Transcript No Slide Title

Topics to be Covered
1. Material Requirement Planning
2. How Does MRP Fit in the Production Cycle
3. Inputs into MRP
4. MRP Processing
5. MRP Issues
6. Lot Sizing
7. Benefits and Limitations of MRP
8. MRP II and Closed Loop MRP
9. Keys to a Successful Implementation
What we have learned !
Supply Chain:
setup of our facility, suppliers, transportation and distribution
Process Planning:
defined and arranged our process in terms of layout and order
penetration (product vs process layout, MTO,MTS,ATO)
Forecasting:
defined anticipated end item demand over a specified time period.
(Technique)
Capacity Planning:
our tactical approach to how we anticipate meeting our anticipated
demand ( Type and amount of Sources, chase vs level strategy)
What is the question we need to answer now?
• What, How much and when to order the stuff to make our product
Material Requirement Planning
1. MRP is a computer-based information system designed to handle ordering and
scheduling of dependent -demand inventories.
2. MRP is used to breakdown the demand requirements for each finished good into
its lower level components requirements.
3. MRP identifies a higher level demand into all its lower level demand components ,
their quantities and timing requirements.
4. MRP continues this breakdown of component quantities and time needs until the
source of each lower level component is supplied by an external source.
5. MRP attempts to solve two problems:
a. Setting up scheduling for all components.
b. Provide an effective means for controlling the scheduled requirements for
each dependent items.
How Does MRP Fit In The Production Cycle.
Make or Buy
Forecasting
Facility Definition
Resource Planning
Aggregate Plan
Master Production Schedule
Rough Cut Capacity
Planning
Detailed Capacity
Planning
Purchasing
MRP
Shop Floor Control
Inputs Into MRP
1. Master Production Schedule
2. Bill Of Materials
3. Inventory Records File
MPS: Example
Scheduled
Man hours
Aggregate Production Plan
Manhrs Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
520
600
580
645
700
585
475
560
635
605
560
660
7125
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Total
Model
123
50
54
58
59
68
51
49
48
47
59
56
62
661
456
110
120
130
140
150
160
90
140
170
120
130
150
1610
789
5
9
3
7
6
1
5
4
6
7
2
5
60
Products in
that month
Master Production Schedule
Master Production Schedule
1. MPS states which end items are to be produced, when these end items are
needed and in what quantities.
2. The MPS is a result of disaggregating the Aggregate Production Plan.
3. Sources for a MPS.
A. Customer Orders
B. Forecasts
C. Internal Orders
4. Planning Horizon for MPS is separated into Time Periods (Time Buckets).
- typically has a 1 year planning horizon.
5. The Time Horizon should cover the cumulative lead time necessary to produce
the end product.
6. Initial requirements for items needed may or may not be possible.
a. May exceed capacity
b. modify aggregate planning
c. recent demand changes
d. assumes sufficient time to complete tasks
7. MRP can not distinguish between a feasible and a non-feasible MPS.
Bill Of Material
1. Contains a listing of all of the assemblies, subassemblies, parts and raw materials
necessary to produce one unit of a finished product.
2. Frequently referred to as a Product Structure Diagram.
3. Parent component is a next higher level component which consists of one or more
Child components.
4. A BOM will identify all components from end item through raw material or
components procured from an outside source.
- includes nuts, bolts, screws, glue, etc.
5. It is important that the BOM is kept up to date.
- requires some sort of change coordination be put into place between
engineering and production.
- Engineering Change Notice
Bill Of Material (BOM) Example
Office Chair
Back Cushion
Adjuster
Mechanism
Seat Cushion
Chair Frame
Base Unit
Wheels (6)
Fasteners (8)
Fasteners (3)
Indented Bill Of Material
Item
Office Chair
Back Cushion
Seat Cushion
Chair Frame
Adjuster Mechanism
Base Unit
Wheels
Fasteners
Fasteners
Part Number
123-4567
6520
8947
1245
1245-1
1245-2
1245-3
3145
3214
Qty
1
1
1
1
1
1
6
3
8
Inventory Records File
1. Used to store supplier information and the status of each item by time
period.
