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,Material Requirements Planning,Operations Management,For Competitive Advantage,CHASE AQUILANO JACOBS,ninth edition,Chapter 14,Chapter 14 Materials Requirements Planning,Material Requirements Planning (MRP) MRP Logic and Product Structure Trees Time Fences MRP Example MRP II Lot Sizing in MRP Programs,Material Requirements Planning Defined,Materials requirements planning (MRP) is the logic for determining the number of parts, components, and materials needed to produce a product. MRP provides time scheduling information specifying when each of the materials, parts, and components should be ordered or produced. Dependent demand drives MRP. MRP is a software system.,Example of MRP Logic and Product Structure Tree,Product Structure Tree for Assembly A,Lead Times A 1 day B 2 days C 1 day D 3 days E 4 days F 1 day,Demand Day 10 50 A Day 8 20 B (Spares) Day 6 15 D (Spares),Given the product structure tree for “A” and the lead time and demand information below, provide a materials requirements plan that defines the number of units of each component and when they will be needed.,LT = 1 day,First, the number of units of “A” are scheduled backwards to allow for their lead time. So, in the materials requirement plan below, we have to place an order for 50 units of “A” in the 9th week to receive them in the 10th week.,Next, we need to start scheduling the components that make up “A”. In the case of component “B” we need 4 Bs for each A. Since we need 50 As, that means 200 Bs. And again, we back the schedule up for the necessary 2 days of lead time.,Finally, repeating the process for all components, we have the final materials requirements plan:,The McGraw-Hill Companies, Inc., 2000,7,Master Production Schedule (MPS),Time-phased plan specifying how many and when the firm plans to build each end item.,MPS (Specific End Items),Types of Time Fences,Frozen No schedule changes allowed within this window. Moderately Firm Specific changes allowed within product groups as long as parts are available. Flexible Significant variation allowed as long as overall capacity requirements remain at the same levels.,Example of Time Fences,Exhibit 14.5,Material Requirements Planning System,Based on a master production schedule, a material requirements planning system: Creates schedules identifying the specific parts and materials required to produce end items. Determines exact unit numbers needed. Determines the dates when orders for those materials should be released, based on lead times.,Material planning (MRP),From Exhibit 14.6,12,The McGraw-Hill Companies, Inc., 2000,Bill of Materials (BOM) File A Complete Product Description,Materials Parts Components Production sequence Modular BOM Subassemblies Planning BOM Fractional options,Inventory Records File,Each inventory item carried as a separate file Status according to “time buckets”. Pegging Identify each parent item that created demand.,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.,Net Change System,Activity driven Net change schedules Potential for system nervousness,Additional MRP Scheduling Terminology,Gross Requirements On-hand Net requirements Planned order receipt Planned order release,MRP Example,Requirements include 95 units (80 firm orders and 15 forecast) of X in week 10 plus the following spares:,Closed Loop MRP,Production Planning Master Production Scheduling Material Requirements Planning Capacity Requirements Planning,Manufacturing Resource Planning (MRP II),Goal: Plan and monitor all resources of a manufacturing fir

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