Structure of the MRP System

BOM

(Bill-of-Material)

Master Production Schedule MRP by period report Lead Times

(Item Master File)

MRP by date report MRP Programs Planned orders report Inventory Data Purchasing data Purchase requirements Exception reports

Master Production Schedule

 Drives MRP process with a schedule of finished products  Quantities represent production not demand  Quantities may consist of a combination of customer orders & demand forecasts  Quantities represent what needs to be produced, not what can be produced

Master Production Schedule

MPS Item Clipboard 1 86 2 3 Period 4 5 6 7 8 93 119 100 100 100 100 100 Lapboard Lapdesk 0 50 75 120 0 47 50 20 0 17 50 10 0 0 50 0 Pencil Case 125 125 125 125 125 125 125 125

Product Structure Tree

Clipboard Level 0 Sheet Metal (8 in 2 ) Clip Assembly (10) Top Clip (1) Bottom Clip (1) Sheet Metal (8 in 2 ) (1) Rivet (2) (1) Spring Steel (10 in.) Iron Rod (3 in.) Board (1) Pressboard (1) Level 1 Finish (2oz.) Level 2 Level 3

LEVEL 0 - - - - 1 - - - - 2 - - - - 3 - - 2 - - - - 3 - - 2 - - - - 3 - - 2 - - - - 3 - 1 - - - 1 - - - - 2 - - - 2 - -

Indented Bill of Material

ITEM Clipboard Clip Assembly Top Clip Sheet Metal Bottom Clip Sheet Metal Pivot Iron Rod Spring Spring Steel Rivet Board Press Board Finish Unit of Measure Ea Ea Ea In 2 Ea In Ea In Ea In Ea Ea 2 Ea Oz Quantity 1 10 1 8 1 8 1 3 1 10 2 1 1 2

The MRP Matrix

1 Lot size: LT: Gross requirements Scheduled receipts Projected on hand Net requirements Planned order receipts Planned order releases PD 2 3 4 5 6 7 8 9 10   Item • name or number identifying scheduled item LLC • low-level-code; lowest level at which item appears in a product structure

Parts Of MRP Matrix

 Lot size • order multiples of this qty; can be min/max qty  LT ( lead time) • time from order placement to receipt   PD ( past-due) • orders behind schedule Gross requirements • demand for item by time period

  Scheduled receipts • quantity already on order & receipt date • released orders become scheduled receipts Projected on hand • expected on-hand inventory at beginning of period    Net requirements • net amount needed after on-hand adjustments Planned order receipts • net requirements adjusted for lot-sizing Planned order releases • planned order receipts offset by lead time

The Alpha Beta Company

A LT=3 B LT=2 C(3) LT=4 Item On Hand A B C D 10 5 140 200 D(2) LT=2 Scheduled Receipts 0 0 0 250, period 2 D(3) LT=2 Lot Size 1 1 150 250 MPS 100, period 8 200, period 6 - - - - -

MRP Matrices For A & B

Item: A LLC: 0 Lot size: 1 LT: 3 Gross requirements Scheduled receipts Projected on hand Net requirements Planned order receipts Planned order releases PD 1 10 10 2 10 3 10 Period 4 5 10 10 6 10 7 8 100 10 10 90 90 90 Item: B LLC: 0 Lot size: 1 LT: 2 Gross requirements Scheduled receipts Projected on hand Net requirements Planned order receipts Planned order releases PD 5 1 5 2 5 3 Period 4 5 5 195 5 5 6 200 5 195 195 7 0 8 0

MRP Matrices For C & D

Item: C Lot size: 150 LLC: 1 LT: 4 Gross requirements Scheduled receipts Projected on hand Net requirements Planned order receipts Planned order releases PD 140 Item: D LLC: 1 Lot size: 250 LT: 2 Gross requirements Scheduled receipts Projected on hand Net requirements Planned order receipts Planned order releases PD 200 1 140 140 150 1 200 2 2 250 450 250 3 Period 4 5 270 140 140 3 450 250 Period 4 585 450 135 250 140 130 150 5 180 115 65 250 6 20 6 185 7 20 7 185 8 20 8 185

Alpha Beta Planned Order Report

Period 1 2 3 4 5 Item C D D B A Quantity 150 250 250 195 90

MRP and The Production Planning Process

Forecast & Firm Orders Aggregate Production Planning Resource Availability Material Requirements Planning Capacity Requirements Planning Master Production Scheduling No, modify CRP, MRP, or MPS Realistic?

Yes Shop Floor Schedules

MRP Benefits

 Increased customer satisfaction due to meeting delivery schedules  Faster response to market changes  Improved labor & equipment utilization  Better inventory planning & scheduling • Reduced inventory levels without reduced customer service  Mechanism for communication between departments

MRP Requirements

 Computer system  Mainly discrete products  Accurate master production schedule  Accurate inventory status • 99% inventory accuracy  Stable lead times © 1984-1994 T/Maker Co.

Inventory Accuracy

1. Maintain orderly stockrooms 2. Control access to stockrooms 3. Establish & enforce procedures for inventory withdrawal 4. Ensure prompt and accurate entry of inventory transactions 5. Take physical inventory count on a regular basis 6. Reconcile inventory discrepancies in a timely manner (use cycle counting)