Material Requirements Planning

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Material Requirements Planning
Inputs
Output
Planned Orders
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Material Requirements Planning
MRP is a Push production system

• With MRP, production is planned to meet
• Future demand forecasts (make-to-stock)
• Orders to be completed in the future
  (make-to-order or assemble-to-order)
• A key input is, therefore, actual demand or a
  demand forecast

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Material Requirements Planning
Demand Sources

• Planning
• Sales and Operations Planning (SOP)
• Forecasting, marketing plans, capacity
• Profitability Analysis
• Controlling (CO) Module (CO-PA)
• Direct Input (Demand Management)

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Demand Management

• Simplest way to create demand it to input it
  directly

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Demand
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DemandS/R List
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Material Requirements Planning
MRP is designed for assembled products

• MRP uses the assembly structure, or Bill of
  Material (BOM) to determine how many components
  or subassemblies are needed to make the required
  number of finished products
• Considers available inventory of components and
  subassemblies in calculationsnet requirements

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Material Requirements Planning
MRP is designed for assembled products

• For end-items, demand is independentfrom
  customers
• For other components, demand can be determined
  using the BOM
• Dependent demand

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Material Requirements Planning
NRGA (7 cases)
Dough NRGA (500 lb)
Oats (300 lb)
Wheat Germ (50 lb)
Carob Chips (50 lb)
Raisins (50 lb)
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Material Requirements Planning
Key MRP concept Time-phased BOM
NRGA (7 cases)
Dough NRGA (500 lb)
Oats (300 lb)
Wheat Germ (50 lb)
Carob Chips (50 lb)
Raisins (50 lb)
Time
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Bill of Material (BOM)
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Bill of Material (BOM)
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Bill of Material (BOM)
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Bill of Material (BOM)
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Bill of Material (BOM)
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Material Requirements Planning
Material Data determines production lot size and
timing

• Primary material data includes
• Current Inventory
• Lot sizing procedure
• Production lead times
• All of this data is available in SAP via the
  Stock/Requirements List

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Material DataS/R List
Inventory Level 0
Inventory Detail
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InventoryDetail
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Material DataS/R List
Lot Size FX, 7
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Material DataS/R List
LeadTime 1
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Material Requirements Planning
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Material Requirements Planning
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Material Requirements Planning
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Material Requirements Planning
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Material Requirements Planning
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Material Requirements Planning
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Material Requirements Planning
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MRPNet Requirements
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Textbook MRP
Textbook MRP uses a bucketed system
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Textbook MRP
LS - lot size - size of production batch or lot
sizing method Gross Requirements - quantity
needed in each period - from MPS or from other
components and assemblies Scheduled Receipts -
Planned receipt dates for orders that have
already been placed Planned Order Receipts -
expected receipt date for planned orders (orders
that haven't been placed yet) Available Balance -
Projected inventory balance at the end of each
period Planned Order Releases - Orders that need
to be placed (as determined by MRP process) to
meet gross requirements (source of planned order
receipts)
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Textbook MRPExample Problem