2. Gross requirements, schedule receipts, amount on-hand
3. Supplier name. location, lead time, pricing & lot size.
4. This step is the feedback for the system to highlight changes to
scheduling.
BLAW-KNOX ITEM MASTER MAINTENANCE
PAGE ________
ECN
ADD
*
*
*01
DATE
CHANGE
COMPANY NO.
PART NUMBER
DESCRIPTION
*
*02
*03
*04
*05
*06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
CCN
STOCK CODE
ITEM STATUS
UNIT OF MEASURE
BUYER OR PLANNER
LEAD TIME
ORDER POLICY
MPS TYPE
POST UP CODE
PRODUCT FAMILY
FAMILY SUBGROUP
FREE STOCK CODE
PHANTOM CODE
DRAWING NUMBER
DRAWING REVISION
DRAWING SIZE
COMMODITY CODE
ITEM CLASS
ITEM WEIGHT
PRIMARY VENDOR
GL ACCOUNT CODE
21
GENERAL LEDGER
22
ALT ROUTER OVERRIDE
23
MAXIMUM ORDER QTY.
24
SAFETY STOCK
25
MINIMUM ORDER QTY.
26
ORDER MULTIPLE
27
REORDER POINT
28
PERCENT SCRAP
29
DATE NEXT CYCLE CNT. 30
SORT FIELD
31
ALT BOM OVERRIDE
32
VENDOR PART NO.
33
STANDARD LOT SIZE
34
LOT SIZE HORIZON
35
DEFAULT LOCATION
36
PO CONVERSION FACTOR
37
MPS TIME FENCE
38
ABC ANALYSIS CODE
39
REPLACED BY P/N
SERVICE PART (Y, N)
ORIGIN CODE
*********** TO BE FILLED OUT BY ORIGINATOR
PROD.
ENGR.
I.E.
CONT.
PURCH.
ACCT.
Form No. 206 / Rev. 1 – 3/09/00
DELETE
(IR, IF)
STEEL PART NO.
(M-DAYS)
(B, M, R)
(B,O,M,P)
(B,P)
STEEL QUANTITY
(F)
(N)
* REQUIRED FIELDS WHEN ADDING PARTS
PARTS
MRP Processing
1.
Identify the quantity of each finished good and the time for their completion.
2. Use BOM to identify the subassemblies, components, and raw materials to create one unit.
3. Identify the Gross Requirements for each component.
- These are the quantities of each part to construct the required quantity for each end item.
4. Define the Net Requirements.
- This represents the quantity of each component or raw material that must be produced
internally or purchased from an external source.
- Net Rqmts = Gross Rqmts - (Scheduled Receipts + units on Hand + Safety Stock)
- Scheduled Receipts: Orders which have been previously placed and are anticipated to
arrive or be produced internally before the newly established need date.
- Net Rqmts for a higher level part is the Gross Rqmts for a lower level part.
5. The Net Rqmts are then placed into the Planned Order Release category until the order for a
given component/raw material is placed
- If the component is produced internally then the Release identifies when the same level
component work order is released to the shop floor to begin production.
- So all lower level components or raw materials must be available by this date.
- Should consider lead times.
6. The Planned Order Receipt identifies when the component or raw material anticipated to be
received.
- If the part is produced internally the Receipt identifies when this level part will be complete.
7. This process is continued until all part requirements have been scheduled.
MRP Issues
Safety Stock
1. Theoretically if demand is known then there is no need for safety stock.
2. Unanticipated variance in Demand causes inventory and safety stock to exist.
3. MRP does not consider machine breakdown, scrap rates, late deliveries.
4. MRP can reduce the amount of safety stock by removing variability.
5. Safety Stock determined by: History, lead time, experience
Updating The MRP System
1. Regenerative: Review the entire MRP system; usually a periodic batch process
(less frequent change; once a week or month)
2. Net Change: Continuous updating every time a change is made; Modifies only
areas of change. ( more frequent; once or more a day)
MRP Software Types: BPICS, KBM, SAP
MRP Outputs
Time Fences
Series of time intervals during which order changes are allowed or restricted.
- Work Order release
- Purchase order release.
