The Planning Hierarchy

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Sophie Perkins
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1 TPPE37 Manufacturing Control Agenda Lecture 3 Material requirements Material Requirements Planning (MRP) MRP Logic and Product Structure Trees MRP input and output Ou Tang 1 Ou Tang 2 The Planning Hierarchy A simple example Master Demand management Feedback Final assembly schedule Sales and operations Production Master prod. schedule Material Resource Master (production) scheduling Rough-cut capacity plan Detailed capacity Front end Engine Given the product structure tree for A and the lead time and demand information, provide a materials requirements plan that defines the number of of units of of each component and when they will be be needed Product Structure Tree for Assembly A A B(4) C(2) Lead Times A 1 day B 2 days C 1 day D 3 days E 4 days F 1 day Vendor systems Shop floor systems Ou Tang 3 Back end Total Unit Demand Day A E(1) D(3) F(2) Day 8 20 B (Spares) Day 6 15 D (Spares) Ou Tang 4 D(2)

2 A simple example (cont.) First, production of of A are scheduled backwards to to allow for their lead time. A simple example (cont.) Day: A Required 50 Order Placem ent 50 B Required Order Placem ent Day: A Required 50 Order Placement 50 A LT = 2 Spares 4x50=200 LT = 1 day B(4) C(2) Ou Tang 5 D(2) E(1) D(3) F(2) Ou Tang 6 A simple example (cont.) Remark Day: A Required 50 LT=1 Order Placement 50 B Required LT=2 Order Placement C Required 100 LT=1 Order Placement 100 D Required LT=3 Order Placement E Required LT=4 Order Placement F Required 200 LT=1 Order Placement 200 B(4) A C(2) Part D: Day spares Material and productin plan are explored through product structure tree D(2) E(1) D(3) F(2) Ou Tang 7 Ou Tang 8

3 Additional MRP Scheduling Terminology Material requirements Gross Requirements Planned order receipt Planned order release D A A = 100, 50, 30, 150, 100 No Nosafety stock Initial stock = 100, 700, 110 Lot sizing: LFL, FOQ=900, FOQ=200 Lead time: 1, 1, 1, 1, 2 periods Sch. receipts: 200 of ofc per. 2 Level bill of material Ou Tang 9 Ou Tang 10 Large MRP matrix The MPS as gross requirements C Description: Lead time:1 period - Lot sizing:lfl Period Ou Tang 11 Description: C Lead time: 2 periods Description:B Lot sizing: LFL 1 2 Period Net. req. consid. plan. orders Description: C Period Master Production Planning (MPS) Lead time: 1 period Lot sizing: LFL Period Net. req. consid. plan. orders 2 Lead time: 1 period Description: C Lot sizing: LFL 1 2 Period Net. req. consid. plan. orders 1 Lowlevel Ou Tang

4 14 Different types of orders MRP input and output Released orders Planned orders Firm pl. orders Description: Lead time: Lot sizing: Period Net req. consid. planned orders Engineering design changes Bill of material file Primary reports Planned order schedule for inventory and production control Master production Schedule (MPS) Material (MRP computer program) Inventory transactions Inventory record file Secondary reports Exception reports Planning reports Reports for performance control Ou Tang 13 Ou Tang 14 The McGraw-Hill Companies, Inc., 2004 Primary MRP reports Planned orders to be released at a future time Order release notices to execute the planned orders Changes in due dates of open orders due to rescheduling Cancellations or suspensions of open orders due to cancellation or suspension of orders on the master production schedule Inventory status data Secondary MRP Reports Planning reports, for example, forecasting inventory requirements over a period of time Performance reports used to determine agreement between actual and programmed usage and costs Exception reports used to point out serious discrepancies, such as late or overdue orders Ou Tang 15 Ou Tang 16

5 Design of the MRP-system Lot sizing Planning horizon Normally the thesame as as in inthe themps (cum. lead lead time time + visibility) Planning period Week Bucketless Processing frequency Regeneration Net Net Change Lot sizing technique Buffering Ou Tang 17 Objectove :: balance balance setup setup (ordering) cost cost and and inventory holding holding cost cost LFL LFL = Lot LotFor ForLot FOQ FOQ = Fixed Fixed order order quantity quantity POQ POQ = Periodic Periodicorder orderquantity Ou Tang 18 Effects of Lot sizing Buffering techniques Lot-for-lot + Preserves the themps MPSquantities + Suitable for for JIT JITmanufacturing + Generates smooth requirements for for material and andcapacity No Noeconomic considerations Fixed order quantities Lumps together requirements to to large largeorders Amplifies lumpiness through the thebom Fluctuationg material and andcapacity requirements Periodic order quantity + Economic considerations considering discrete requirements Estimation of of cost costparameters Covering many periods net net requirements tends to to create amplified variability of of demand for for material and andcapacity Ou Tang 19 Safety stock Physical safety quantity Used Used when quantity, demand or or consumption is isunreliable Net Net req. req. generated when safety stock is isused (rec. (rec. by by APICS) Safety lead time Safety in intime, order orderreceipt befor beforrequirement Used Used when lead lead times are are stochastic Extends the the lead lead time time Ou Tang 20

6 Ex: Buffering techniques - SS Ex: Buffering techniques - SL Description: A Lead time: 2 periods 30 pcs Lot sizing: FOQ=100 Period Description: A Lead time: 2 periods 1 period Lot sizing: FOQ=100 Period Ou Tang 21 Ou Tang 22 Processing frequency Nervousness Regeneration Complete recalculation of ofall requirements Net change Re of ofmaterial requirements only for foritems affected by bychanges Significant changes in in MRP plans, which occur even with only minor changes in inhigher-level MRP records or or the themaster production schedule. Actions for forreducing nervousness Stabilizing the themps MPSwith time time fences Lot Lot size size carefully Use UseFPO in in MPS MPS and and MRP Ou Tang 23 Ou Tang 24

Chapter 18. Materials Requirements Planning

Chapter 18. Materials Requirements Planning 1 Chapter 18 Materials Requirements Planning Material Requirements Planning 2 Materials requirements planning (MRP) is a means for determining the number of parts, components, and materials needed to produce