ch5 MRP

Material Requirement Planning
(MRP)
Nur'Ain Binti Yahaya B050810172

Hazwan Bin Ismail B050810289
Mohd Yusnurahman Bin Mohd Yuznah B050810294
Nurhazwani Binti Jaya B050810188
What is MRP?
• a system that controls inventory levels, plans production, helps supply
management with important information, and helps with the
manufacturing control system with respect to the production of
assembled parts.
Major Objective of MRP
• Determine Requirements – Calculated to meet
product requirements defined in the MPS
What to order
How much to order
When to order
When to schedule delivery
• Keep Priorities Current
Overview of MRP
Dependent Demand
• Demand for items that are subassemblies or
component parts to be used in production of
finished goods.
• Once the independent demand is known, the
dependent demand can be determined.
MRP Input
Requirements for Effective Use of Dependent
Demand Inventory Models:
Master Production Schedule
Bills of Materials
Accurate Inventory records
Master Production Schedule
The master production schedule specifies
• Which end items or finished products the company is to
produce,
• How many are needed, and when they are needed.
The numbers that are on the master
production schedule represent
• Production, not demand,
• May be a combination of customer orders and demand
forecasts
• Gives what needs to be produced.
• Cumulative lead time: The sum of the lead
times that sequential phases of a process
require, from ordering of parts or raw
materials to completion of final assembly.
Assembly
Subassembly
Fabrication
Procurement
1 2 3 4 5 6 7 8 9 10
Time Period (weeks)
Bill of Material (BOM)
• BOM: A listing of all of the raw materials,
parts, subassemblies, and assemblies needed
to produce ONE unit of a product.
• Product structure tree: Visual depiction of the

requirements in a bill of materials, where all
components are listed by levels.
Product Structure Tree
Example 5.1
Question: Use the information presented in product
structure tree, do the following:
 Determine the quantities of B, C, D, E and F needed to assemble
one X
 Determine the quantities of these components that will be
required to assemble 10Xs, taking into account the quantities on
hand (i.e., in inventory) of various components: B (OH:4); C
(OH:10); D (OH:8); E(OH:60)
Example 5.1
Exercise
• Using the product-tree shown, determine the following:

a) the quantity of component K that will be needed to assemble
80 units of P, assuming no on-hand inventory exists.
b) the quantity of component K needed to assemble 80 units of
P, given on-hand inventory of 30 A's, 50 B's and 20 C's
Answer
Inventory Records
• One of the three primary inputs in MRP
• Includes information on the status of each
item by time period
– Gross requirements
– Schedule receipts
– Projected on hand
– Net requirements
– Planned-order receipts
– Planned-order releases
Example: MRP worksheet
Week 1 2 3 4 5
Part Gross requirements
Scheduled receipts
Lead Time Projected available
Net requirements
Planned order
receipt
Planned order
release
MRP Processing
• Planned-order receipts
– Quantity expected to received at the beginning of
the period
• Planned-order releases
– Planned amount to order in each time period
Example 5.2
Figure 4.11: Product tree with Lead Time

Example5.2
Question : Using the product tree and lead times shown in figure
4.11,complete the following table to determine the planned order receipts
and release. There are 50 As required in week 5 and 100 in week 6.
Week 1 2 3 4 5 6
Part A Planned order receipt 50 100
Lead time: 1 week Planned order release 50 100
Part B Planned order receipt 50 100
Part C Planned order receipt 50 100
Part D Planned order receipt 50 100
Part E Planned order receipt 50 100
Exercise
• Using the following product tree, determine the planned order receipts
and release if 200 As are to be produced in week 5. All lead times are one
week excepts for component E, which has lead time of two weeks.
Answer
Week 1 2 3 4 5
Part A Planned order receipt 200
Lead time: 1 week Planned order release 200
Part B Planned order receipt 200

