MRP

CHAPTER
13
Material Requirements Planning (MRP)
Introduction to Operations Management

1
Material Requirements
Planning
Master Production Schedule
Time-phased plan specifying timing and quantity of production for each
end item.
Material Requirement Planning Process
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T
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2
Demand
Demand
Dependent vs Independent Demand

Stable demand
Safety stock
Time
Amount on hand
Amount on hand
Time
Lumpy demand
Time
Time
3
Objectives of MRP
MRP answers the following production

decision of a firm
What is needed?
How much is needed?
When is it needed?

4
Material decision
Decision on
Quantity (how much)
Time (when)
Type (what)
The first two are same as in inventory

management. The last one is needed
because it involves more than one type
of parts or components.
5
MRP Overview
MRP Inputs
MRP Processing
MRP Outputs
Changes
Order releases
Master
schedule
Planned-order
schedules
Primary
reports
Bill of
materials
file
Inventory
records
file
MRP computer
programs
Secondary
reports
Exception reports
Planning reports
Performancecontrol
reports
Inventory
transaction

6
Output from an MRP system
Generate a feasible schedule of

requirements for
subassemblies
component parts
raw materials required
to produce the quantity of items required

in the given time frame
7
Planning Horizon
Assembly
Subassembly
Fabrication
Procurement
1
10

8
Master Schedule
Master schedule: One of three primary inputs in MRP;
states which end items are to be produced, when these
are needed, and in what quantities.
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.
Time fences: Series of time intervals during which order

changes are allowed or restricted.

9
Bill-of-Materials
Bill of materials: One of the three primary
inputs of MRP; 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.

10
BOM
Accuracy is important since errors

may multiply many times

11
Product Structure Tree

Level
0
1
Chair
Leg
Assembly
2 Legs (2)
Cross
bar
Back
Assembly
Seat
Side
Cross
Rails (2)
bar
Back
Supports (3)

12
Low Level Coding

Level
0
Y
A

13
MRP Processing
Gross requirements
Scheduled receipts(orders scheduled to arrive from suppliers at the
beginning of the period)
Projected on hand
Net requirements
Planned-order receipts
Planned-order releases

14
MRP Processing
Net
Requirement
in period t
Gross
Requirement
in period t
Projected on
hand inventory
in period t
Safety
Allowance
+
stock
for waste

15
Assembly Time Chart

Procurement of
raw material D
Fabrication
of part E
Subassembly A
Procurement of
raw material F
Final assembly
and inspection
Procurement of
part C
Procurement of
part H
Fabrication
of part G
Procurement of
raw material I
Subassembly B
10
11

16
MRP Outputs
Planned orders - schedule indicating the
amount and timing of future orders.
Order releases - Authorization for the
execution of planned orders.
Changes - revisions of due dates or order
quantities, or cancellations of orders.

17
Example (p.632)
A firm that produces wood shutters and bookcases has received two
orders for shutters: One for 100 to be due for delivery at the start of
week 4 and the other 150 units to be due for delivery at the start of
week 8 of the current schedule. Each shutter consists of four slatted
wood sections and two frames. The wood sections are made by the
firm, and fabrication takes one week. The frames are ordered, and lead
time is two weeks. Assembly of the shutters requires one week. There
is a scheduled receipt of 70 wood sections at the beginning of week 1.
Determine the size and timing of planned-order releases necessary to
meet delivery requirements under each of theses conditions:
(1). Lot-for-lot ordering (order size equal to net requirement)
(2). Lot-size ordering with a lot size of 320 units for frames and 70 units
for wood sections.
18
Solution to example
Develop a master schedule and a product structure tree
Wk number
Quantity
100
8
150
Shutter
Frames (2)
Wood
sections (4)

19
Solution to example(lot-for-lot)
1
Shutters:
LT is
one
week
Gross
requirements
Scheduled
receipts
Projected on
hand
Net
requirements
Planned-order
receipts
Planned-order
releases
100
100
100
100
150

20
Solution to example
(lot-for-lot)
times 2
1
Frames:
LT is
two
weeks
Gross
requirements
Scheduled
receipts
Projected on
hand
Net
requirements
Planned-order
receipts
Planned-order
releases
200
300
200
300
200
300
200
300

