Oman College of Management and Technology

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1 Oman College of Management and Technology Course PIS Chapter 7 Material Requirements Planning (MRP) CS/MIS Department

2 What is MRP? (Material Requirements Planning) Is a basic tool for performing the detailed material planning function in the manufacture of component parts and their assembly into finished items. Objective: To provide the right parts at the right time to meet the schedules for completed products. 2

3 MRP and MPC Requires MPS Requires Bill of Materials Requires Inventory Status data Routing file for each component Contains: operations to be performed, sequence of operations, work center, other possible WC, tooling needed, standard times (setup and run time). 3

4 Manufacturing Planning and Control System 4

5 The Basic MRP Record Anticipated usage of demand for each period (GROSS REQUIREMENTS) Existing replenishment orders at the beginning of period (SCHEDULED RECEIPTS) The current and projected inventory status at the end of period (PROJECTED AVAILABLE BALANCE) Planned replenishment orders for the beginning of each period (PLANNED ORDER RELEASES) 5

6 Information Timing Gross Requirements Scheduled Receipts Projected Available Balance Planned Order Release - Beginning of Period - Beginning of Period - End of Period - Beginning of Period 6

7 Example: Gross requirement Scheduled receipts 50 Projected available balance Planned order releases 50 Lead time: 1 week Lot Size: 50 7

8 Product Structure Diagram It is a technique used to describe the relationship between the components of a product and the way these components and parts are put together in order to make a complete unit. 8

9 Figure 7.3 The 1605 Snow Shovel shown with component parts and assemblies MIS Topic 7 9

10 Figure 7.4 Parts for Snow Shovel Product Structure Diagram 10

11 Figure 7.4 Parts for Snow Shovel Indented BOM MIS Topic 7 11

12 Gross to Net Explosion Explosion is the process of translating product requirements into component part requirements taking existing inventories and scheduled receipts into account. As the explosion takes place only the components, net of any inventory are considered. This way only the necessary requirements are linked through the system. Figure

13 Figure 7.5 Gross net requirement calculations for the snow shovel 13

14 Offsetting {Gross & Lead Time} Gross to net offset tells us how many of each component are needed for a finished product. Lead Time Offset tells us WHEN they are needed. 14

15 Front and Back Schedule (7.6,7.7) Front or Earliest Start assumes that we will start everything as soon as possible. {Regardless of WIP inventory cost} Back schedule will start everything as late as possible. MRP uses the benefits of back scheduling and the gross to net explosion. This is the heart of the system. 15

16 Figure 7.6 Gant Chart for cutting approach to snow shovel problem (front or earliest start schedule) MIS Topic 7 16

17 Figure 7.7 Gant Chart based on back schedule (latest start) MIS Topic 7 17

18 Technical Issues 18

19 Regeneration Processing all records in one computer run is called regeneration. This means that all part numbers are completely reconstructed each time the records are processed. All current planning orders are removed and starting with the end items each item is completely rescheduled. Requires a lot of computer time. More frequent runs creates more credibility. 19

20 Net Change Respond to the need for frequency by processing only the records affected by the changes. It can reduce computer time enough to make daily runs (or even real time processing). Every once in a while do a regeneration to clean up all the records. 20

21 System nervousness and bucketless system System nervousness (hypersensitivity) is a result of the frequent replanning and change in the MRP records (net change). Bucketless systems are those with no fixed periodic updating, but when needed. It specifies the exact release and due dates for each requirement, scheduled receipt. Lot sizing: what are the trade offs of fixed lot sizing. 21

22 Safety Stock/Lead Time These technique allow the decrease of situations where there may be shortages. Safety stock is a buffer of stock above what is needed to satisfy the gross requirements Safety lead time is a procedure by means of which orders are released and scheduled to arrive earlier than they should. (7.9) 22

23 Figure 7.9 Figure 7.9 MRP Record with safety lead time Part 129 Top Handle Bracket Lead time = 1 Lot-4-Lot Safety lead time = 1 Week Gross requirements Scheduled receipts Projected available Planned order release Top Handle bracket Lead time = 1, LFL Week Gross Requirement Scheduled Receipts Projected Available I Planned order release

24 Pegging and Where-used Relates all gross requirements for a part to all planned order releases or other sources of demand that created the requirements. At level 0, pegging records may contain the specific customer orders to be satisfied by the gross requirements in the end-item time phased records. Where used indicate for each part number, the part numbers of all items where it is used. Pegging is selective where-used. It shows only the part numbers that produce the specific gross requirements in each time period. 24

25 Firmed planned order FPO is a planned order that the MRP system does not automatically change when conditions change. [or override of the system] 25

26 Service Parts Service part demand must be included in the MRP record if the material requirement are not to be understated. They are usually based on a forecast and added directly into the gross requirements. Demand variations are usually taken care with safety stock. 26

27 Planning Horizon It should be estimated by calculating the cumulative lead time for the products made in the system. The cumulated lead time for the top handle assembly = 7 weeks. 27

28 Scheduled Receipts & Planned Order Releases The scheduled receipt represents a commitment done in the past (more difficult to change). If manufactured it means an open shop order if purchased it means a purchased order has been issued. The planned order release is a PLAN not a reality. 28

29 Actions of the MRP Planner Release orders Reschedule due dates Analyze and update system planning factors for the part numbers under her control Reconcile errors and inconsistencies Find key problem areas Use the system to solve critical material shortages Indicate where enhancements would make job easier. 29

30 Allocation Prior to order launching, an availability check should be done for the necessary components. If not all available, a partial order could be evaluated in conjunction with marketing. After this a picking ticket should be issued so that items are removed from their physical location. 30

31 System Dynamics It is essential that the MRP system mirrors actual shop conditions, that is the information system should have to cope with scrap, incorrect counts, changes in customer needs, incorrect BOM, engineering design changes, etc. 31

History IE 376 PRODUCTION INFORMATION SYSTEMS. Course Notes Lecture #2.A Material Requirements Planning

History IE 376 PRODUCTION INFORMATION SYSTEMS. Course Notes Lecture #2.A Material Requirements Planning IE PRODUCTION INFORMATION SYSTEMS Course Notes Lecture #.A Material Requirements Planning IE Bilkent University Manufacturing Planning and Control System Routing file Resource planning Bills of material