirement after existing requirements taken into account

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Some Key Terms, Continued 

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Projected available – The expected inventory position at the end of the period Planned order release – the amount that should be ordered (using the lot size) to prevent a negative projected available balance Planned order receipt – when the order should be available for use, offset by lead time from the planned order release

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Example Problem

Lead time for this component is 2 weeks and order quantity is 200. Complete the table. What action should be taken?

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Example problem solution

The order for 200 should be released

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Example for a multilevel BOM

Lead time for each component is 1 week Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Netting and exploding zero-level parts

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Netting and exploding first-level parts

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Completed Material Requirements Plan

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Sample Multiproduct MRP Explosion

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Points About the MRP Record 

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Current time – beginning of first period (often called time buckets) Items considered available at beginning of period Quantity in Projected Available row considered at end of period Current period often called action bucket – action should be taken to avoid a future problem

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Planner Responsibilities for MRP 

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Launch Orders – Production or Purchasing Reschedule orders as required Reconcile errors and search for causes Solve critical material shortages  

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Replan Expedite

Coordinate with other functions to resolve problems

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Moving through time â&#x20AC;&#x201C; an example

This record shows the status of the part Monday morning. The computer is showing the need to release the order of 30

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

During the week, the following events happen: 

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Only 25 units of the scheduled receipt move into inventory. The balanced is scrapped The gross requirement for week 3 is changed to 10. The gross requirement for week 4 is increased to 50. The gross requirement for week 7 is 15. An inventory count reveals there are 10 more in inventory than the record shows The gross requirement for week 1 is issued from inventory The planned order release of 30 in week 1 is released and becomes a scheduled receipt in week 3.

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

The new record reflects those events from week 1:

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive

Other Key Terms 

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Firm Planned orders – Orders not yet released, but “frozen” in quantity and time to reduce system “nervousness” Exception messages – messages generated by the computer signaling planner action needed Bottom-up replanning – actions to correct for changed conditions made as low as possible in the product structure

Introduction to Materials Management, 7th Edition Arnold, Chapman, Clive