Material Requirements Planning

1
Material Requirements Planning

• Chapter 2

2
MRP in MPC
3
MRP and in MPC

• An MRP system translates the MPSs into the
  detailed individual steps necessary to accomplish
  those plans. It also provides information to
  develop capacity plans.
• An MRP II system has a what if capability and
  involves other functions (e.g., sales, finance,
  human resources, accounting, etc.)

4
MRP Record Processing
5
MRP Terms

• Time bucket period, e.g., 1 week.
• Planning horizon number of periods.
• Lead time offset offsets a planned order release
  from a required replenishment.
• Net requirement difference between the gross
  requirements and the available inventory
  (including scheduled receipts).

6
Gross to Net Explosion and Lead Time Offsetting

• Explosion process of translating an items
  requirements into component requirements, taking
  existing inventories and scheduled receipts into
  account. Basis for the concept of dependent
  demand.
• Precedent relationships from the BOM indicate
  the order in which assembly must be done.
• MRP achieves the benefits of the backward
  scheduling and performs the gross to net explosion

7
Technical Issues

• Processing frequency cost versus timeliness and
  accuracy
• Regeneration
• Net change
• Bucketless systems
• Lot sizing setup cost versus carrying cost,
  cascading effect
• Safety stock, safety lead time
• Low-level coding

8
Technical Issues

• Pegging
• Firm planned orders
• Service parts
• Planning horizon
• Cumulative lead time
• Scheduled receipts vs. planned order releases

9
Using the MRP System

• MRP Planner- Primary actions see list, p. 36
• Order launching - process of releasing orders to
  the shop or to vendors done when planned order
  release is in the action bucket.
• Allocation and availability checking - step prior
  to order launching that involves an availability
  check for the necessary component(s).
• Exception codes
• Bottom-up replanning - using pegging data to
  solve material shortage problems.

10
System Dynamics

• Transactions during a period.
• Rescheduling.
• Complex transaction processing.
• Procedural inadequacies data auditing and
  reconciliation.

11
MRP Data Base

• Item master file - individual part data that is
  static.
• Subordinate item master file - information on
  part status.
• Bill of materials file - usually set up on a
  single-level basis i.e., part number is linked
  only to part numbers of immediate components
  required to produce it.

12
MRP Data Base

• Location file - physical storage locations.
• Calendar file.
• Open order file - files of scheduled receipts
  (purchase orders and shop orders).
• Other file linkages forecasting, capacity
  planning, production scheduling, cost accounting,
  budgeting, order entry, shop-floor control,
  distribution, invoicing, payroll, job standards,
  and engineering.

13
Concluding Principles

• Effective use of an MRP system allows development
  of a forward-looking (planning) approach to
  managing material flows.
• The MRP system permits decentralized decision
  making on individual part numbers.
• All decisions made to solve problems must be done
  within the system, and transactions must be
  processed to reflect the changes.

14
Concluding Principles

• Effective use of exception messages allows
  focusing attention on the vital few, not the
  trivial many.
• System records must be accurate and reflect the
  factorys physical reality.
• Procedural inaccuracies in processing MRP
  transactions must be identified and corrected to
  ensure that material plans are accurate.

15
Homework Assignments

• Problems 2.6 and 2.14
• Due Thursday, October 3
• Use spreadsheets for the assignments