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Material Requirements Planning

Material Requirements Planning. MRP. MRP. Material requirements planning (MRP): Computer-based information system for ordering and scheduling of dependent demand inventories. Dependent Demand.

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Material Requirements Planning

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  1. Material Requirements Planning MRP

  2. MRP • Material requirements planning (MRP): Computer-based information system for ordering and scheduling of dependent demand inventories

  3. Dependent Demand • Dependent demand: Demand for items that are subassemblies or component parts to be used in production of finished goods.

  4. MRP Inputs MRP Processing MRP Outputs Changes Order releases Master schedule Planned-order schedules Primary reports Exception reports Bill of materials Planning reports MRP computer programs Secondary reports Performance- control reports Inventory records Inventory transaction

  5. MRP Inputs • Master Production Schedule • Time-phased plan specifying timing and quantity of production for each end item. • Material Requirement Planning Process Product Structure Tree Lead Times

  6. Master Schedule 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. 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.

  7. Assembly Subassembly Fabrication Procurement 6 7 1 2 3 4 5 8 9 10 Planning Horizon

  8. 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.

  9. Level 0 Chair Leg Assembly Back Assembly 1 Seat Cross bar Side Rails (2) Cross bar Back Supports (3) Legs (2) 2 3 Product Structure Tree

  10. Procurement of raw material D Fabrication of part E Subassembly A Procurement of raw material F Final assembly and inspection Procurement of part C Procurement of part H Subassembly B Fabrication of part G Procurement of raw material I 6 7 1 2 3 4 5 8 9 10 11 Assembly Time Chart

  11. MRP Processing • Gross requirements • Schedule receipts • Projected on hand • Net requirements • Planned-order receipts • Planned-order releases

  12. 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.

  13. MRP Secondary Reports • Performance-control reports • Planning reports • Exception reports

  14. Other Considerations • Safety Stock • Lot sizing • Lot-for-lot ordering • Economic order quantity • Fixed-period ordering • Part-period model

  15. Capacity Planning Capacity requirements planning: The process of determining short-range capacity requirements. Load reports: Department or work center reports that compare known and expected future capacity requirements with projected capacity availability. Time fences: Series of time intervals during which order changes are allowed or restricted.

  16. Develop a tentative master production schedule Use MRP to simulate material requirements Convert material requirements to resource requirements Revise tentative master production schedule No Can capacity be changed to meet requirements Is shop capacity adequate? No Yes Yes Firm up a portion of the MPS Change capacity MRP Planning

  17. MRP in Services • Food catering service • End item => catered food • Dependent demand => ingredients for each recipe, i.e. bill of materials • Hotel renovation • Activities and materials “exploded” into component parts

  18. Benefits of MRP • Low levels of in-process inventories • Ability to track material requirements • Ability to evaluate capacity requirements • Means of allocating production time

  19. Requirements of MRP • Computer and necessary software • Accurate and up-to-date • Master schedules • Bills of materials • Inventory records • Integrity of data

  20. MRP II • Expanded MRP with an emphasis placed on integration • Financial planning • Marketing • Engineering • Purchasing • Manufacturing

  21. Master production schedule Market Demand Finance Manufacturing Marketing Production plan MRP Adjust master schedule Rough-cut capacity planning Capacity planning Adjust production plan No Yes Requirements schedules No Yes Problems? Problems? MRP II

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