Ch17 Mrp

Materials Requirements Planning

Fun stuff

Materials Management

A plant organizing function that assures a predictable flow of components and other inputs through a transformation process.

It coordinates the activities of both the internal and external factory

What is needed When i.e. Inventory micro issues

Development of MRP

After WWII - D>>S Companies use quarterly ordering systems based on

confirmed orders WWII boom settles down D = S

backlog of orders decreases quarterly systems become more based on forecasts In move from confirmed orders to forecasts, quarterly

systems become less and less accurate Wight, others develop MRP

takes forecasts, breaks them down via dependent demand into weekly schedules

Up to 1970s, extensive use of Q and P models why? Simple to use, limited information

requirements, “optional” Why move to MRP?

problems with Q and P models high levels of inventory high stockouts poor customer services

“Order launch & Expedite”

Prior to MRP

Major changes high cost of inventory increased availability of more

powerful computers decreasing cost of computers

MRP now supported by extensive body of software

Other Factors

Dependent Demand

Demand for components driven by the production schedule

It is derived - not forecasted Consists of WIP and raw materials Lumpy- discrete, irregular quantities Concept of Parent/Component Time Bucket

MRP and Dependent Demand Independent Demand

Finished Goods independent demand in MPS

Problem with Dependent Demand information generated challenge - generating 100% CSL past approach – Q, P new approach - MRP

Remember This?? MPS Principles The MPS must be in concert with the

production plan The MPS must drive the entire

materials management system Include all known requirements in the

preparation of the MPS and the FAS Minimize the number of items needed

to adequately express the MPS and the FAS

Plan showing availability Build schedule Stated in BoM terms

What is the MPS?

A complete, current and accurate database one set of records high emphasis on data accuracy quick correction of error in db accessible to all who need data

Remember this?

Keys to MPC

Capacity Maximum Effective Demonstrated

Demand management Capacity management

level chase mixed

Requires coordination with marketing

Issues Considered

Nature of MRP

Use forecast to predict required amount of level 0 (end product) Use this number to determine number of lower level

components needed (dependent demand)

Frame Seat Brake Kit

Hoop

Rim

Wire

Spokes

Front Wheel Rear Wheel

Bike Level 0

Level 1

Level 2

Level 3

Implementation of MRP

Forecast becomes gross requirements for MRP system

Break down gross requirements into time buckets

Calculate net requirements - difference between units required (i.e. gross requirements or derivation plus orders for that period) and units expected to be available in inventory

Key inputs to MRP

MPS - merges forecasts and production capacity BOM - gives components needed for each end

product in terms of part numbers Inventory Records - must be accurate, as MRP uses

this information as the basis of its calculations; should design inventory system to ensure accuracy

Order Status - use scheduled receipts to distinguish those orders that have actually been released

Planned Lead Times - gives the when information

Brunswick Motors

Applying MRP to InventoryPlanning & Scheduling

MRP Elements Gross Requirements On-Hand Inventory

Allocations Scheduled Receipts Net Requirements Planned Order Releases Time-phasing Parent/Component

MRP Elements Planning factors System nervousness Firm planning Explosion Time buckets

Action bucket Rolling the Schedule Net Change vs. Regenerative MRP

Advantages of MRP Forward looking when planning (visibility) Useful simulator Provides valid, credible priorities

priorities reflect actual needs, not implied needs.

Provides mangers with control over the execution system

Forms basis for building credible, valid formal system

MRP Works Best When...

End Products are Standardized Batch Production End product is moderately

complex The end product is assembled from

a set of components and raw materials

Limitations of MRP only looks at materials, ignores

capacity, shop floor conditions requires user discipline requires accurate information/data requires valid MPS not appropriate for all areas

high volume production projects

Capacity Requirements Planning

Wait a second - just because MRP says produce X, are we able to produce X? Need to evaluate the capacity to see if it

can meet plan Need all of MRP information plus:

1. How much capacity a process requires to make 1 unit of a product

2. When does the process need the hours (time) of capacity

MRP Closed Loop MRP MRP II Distribution Requirements Planning DRP II Enterprise Requirement Planning

Types of MRP Systems

Reports

Master Schedule Indented Bill of Materials BOM - Item Requirements Scheduled Receipts Planned Orders

ABC Analysis

Which items are C items? B items? Which item should we order ahead

furthest? Which should we spend the most

time on? Spend time and effort on A + B

items carry small quantities review frequently

ABC Analysis

Manage C items by: carrying inventories concentrating with a few suppliers stockless buying review infrequently