Bill of Materials

1. Bill of Materials

2. Contents • Definition of a bill of materials • How a bill of materials is used • Types of bill of materials • Bill of materials information • Benefits of a bill of materials • Examples of bill of materials

3. Definition • Bill of materials (BOM): a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product. • Each finished product has its own bill of materials. • Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels. Bozarth, Cecil C. and Handfield, Robert B. Introduction to Operations and Supply Chain Management . Pearson Education, Inc., Upper Saddle River, New Jersey, 2006. p.461.

4. Definition Explained • Basically, a bill of material (BOM) is a complete list of the components making up an object or assembly. • It is also part of material requirements planning (MRP) input.

5. Processes that utilize a BOM • Production • Materials planning • Product costing • Plant maintenance

6. Types of BOMs • Static (fixed) bill • A bill of material for a part that is normally made from the same components, labor and raw materials. • Used for standard assemblies, components, and engineer-to-order customer orders. • Example: • A bill of materials for a standard chair

7. Types of BOMs • Dynamic (parametric) bill • A bill of material for a product or part for which size, color, laminate, and other options can be selected. • Example: • A bill of materials for a Dell computer

8. Structure of a BOM

9. What information is on a BOM? • Quantity • Item ID# • Description of Item • Cost of Item • Total Project Cost

10. Quantity • Tells user how many of each part is needed for each project • Example: • A chair needs 1 seat, 4 legs, 1 back, and 5 nails.

11. Item ID # • Tells us which part to order • Can be any of the following: • Catalog number, UPC, or any other identification number. • Example: • The chair needs a 2PC seat, 5DR legs, 6TU8 back, and 1 inch nails.

12. Description of Item • Provides a check that the correct item is being ordered.

13. Cost of Item • Cost is included to show how much each part is per item and the total cost of all like parts. • Example: • The cost of a leg is $5 per leg. Then the total price of the legs ordered would be $20 because there are 4 legs.

14. Total Project Cost • Shows the total cost of all items and is also the total cost of the direct materials used in the project. • Example: • Seat-$10, Back-$5, Leg-$5 per leg, Nail-$.5 per nail • Total Cost of a chair = 10 + 5 + 5*4 + .5*5 = $37.50

15. BOM Example Quantity ID# Description Unit Price Total Cost 1 6TU8 Back $5/Unit $ 5.00 4 5DR Legs $5/Unit 20.00 1 2PC Seat $10/Unit 10.00 5 1” Nails $0.50/Unit 2.50 Total Project Cost $37.50

16. Assembly Diagram & Product Structure Tree

17. Example

18. Example 1 (Cont.) • Using the information above to do the follows: a) Determine the quantities of B, C, D, E, and F needed to assemble one X.

19. X B(2) C D(3) E E(2) F(2) E(4) Solution to Example 1 a). • Thus, one X will require • B: 2 C: 1 • D:6 F: 2 • E: 28 (Note that E occurs in three places, with 2+2+24)

20. Component B C D E On hand 4 10 8 60 Example 1 (Cont.) • Using the information above to do the follows: a) Determine the quantities of B, C, D, E, and F needed to assemble one X. b) Determine the quantities of B, C, D, E, and F needed to assemble ten X's, if you have the following in inventory:

21. Component B C D E On hand 4 10 8 60 X B(2) C D(3) E E(2) F(2) E(4) Solution to Example 1 (Cont.) b). • Thus, given the amounts of on-hand inventory, 10 Xs will require • B: 16 C: 0 • D: 40 F: 0 • E: 116 (=16+100)