- Rescheduling
MRP Outputs
Provides management with a range of possible reports.
Reports can be classified as primary and secondary.
•
Primary Reports concern production & inventory planning and control:
- schedule of planned orders - amount & timing of future orders
- order releases - executes the planned orders (POs & WOs)
- Changes to planned orders - revisions of due dates & quantities
•
Secondary Reports concern performance
- evaluate system operation (missed deliveries & stock outs)
- planning reports - forecasting future inventory requirements
- exception reports - attributes to major discrepancies
Load Reports
• Compares known and future capacity requirements
- Typically requires a separate module
- Mini MRP: a review of current inventory and planned receipts to
determine what is
needed for a real or hypothetical demand.
Supplier Report
Blanket P/O Release
Prog. No. RT0331
***********************************************
* From Buyer: COREY WALL
Supplier No:
8720
Supplier Name: WATLOW ELECTRIC MFG. CO.
Fax No: 573-474-5859
*
Buyer:
* Deliver To: DON NYBOE
8
***********************************************
P/O Number:
B64704
Past
Part Number
Description
Rev
04712-010-00
HEAT PAD MAIN ULTIMAT 10/ 01
04712-014-00
HEAT PAD MAIN ULTIMAT 8/1 01
04712-316-00
HEAT PAD BERMLESS EXTN 10 01
04712-317-00
HEAT PAD BERMLESS EXTN 8/ 01
04712-319-00
HEAT PAD 10'/18" INNER BE 00
04712-320-00
HEAT MAT - 12" BERM - INN 00
04712-321-00
HEAT PAD 8' 18" INNER BER 00
04712-324-00
HEAT PAD 8'10'18" OUTER B 00
04712-325-00
HEAT MAT - 24" OUTER
00
Due
31-Jul 07-Aug 14-Aug 21-Aug
Jul
20
6
10
10
Aug
Sep
Oct
Nov
Dec
Jan
20
20
10
30
10
30
20
10
10
10
10
20
10
30
10
10
20
16
10
10
26
10
30
26
4
4
4
4
4
4
4
4
4
Lot Sizing
1. Goal is to minimize the setup/ordering cost & holding costs.
2. There can be advantages in grouping part orders
3. Problem is that by grouping middle and upper level parts you have a
cascading effect on the lower level parts.
- so it is important to consider all inventory requirements below the
part/subassembly being considered for lot sizing.
4. Types of Lot Sizing Techniques.
- Lot by Lot
- EOQ
- Wagner-Whitlin
- Silver-Meal
- Least Cost
- Part-Period
All methods, except for Lot by Lot, consider the relationship between
holding costs and ordering costs.
Limitations of MRP
1. Best used for Batch and job shop applications
2. Holding costs dependent on variations in system.
3. Inability to track material requirements
4. Inability to determine capacity requirements given a master schedule.
5. Lead Time is fixed
6. Necessary to Have:
- computer and software
- accurate way to maintain changes to parts BOM
- integrity of inventory records
7. Inability to react to short term or system changes.
MRP II and Closed Loop MRP
Manufacturing Resources Planning
1. Expands on the scope of production resource planning
- involves marketing, finance, engineering, etc.
2. A major purpose of MRP II is to integrate these primary functions of
production along with the other impacted areas in a common set of
goals.
3. Can be used to simulate effects of different manufacturing plans.
4. Provides each function with insight into the other functions
performance and plans.
Closed Loop MRP
1. Uses capacity planning and feedback to improve the ability of the
production system to complete work as planned.
2. Timely feedback allows planners time to generate alternative plans.
Keys to a Successful Implementation
1. Top Management Support.
2. Good Information Technology Design.
3. Appropriate user-designer interaction and understanding.
4. Committing to change and to the implementation effort.
5. Defining and planning the project extensively.
6. Using organizational change theories to manage process.
Enterprise Resource Planning (ERP)
ERP integrates a basic MRP systems with information from marketing,
sales, finance, accounting, and human resources through a common
database.
Planning is cross functional
Planning begins from Sales planning, thru MRP to the accounts
receivable.
See Table 16.5 pg 421
ERP Video