Lecture 9 - Materials Requirements Planning. There are two types of demand: independent and dependent. Independent demand is not related to the demand for any other product. For example, if a company makes wooden tables, the demand for the tables is independent. Master production schedule items are independent demand items.
Lecture 9 Materials Requirements Planning Books • Introduction to Materials Management, Sixth Edition, J. R. Tony Arnold, P.E., CFPIM, CIRM, Fleming College, Emeritus, Stephen N. Chapman, Ph.D., CFPIM, North Carolina State University, Lloyd M. Clive, P.E., CFPIM, Fleming College • Operations Management for Competitive Advantage, 11th Edition, by Chase, Jacobs, and Aquilano, 2005, N.Y.: McGrawHill/Irwin • Operations Management, 11/E, Jay Heizer, Texas Lutheran University, Barry Render, Graduate School of Business, Rollins College, Prentice Hall Objectives • • • • • Material Requirement Planning Nature of Demand Inputs to MRP Bill of Material Planned Orders Material Requirements Planning • • • Material Requirements Planning is a system to calculate requirements for dependent demand items It establishes a schedule (priority plan) showing the components required at each level of the assembly and, based on lead times, calculates the time when these components will be needed It is a system to avoid missing parts for the end item Material Requirements Planning Process • We need to determine – – – • What to order How much to order When to order This will involve – – – – Lead times Bills of material Inventory Status Planning data Nature of Demand • Two Types of Demand – Independent • • – Is not related to the demand for any other product and must be forecast Master production schedule (MPS) items are independent demand items Dependent • • Is directly related to other items or end items Such demand should be calculated and need not and should not be forecast Nature of Demand Independent Demand (Forecast) Table Legs (4) Ends (2) Sides (2) Item #206 Item #433 Item #711 Top (1) Item #025 Hardware Dependent Demand Kit (1) (Calculated) Item #822 If you have an order for 23 Tables, what components would you need to produce them? Objectives of MRP • Two Major Objectives – Determine Requirements • • • • – What to order How much to order When to order When to schedule delivery Keep Priorities Current • It must be able to add and delete, expedite, delay, and change orders based upon present priorities Linkages with Other Manufacturing Planning and Control Functions Business Plan Production Plan Planning MPS MRP PC and Purchasing The MRP is driven by the MPS; it is concerned with the components needed to make the end items • The MRP in turn drives, or is input to, production control (PC) and purchasing • Execution Inputs to the MRP System • MPS Inventory Status MRP Four Major Inputs: – Bill of Material – – – Planning Data Master Production Schedule Inventory Records Planning Data Bills of Material Inputs to the MRP System • Master Production Schedule (MPS) – • The MPS provides information on planned and scheduled orders for end items (how much is wanted and when) Inventory Status – Inventory status provides information on what is already available. Inventory records include the status of each item, including amounts on order and on hand and the location Example from Pg. 88 Week Gross Reqts Proj Avail (75) Net Reqts Plan Order Rcpt Plan Order Rls 45 80 20 100 20 75 50 25 Example from Pg. 88 Week Gross Reqts Proj Avail (75) Net Reqts Plan Order Rcpt Plan Order Rls 75 50 25 45 80 20 100 20 60 100 Example from Pg. 90 (87 3rd Ed.) Week Gross Reqts Sched Receipts Proj Avail (150) Net Reqts Plan Order Rcpt Plan Order Rls 50 250 200 100 50 Example from Pg. 90 Week Gross Reqts Sched Receipts Proj Avail (150) Net Reqts Plan Order Rcpt Plan Order Rls 50 250 200 50 100 50 100 50 200 Example from Pg. 90 Week Gross Reqts Sched Receipts Proj Avail (150) Net Reqts Plan Order Rcpt Plan Order Rls 50 250 200 50 100 50 150 50 200 100 100 Example from Pg. 90 Week Gross Reqts Sched Receipts Proj Avail (150) Net Reqts Plan Order Rcpt Plan Order Rls 50 250 200 50 100 50 150 50 200 100 100 200 Release the order for 200 units Using the Material Requirements Plan • The computer can perform all calculations and create planned order releases, but it does not (usually) issue purchase or manufacturing orders or reschedule open orders. Computer software can create exception messages and suggest types of action Using the Material Requirements Plan • On the basis of action and exception messages, the planner can release planned orders, reschedule existing orders in or out, or change quantities. In addition, the planner works with other planners, master production schedulers, production activity control, and purchasing to solve problems as they arise The Basic Responsibilities of a Planner – – – Launch (release) orders to purchasing or manufacturing Reschedule due dates of open (existing) orders as required Reconcile errors and try to find their cause The Basic Responsibilities of a Planner – – Address critical material shortages by expediting or re planning Coordinate with other planners, master production schedulers, production activity control, and purchasing to resolve problems Material Planner’s 3 Types of Orders – – Planned orders calculated and controlled by the software Released orders scheduled receipts; releasing is the responsibility of the planner Material Planner’s 3 Types of Orders – Firm planned orders the planner tells the computer that the order is not to be changed; the planner uses firm planned orders to override the software in terms of quantity, time, or both. When replanning, the software will not change the planner’s decision Managing the Material Requirements Plan The planner must consider three important factors when managing the MRP: – – Priority refers to maintaining the correct due dates by constantly evaluating the true duedate need for released orders and, if necessary, expediting or deexpediting Bottomup Replanning Action to correct for changed conditions should occur as low in the product structure as possible Managing the Material Requirements Plan The planner must consider three important factors when managing the MRP: – Reducing System Nervousness Requirements can change rapidly and by small amounts. The planner must judge whether the changes are important enough to react to and whether an order should be released End of Lecture 9 ... Computers are needed because they are fast , accurate,? ?and? ?have the ability to store? ?and? ?manipulate data? ?and? ?produce information rapidly Bills? ?of? ?Material Bill? ?of? ?Material “a listing? ?of? ?all the subassemblies, intermediates, parts,? ?and? ?raw materials ... available.? ?Inventory? ?records include the status? ?of? ?each item, including amounts on order? ?and? ?on hand? ?and? ?the location Inputs to the MRP System • Bills? ?of? ?Material – • Planning Data – • Bills? ?of? ?material? ?describe components? ?and? ?the quantity? ?of? ?each needed to ... Items can be both parents? ?of? ?components? ?and? ?components? ?of? ? other parents Bills? ?of? ?Material • LowLevel Coding? ?and? ?Netting A component may reside on more than one level in a bill? ?of? ?material – – – The lowlevel code is the lowest level on which a part resides in all bills