21
Solution to example (lot-for-lot)

times 4
Wood
sections:
LT is
one
week
Gross
requirements
Scheduled
receipts
Projected on
hand
Net
requirements
Planned-order
receipts
Planned-order
releases
400
7
600
70
70
70
70
330
600
330
600
330
600

22
Solution to example (fixed lot-size)

times 2
Frames:
LT is
two
weeks
Gross
requirements
Scheduled
receipts
Projected on
hand
Net
requirements
Planned-order
receipts
Planned-order
releases
200
7
300
120
120
120
120
200
180
320
320
320
320

23
Solution to example (fixed lot-size)

times 4
Wood
sections:
LT is
one
week
Gross
requirements
Scheduled
receipts
Projected on
hand
Net
requirements
Planned-order
receipts
Planned-order
releases
400
7
600
70
70
70
70
20
20
20
20
330
580
350
630
350
630

24
MRP Secondary Reports
Performance-control reports
Planning reports
Exception reports

25
Other Considerations
Safety Stock
Lot sizing
Lot-for-lot ordering
Economic order quantity
Fixed-period ordering
Part-period model
Yield rates

26
MRP Capacity requirement Planning
Capacity requirements planning: The

process of determining short-range capacity
requirements.
Load reports: Department or work center

reports that compare known and expected
future capacity requirements with projected
capacity availability.

27
MRP Capacity Requirement Planning

Develop a tentative
master production
schedule
Use MRP to
simulate material
requirements
Revise tentative
master production
schedule
Convert material
requirements to
resource requirements
No
Is shop
capacity
adequate?
Yes
Firm up a portion
of the MPS
No
Can
capacity be
changed to meet
requirements
Yes
Change
capacity

28
Benefits of MRP
Low levels of in-process inventories
Ability to track material requirements
Ability to evaluate capacity requirements
Means of allocating production time

29
Requirements of MRP
Computer and necessary software
Accurate and up-to-date
Master schedules
Bills of materials
Inventory records
Integrity of data

30
MRP II
Expanded MRP with and emphasis

placed on integration
Financial planning
Marketing
Engineering
Purchasing
Manufacturing
31
Overview of MRP II
Manufacturing
Master
production schedule
Marketing
Production
plan
MRP
Rough-cut
capacity planning
Capacity
planning
Adjust
production plan
Yes
Problems?
No Requirements
schedules
No
Problems?
Adjust master schedule
Market
Demand
Finance
Yes

32

MRP

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CHAPTER

Material Requirements Planning (MRP)

Introduction to Operations Management

Introduction to Operations Management

Dependent vs Independent Demand

MRP answers the following production

Introduction to Operations Management

The first two are same as in inventory

Introduction to Operations Management

Output from an MRP system

Generate a feasible schedule of

to produce the quantity of items required

Introduction to Operations Management

Cumulative lead time: The sum of the lead times that

Time fences: Series of time intervals during which order

Introduction to Operations Management

Product structure tree: Visual depiction of

Introduction to Operations Management

Accuracy is important since errors

Introduction to Operations Management

Product Structure Tree

Introduction to Operations Management

Low Level Coding

Introduction to Operations Management

Introduction to Operations Management

Introduction to Operations Management

Assembly Time Chart

Introduction to Operations Management

Introduction to Operations Management

Introduction to Operations Management

Introduction to Operations Management

Introduction to Operations Management

Solution to example (lot-for-lot)

Introduction to Operations Management

Solution to example (fixed lot-size)

Introduction to Operations Management

Solution to example (fixed lot-size)

Introduction to Operations Management

MRP Secondary Reports

Introduction to Operations Management

Introduction to Operations Management

MRP Capacity requirement Planning

Capacity requirements planning: The

Load reports: Department or work center

Introduction to Operations Management

MRP Capacity Requirement Planning

Introduction to Operations Management

Introduction to Operations Management

Introduction to Operations Management

Expanded MRP with and emphasis

Adjust master schedule

Introduction to Operations Management

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