Transcript
8/6/2019 Material Requirment Planning
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AN OPERATION MANAGEMENT
TECHNIQUE.
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� American production and control
society(APICS) defines;
� MRP constitutes a set of techniques that use
BOM, Inventory data and MPS to calculaterequirement for materials.
� It is the system of calculating the
needs/requirments of the input material at
different point of time based on the plan orschedule for production of the finished
item/good/products.
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� It is the computer based system that takes
MPS to explode it into required amount of
basic raw materials, components/parts,
subassemblies and assemblies required ineach of the planning horizon, and then
reducing these material requirments to take
into account that ar in inventory or on order
and finally developing a schedule of order forpurchased materials and produced
components over the planning horizon.
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� Low prices of the product being
manufactured
�Continuity of supply so that there are no
production halts� Low payable cost
�Consistency in quality of products
� Low cost of acquisition and possession
�High inventory turnover
�Development of good personnel records
�Good supplier relation
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Aggregate
Production
Plan
MarketingCustomer
Demand
EngineeringDesign
Completion
ManagementReturn on
Investment
Capital
HumanResourcesManpower
Planning
ProcurementSupplier
Performance
FinanceCash Flow
ProductionCapacity
Inventory
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MRP SYSTEM
INDEPENDENT
DEMAND SALESFORECAST
PRODUCT
STRUCTURE
OR LIST OF
COMPONENTSREQUIRED
MASTER
PRODUCTION
SCHEDULE
EXTERNAL ORDER
FOR
COMPONENTS
INVENTORY
RECORD
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� LEAD TIME: Time need in completing the job from stage to finalstage.� MANUFACTURING LEAD TIME: To process the part through the sequence
of m/cs or work stations specified on the route sheet.
� ORDERING LEAD TIME: time needed from start of purchasing process tothe receipt of item/goods from the supplier. This time is dependent
upon the time required by the suppliers to deliver the items after thereceipt of order.
� DATA FILES:FIRST FILE: BOM( Mat. Record, tool requirement and lead time)
SECOND FILE: ENGINEERING DATA FILE(machine time routing and labourrequirement).
THIRD FILE: INVENTORY TRANSECTION FILE( running balances of partsand subassemblies).
FOURTH FILE: OPEN ORDER FILE(order placed but not received orcompleted).
FIFTH FILE: Master Production Schedule(indicates the number andtiming of all final product to be produced over the planning horizon).
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� Capacity Requirement Planning:� To reconcile the MPS to labor & machine capacities of production
departments over the planning horizon.
� Safety stock:� Qtn of mat held as inventory that is dedicated to b used in emergency
shortages, which may be due to uncertain demand or lead times.
� Independent demand:� Independent of the demands for other materials.
� Dependent demand:� Demand of raw material, parts or other lower level component that
depend on the demand for the final product into which the componentgoes.
� Gross requirement:� Total requirement for a particular material, without considering any
availability of the material in inventory or schedule receipts.
� Net requirement:� Gross requirement ² available material
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Inventory
ro ess
st e
e n
y e
N ber
& V l eOther
R w M teri l
WI
Finishe
Goo s
In e en en
t
e en ent
A Ite s
B Ite s
C Ite s
M inten n
e
e en ent
O er tin
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PowerPoint presentation to accompanyOperations Management, 6E (Heizer & Render)
© 2001 by Prentice Hall, Inc. Upper Saddle River, N.J.0745814-10
ItemMaterials With
Independent DemandMaterials With
Dependent Demand
Demand
Source Company Customers Parent Items
MaterialType
Finished Goods WIP & Raw Materials
Method of
EstimatingDemand
Forecast & BookedCustomer Orders
Calculated
PlanningMethod
EOQ & ROP MRP
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Effective use of dependent demand
inventory models requires that the
operations manager know the:
� master production schedule
� specifications or bills-of-material
� inventory availability
� purchase orders outstanding
� lead times
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Production Plan
Execute MaterialPlans
Master ProductionSchedule
MaterialRequirements
Plan
CapacityRequirements
Plan
Execute CapacityPlans
Realistic??o
Yes
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Independent
product
demand
MPS
Product
structure, BOM
Inventory
transaction
Inventory
recordsMRP
Inventory
order
action
Priority
integrity
Priority
planning
Performance
control
Planned
order
schedules
Capacity
requirement
planning
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� Projected Requirements:� The MPS gives particulars about demands of the final
assembly for the periods in the planning horizon.The projected requirements of the subassemblies which
are in the next immediate level just below the final
product can be calculated only after completing theMRP calculations for the final product.
