Transcript Production and Operations Management: Manufacturing and

Material Requirements Planning (MRP)
Chapter 15
11/7/05
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Overview
Position of MRP in Operation Management
Definitions (MPS, BOM, etc)
MRP example
MRP II
Lot Sizing in MRP
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Exhibit 13.1
Process planning
Long
range
Strategic capacity planning
Intermediate Forecasting
& demand
range
management
Sales and operations (aggregate) planning
Sales plan
Aggregate operations plan
Manufacturing
Master Production Schedule (MPS)
Services
Material Requirements Planning (MRP)
Short
range
Irwin/McGraw-Hill
Order scheduling
Weekly workforce and
customer scheduling
Daily workforce and customer scheduling
©The McGraw-Hill Companies, Inc., 1998
Independent vs. Dependent Demand
Independent Demand
(Demand not related to other items)
Dependent Demand
(Derived)
Drives MRP
E(1)
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©The McGraw-Hill Companies, Inc., 1998 6
Material Requirements Planning
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How much of an item is needed?
•
When is an item needed to complete
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•
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Specified number of units at
Specified period of time?
Where MRP is most beneficial?
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 3
Introductory Example - Dependent Demand
Product Structure Tree for Assembly A
A
B(4)
D(2)
A
B
C
D
E
F
C(2)
E(1)
D(3)
Lead Times
F(2)
1 day
2 days
1 day
3 days
4 days
1 day
Demand
Day 10 50 A
Day 8
20 B (Spares)
Day 6 15 D (Spares)
Create a schedule to satisfy demand.
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©The McGraw-Hill Companies, Inc., 1998 4
First, the number of units of “A” are scheduled backwards to
allow for their lead time. So, in the materials requirement plan
below, we have to place an order for 50 units of “A” in the 9th
week to receive them in the 10th week.
Day:
1
2
3
4
5
6
7
8
A Required
Order Placement
9
10
50
50
LT = 1 day
Irwin/McGraw-Hill
© The McGraw-Hill Companies, Inc., 1998
5
Next, we need to start scheduling the components that make up “A”. In
the case of component “B” we need 4 B’s for each A. Since we need 50
A’s, that means 200 B’s. And again, we back the schedule up for the
necessary 2 days of lead time.
Day:
A
1
2
3
4
5
6
7
8
R e q u ire d
10
50
O rd e r P la c e m e n t
B
9
50
R e q u ire d
20
O rd e r P la c e m e n t
20
LT = 2
200
200
Spares
A
4x50=200
B(4)
D(2)
Irwin/McGraw-Hill
C(2)
E(1)
D(3)
F(2)
© The McGraw-Hill Companies, Inc., 1998
6
Finally, repeating the process for all components, we have the
final materials requirements plan:
Day:
A
LT=1
B
LT=2
C
LT=1
D
LT=3
E
LT=4
F
LT=1
1
2
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
3
4
5
6
20
7
8
9
20
50
200
8
10
50
200
100
55
20
400
55
400
20
200
100
300
300
200
200
200
A
Part D: Day 6
B(4)
D(2)
C(2)
E(1)
D(3)
40 + 15 spares
F(2)
©The McGraw-Hill Companies, Inc., 2001
Master Production Schedule (MPS)
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Time-phased plan specifying how many and
when the firm plans to build each end item.
Aggregate Plan
(Product Groups)
Exhibit 15.4
Irwin/McGraw-Hill
MPS
(Specific End Items)
©The McGraw-Hill Companies, Inc., 1998
10
Firm orders
from known
customers
Aggregate
product
plan
Forecasts
of demand
from random
customers
Engineering
design
changes
Master
production
schedule
(MPS)
Inventory
transactions
Bill of
material
file
Material
planning
(MRP)
Inventory
record
file
From Exhibit 15.6
Reports
Types?