Part C Planned order receipt 200

Part D Planned order receipt 200

Part E Planned order receipt 200

MRP Processing
• Gross requirements
– Total expected demand
• Net requirements
– Actual amount needed in each time period
Net Requirements = Gross Requirements – Available Inventory
• Planned on hand
– Expected inventory on hand at the beginning of each
time period
Available Inventory = Projected on hand– Safety stock– Inventory
allocated to other items
Example 5.3
• Complete the following table. Lead time for the part is two weeks. The
order quantity (lot size) is 100 units
Week 1 2 3 4
Gross requirements 50 45 20
Projected available 75
Net requirements
Planned order receipt
Planned order release
Week 1 2 3 4
Gross requirements 50 45 20
Projected available 75 75 25 80 60
Net requirements 20
Planned order receipt 100
Planned order release 100
Exercise
• Complete the following table. Lead time for the part is two weeks, and the
order quantity is 40. What action should be taken?
Week 1 2 3 4
Gross requirements 20 15 10 20
Net requirements
Answer
Week 1 2 3 4
Net requirements 40 15
Answer: An order for 40 should be released in week 1

MRP Processing
• Scheduled receipts
– Open orders (orders that have been placed and
are) scheduled to arrive from vendors or
elsewhere in the pipeline by the beginning of a
period.
Example 5.4
• Complete the following table. Lead time for the item is two weeks and the
order quantity is 200. What action should be taken?
Week 1 2 3 4
Scheduled receipts 200
Net requirements
Week 1 2 3 4
Net requirements 50
Exercise
• Complete the following table. Lead time for the part is two weeks. The lot
size is 100. What is the projected available at the end of week 3? When is
it planned to release an order?
Week 1 2 3 4
Scheduled receipts 40 100
Projected available
Net requirements
Answer
Week 1 2 3 4
Scheduled receipts 40 20 100 20 95
Projected available 0 55 0 5
Net requirements 0 0 0 100
Planned order receipt 100 0
Answer: Projected available at the end of week 3 is 20

An order release is planned for the beginning of week 2
Example 5.5
• Given the following partial product tree, explode, offset, and determine
the gross and net requirements for each H,I,J, and K. There are other
components, but they are not connected to this problem. This quantities
required are shown in parentheses. The master production schedule calls
for the completion of 50 Hs in week 3 and 80 in week 5. There is a
scheduled receipt of 100 Is in week 2. There are 400 Js and 400 Ks
available.
Week 1 2 3 4 5
Part H Gross requirements
Scheduled receipts
Lead time Projected available
1 week Net requirements
Part I Gross requirements
Scheduled receipts
2 weeks Net requirements
Part J Gross requirements
Scheduled receipts
Part K Gross requirements
Scheduled receipts
Answer
Week 1 2 3 4 5
Part H Gross requirements 50 80
Scheduled receipts
Lead time Projected available 0 0 0
1 week Net requirements 50 80
Planned order receipt 50 80
Planned order release 50 80
Part I Gross requirements 100 160
2 weeks Net requirements 160
Part J Gross requirements 320
Scheduled receipts
Lead time Projected available 400 400 80 80 80 80
Part K Gross requirements 480
Scheduled receipts
1 week Net requirements 80
MRP Output
• Primary Reports
Planned orders
Order releases
Changes
• Secondary Reports
Performance-control reports
Planning reports
Exception reports
Other Consideration MRP
• Safety stock
• Lot sizing
– Lot-for-lot ordering
– Economic order quantity
– Fixed-period ordering
Benefit of MRP
• Low levels of in-process inventories
• Ability to track material requirements
• Ability to evaluate capacity requirements
• Means of allocating production time
• Ability to easily determine inventory usage by
backflushing
• Backflushing: Exploding an end item’s bill of materials to
determine the quantities of the components that were
used to make the item.
THANK YOU

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Material Requirement Planning

Nur'Ain Binti Yahaya B050810172

• Product structure tree: Visual depiction of the

• Using the product-tree shown, determine the following:

Part Gross requirements

Lead Time Projected available

Figure 4.11: Product tree with Lead Time

Part B Planned order receipt 200

Part C Planned order receipt 200

Part D Planned order receipt 200

Part E Planned order receipt 200

Answer: An order for 40 should be released in week 1

Answer: Projected available at the end of week 3 is 20

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