� Stock on hand:� It is level of inventory at the end of each period.
� Planned order release:
� It is the plan to initiate the purchase or manufactureof materials so that they will be received on scheduleafter the lead time offset.
� Economic order quantity:� Is calculated based on the set up cost and carrying
cost.
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� To demonstrate the working of MRP to
manufacture the fire extinguisher. The MPS
to manufacture the fire extinguisher is given
in table1. The details of BOM,EOQ & stock on
hand for the final product and subassemblies
are shown in table 2.
Table 1: Master Production Schedule
Week 1 2 3 4 5 6 7 8
Demand 100 150 140 200 140 300
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Parts
required
Order
quantity
o. of units Lead time Stock on
hand
Fire
extinguisher
300 1 1 150
Cylinder 450 1 2 350Valve
assemblies
400 1 2 325
Valve 350 1 1 150
Valve
housing
450 1 1 350
Handle bars 700 2 1 650
Complete MRP plan and show what quantities of orders must be
released and when they must be released in order to satisfy the
MPS.
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� The projected requirement for the fire
extinguisher are same as the MPS which are
shown in table 2.
� The projected requirements of the cylinderand the valve assembly are same as the
planned order releases of the fire
extinguisher in various weeks, since each fire
extinguisher requires two units of handle bar.� The projected requirements of the valve
housing are same as the planned order
release values of the valve assembly.
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period 0 1 2 3 4 5 6 7 8
Projected
requirement
100 150 140 200 140 300
receipts 300 300 300
Stock on hand 150 50 50 200 60 160 20 20 20
Shortage -100 -140 -280
Planned order release 300 300 300
EOQ=300 LT=1week
Ta le: 1 Calculations for fire extinguisher
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EOQ= 450 LT=2WEEKS
Period 0 1 2 3 4 5 6 7 8
Projected
requirement
300 300 300
receipts 450 450
Stock on hand 350 350 50 50 200 200 200 350 350
Shortage -250 -100
Planned order release 450 450
Ta le 2: Calculations for cylinder
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Period 0 1 2 3 4 5 6 7 8
Projected
requirement
300 300 300
receipts 400 400
Stock on hand 325 325 25 25 125 125 125 225 225
Shortage -275 -175
Planned order release 400 400
EOQ = 400 LT = 1 WEEK
Ta le 3: Calculations for valve assem ly
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EOQ = 350 LT = 1 WEEK
period 0 1 2 3 4 5 6 7 8
Projected
requirement
400 400
Receipts 350 350
Stock on hand 150 150 150 100 100 100 50 50 50
shortage -250 -300
Planned order
release
350 350
Ta le 4: Calculations for valve
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period 0 1 2 3 4 5 6 7 8
Projected
requirement
400 400
Receipts 450
Stock on hand 350 350 350 400 400 400 0 0 0
shortage -50
Planned orderrelease
450
EOQ = 450 LT = 1WEEK
Ta le: 5 Calculations for valve housing
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EOQ = 700 LT = 1 week
Period 0 1 2 3 4 5 6 7 8
Projected
requirement
600 600 600
Reciepts 700 700
Stock
On
hand
650 650 50 50 150 150 150 250 250
shortage
Planned
Orderrelease
700 700
MRP calculations for handle ar
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