Lecture Operations and supply chain management: The Core (3/e) – Chapter 9: Material requirements planning

After reading the material in this chapter, you should be able to: Describe what MRP is and where it is best applied, understand the source of the information used by the system, demonstrate how to do an MRP “explosion,” explain how order quantities are calculated in MRP systems.

Material Requirements Planning Chapter 09 McGraw­Hill/Irwin         Copyright © 2013 by The McGraw­Hill Companies, Inc. All rights reserved Learning Objectives Describe what MRP is and where it is best applied Understand the source of the information used by the system Demonstrate how to an MRP “explosion.” Explain how order quantities are calculated in MRP systems 9­2 Enterprise Resource Planning (ERP) and Material Requirements Planning (MRP) 9­3 Material Requirements Planning (MRP)   The logic that ties production functions together from a material planning and control view A logical, easily understood approach to the problem of managing the parts, components, and materials needed to produce end items    How much of each part to obtain? When to order or produce the parts? Dependent demand is drives the MPR system 9­4 Master Production Scheduling   The master schedule deals with end items and is a major input to the MRP process All production systems have limited capacity and limited resources   The aggregate plan provides the general range of operation, the master scheduler must specify exactly what is to be produced To determine an acceptable feasible schedule to be released to the shop, trial master production schedules are tested using the MRP program 9­5 Master Production Scheduling Aggregate plan shows overall quantities to produce – without specifying type Week MPS shows quantities of each type, with information about the production time frame 9­6 MRP System Structure MRP system inputs MRP system outputs 9­7 Product Demand Sources   Customers – specific orders placed by either external or internal customers Aggregate production plan – the firm’s strategy for meeting demand in the future, implemented through the master production schedule (MPS) 9­8 Bill of Materials (BOM) 9­9 MRP Explosion Process 9­10 MRP Explosion Process (continued) 9­11 Lot Sizing in MRP Systems   Determination of lot sizes in an MRP system is a complicated and difficult problem Lot sizes - the part quantities issued in the planned order receipt and planned order release sections of an MRP schedule 9­12 Lot-for-Lot 9­13 Economic Order Quantity 9­14 Least Total Cost/Least Unit Cost  Least total cost method (LTC) - a dynamic lotsizing technique that calculates the order quantity by comparing the carrying cost and the setup costs for various lot sizes and then selects the lot in which these are most nearly equal   Influenced by the length of the planning horizon Least unit cost method (LUC) - a dynamic lotsizing technique that adds ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost 9­15 ... Resource Planning (ERP) and Material Requirements Planning (MRP) 9­3 Material Requirements Planning (MRP)   The logic that ties production functions together from a material planning and control... the order quantity by comparing the carrying cost and the setup costs for various lot sizes and then selects the lot in which these are most nearly equal   Influenced by the length of the planning. .. 9­7 Product Demand Sources   Customers – specific orders placed by either external or internal customers Aggregate production plan – the firm’s strategy for meeting demand in the future, implemented