©The McGraw-Hill Companies, Inc., 2001
Material Requirements Planning System
•
Based on a master production schedule,
a material requirements planning
system:
–
Creates schedules identifying the specific
parts and materials required to produce end
items
–
Determines exact numbers needed
–
Determines the dates when orders for those
materials should be released, based on lead
times
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 11
Bill of Materials (BOM) File
A Complete Product Description
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Materials
Parts
Components
Production sequence
Planning BOM
– Modular BOM
»
Subassemblies
– Super BOM
»
Fractional options
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 13
Parts List & Low Level Coding
Single Level
Indented
A
A
A
B(4)
C(2)
B(4)
B(4)
C(2)
D(2)
D(2)
E(1)
D(3)
F(2)
E(1)
B
D(2)
C(2)
E(1)
D(3)
Level
Parent
F(2)
C
D(3)
Low Level Coding - (Exhibit 15.9)
Irwin/McGraw-Hill
F(2)
©The McGraw-Hill Companies, Inc., 1998
Inventory Status Record ( Exhibit 15.10)
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Each inventory item carried as a separate file
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Information (records)
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–
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Status “Periods - time buckets”
Gross Requirements
On-hand
Scheduled receipt (to be received in the future-it is already paid
for)
Planned order release (to be released at a future time)
Planned order receipt (to be received in the future based on the
planned order release)
Pegging
–
Identify each parent item that created demand
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 14
15
Firm orders
from known
customers
Aggregate
product
plan
Forecasts
of demand
from random
customers
Engineering
design
changes
Master
production
schedule
(MPS)
Inventory
transactions
Bill of
material
file
Material
planning
(MRP)
Inventory
record
file
From Exhibit 15.6
Reports
Types?
©The McGraw-Hill Companies, Inc., 2001
MRP program
Master
production
schedule
(MPS)
Bill of
material
file
Material
planning
(MRP)
Inventory
record
file
Method of calculation (explosion) - (p586)
When calculations are updated (net change)
Read Example (p595)
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Work Center Load
• Revise schedules because of limited capacity
•Work center used to make different components (Fig 15.18)
• If scheduled work exceeds available capacity, what should be done?
• Available Capacity = #machines x #shifts x # hrs/shift
=
2 x 2 x 10 = 40 hrs/work center
• Take into account utilization and efficiency
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Closed Loop MRP (Exhibit 15.19)
Production Planning
Master Production Scheduling
Material Requirements Planning
Capacity Requirements Planning
No
Feedback
Realistic?
Feedback
Yes
Execute:
Capacity Plans
Material Plans
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Manufacturing Resource Planning
(MRP II)
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Goal: Plan and monitor all resources of a
manufacturing firm (closed loop):
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manufacturing
marketing
finance
engineering
Simulate the manufacturing system
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Exhibit 15.5
Time Fences in MPS
Moderately
Firm
Frozen
Flexible
Capacity
Forecast and available
capacity
Firm Customer Orders
8
15
26
Weeks
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Types of Time Fences
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Frozen
–
•
Moderately Firm
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•
No schedule changes allowed within this window.
Specific changes allowed within product groups as
long as parts are available.
Flexible
–
Significant variation allowed as long as overall
capacity requirements remain at the same levels.
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
MRP Example
Item
X
A
B
C
D
X
A(2)
C(3)
B(1)
C(2)
On-Hand Lead Time (Weeks)
50
2
75
3
25
1
10
2
20
2
D(5)
Requirements include 95 units (80 firm orders and 15 forecast) of X
in week 10
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
X
A(2)
It takes
2 A’s for
each X
X
LT=2
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
X
A(2)
B(1)
It takes
1 B for
each X
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
X
A(2)
C(3)
It takes 3
C’s for
each A
B(1)
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
X
A(2)
C(3)
B(1)
C(2)
It takes 2
C’s for
each B
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
X
A(2)
C(3)
B(1)
C(2)
D(5)
It takes 5
D’s for each
B
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
Lot Sizing in MRP Programs
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•
•
Lot sizes are the part quantities issued in the
planned order receipt (or release) in MRP
It increases complexity of MRP
Several techniques are available
•
•
•
•
Lot-for-lot (L4L)
Economic order quantity (EOQ)
Least total cost (LTC)
Least unit cost (LUC)
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998
Lot for Lot
•
•
•
•
Set planned order to match net requirement
Produces whatever is needed each week w/o
carrying over to future period
Does not take into account setup costs (high) or
capacity limitations
Minimize carrying cost
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 15
EOQ for MRP
•
Same formula for inventory
• EOQ = batch size
• Setup cost = order cost
•
Holding costs are charged at ending inventory of
each period (different from regular EOQ?)
Irwin/McGraw-Hill
©The McGraw-Hill Companies, Inc., 1998 15
Home Work #8
Due Date 11/14/05
You may work in groups of TWO
•Solve problems 12, 14, and 17 (from the problems at the end of this
Chapter 15 - pp 610)