Post on 03-Apr-2018
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MATERAIALS REQUIREMENT
PLANNING(MRP)
VENKATESWARA RAO .KORASIGA
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Dependent demand
lumpy
MRP
DETAILED SCHEDULE FOR
RAW MATERIALS
&
COMPONENTS
USED IN THE END PRODUCTS
MASTER SCHEDULE
FOR END ITEMS
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MRP Systems
Commonly used method in industry to coordinate the
production scheduling of end items and their associated subcomponents.
Fords MRP systems is known as CMMS, common
manufacturing management system.
Required information to support an MRP system:
Master Production Schedule (MPS)
Bill of Material (BOM)
Inventory Status Records by each part or component Lead times
Item master data
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C1 C2 C3 Cn
P1
P2
P3
PN
BASIC RAW MATERIAL
COMPONENTS
PRODUCTS
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MRP Systems
Master Production Schedule (MPS):
Example
Production of 1000 no. 12468 staplers is planned for weeks 1, 2, and 3,
followed by no more stapler production until week 6 in which 1500 staplers
will be produced.
Product: personal stapler no. 12468
1 2 3 4 5 6
Planned order releases 1000 1000 1000 0 0 1500
Week
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MRP Systems
Bill of Material (BOM): A listing of all components required for each end-
item.
Example personal stapler no. 12468. This stapler is assembled from 3
sub-assemblies.
Standard , Personal
Stapler
Base Assembly Top Jaw Bottom Jaw Top Assembly Pin Spring Assembly
Base
Plate
Base
Molding
Jaw
Support
Stake
Rivet
Tension
Plate
Top Top
Cover
Locator
Plate
Stake
Rivet
Pin Copper
Spring
Slide
Pin
Slide
Housing
2 2
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MRP Systems
Inventory Status Records: Dynamic information about the current level of
inventory for all components designated in the BOM of each end item. In
practice, accurate inventory levels are difficult to maintain.
Example Component Inventory Status
Top Assembly 1212Spring Assembly 1150
Locator Plate 146
Slide Pin 558
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MRP Systems
Lead Times: the time from when an order to replenish a part is initiated until
the part becomes available for use.
Lead times in practice are variable, but for the MPS, a fixed value is applied,
usually the mean plus some safety factor.
Example Component Lead Time (weeks)Top Assembly 1
Spring Assembly 1
Locator Plate 2
Slide Pin 1
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MRP Systems
Item Master Data - unique data for each part or component. This data
includes:
unique part number
annual demand
nominal order quantity cost
scrap rate
production lead time
resource requirements
pointers to engineering drawings (if produced internally)
vendor information (if purchased)etc
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MRP Systems
Requirements explosion and order release plan:
Example order release plan for personal stapler no. 12468
Level One Planning Top Assembly
0 1 2 3 4 5 6
Top Assembly: Lead time = 1
Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500
Planned Order Releases 788 1000 1500
Week
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MRP Systems
Requirements explosion and order release plan:
Example order release plan for personal stapler no. 12468
Level One Planning Spring Assembly
0 1 2 3 4 5 6
Spring Assembly: Lead time = 1
Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1150 150
Net Requirements 850 1000 1500Planned Order Releases 850 1000 1500
Week
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MRP SystemsRequirements explosion and order release plan:
Ex. order release plan for personal stapler no. 12468, an order for 750 locator
plates is expected to arrive early in week 1
* The 892 units released in week 1 will not arrive till week 3 unless some
expedited actions occur
Level Two Planning Spring Assembly
0 1 2 3 4 5 6
Locator Plate: Lead time = 2
Gross Requirements 788 1000 1500
Scheduled Receipts 750
(Projected) On-hand 146 108
Net Requirements 892 1500Planned Order Releases 892* 1500
Week
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MRP SystemsRequirements explosion and order release plan:
Ex. order release plan for personal stapler no. 12468, a batch of 650 slide
pins is just about complete.
Level Two Planning Spring Assembly
0 1 2 3 4 5 6
Slide Pins: Lead time = 1
Gross Requirements 850 1000 1500
Scheduled Receipts 650
(Projected) On-hand 558 358
Net Requirements 642 1500
Planned Order Releases 642 1500
Week
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MRP Systems
Recall the requirements explosion and order release plan from Ex. order
release plan for personal stapler no. 12468
How might you allow for quality losses and or demand variability and lead-time
variability?
0 1 2 3 4 5 6
Top Assembly: Lead time = 1
Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500
Planned Order Releases 788 1000 1500
Week
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MRP SystemsScrap losses recall on the item master data record, quality yield is a field
which has been populated using historical data or a guess. If yield for the
stapler top assembly is say 90%, then more units should be planned for release
than are required for the planned end-items according to:
Ex. If there is a 90% yield for for top assembly then:
0 1 2 3 4 5 6
Top Assembly: Lead time = 1Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500
Planned Order Releases 876 1111 1667
Yeild = 90%
yield
reqnetreleaseorder
.
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MRP SystemsSafety Stock and Safety Lead Time to protect against demand variability and
lead time variablity, a safety factor may be applied. Numerous application a
safety factors exist, the simplest may be multiply by some percentage.
Ex. If a 15% safety factor has been identified for top assembly then:
0 1 2 3 4 5 6
Top Assembly: Lead time = 1Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500
Planned Order Releases 906 1150 1725
Safety facotr = 15%
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MRP Systems
Rough-Cut Capacity Planning:
When developing an MPS, one must consider if the schedule is feasible based
on the capacity of workcenters within the plant.
This is performed by determining the number of hours impact on all
workcenters required to produce the end item, and identified by time bucket.
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Rough-Cut Capacity Planning:
For example, suppose for every unit of end item A that is planned for
production, the following workcenters are impacted:
Part C has a 2-week lead time, and uses both workcenter 200 and 300. Part D
consists of part E which requires WC 300 and part F (a purchased component).
MRP Systems
C C
A
ED
F
-5 -4 -3 -2 -1 0
OP#1
WC200
.10 hr/unit
OP#2
WC300
.15 hr/unit
Purchased
WC200
.20 hr/unit
WC300
.15 hr/unit
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MRP SystemsRough-Cut Capacity Planning:
An aggregated, time phased profile for end item A and another end item B is
shown below.
End Item A End Item B
Period Period
Workcenter 0 -1 -2 0 -1 -2
100 0.05 0.05
200 0.2 0.1 0.2 0.2
300 0.15 0.15 0.3 0.15
Aggregated time-phased load profiles for end items (Hrs/Unit)
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MRP SystemsRough-Cut Capacity Planning:
Given a master production schedule for the facility:
And the time-phased load profile, results in the total resource requirements
End Item 1 2 3 4 5 6
A 50 75 25 50 200B 75 125 100 150
Period
Workcenter -1 0 1 2 3 4 5 6
100 6.25 3.75 7.5 7.5 10 7.5
200 20 32.5 42.5 55 50 70 30
300 18.75 41.25 33.75 63.75 67.5 52.5 45
Period
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MRP Systems
Master Production Schedule (MPS):
Example
Production of 1000 no. 12468 staplers is planned for weeks 1, 2, and 3,
followed by no more stapler production until week 6 in which 1500 staplers
will be produced.
Product: personal stapler no. 124681 2 3 4 5 6
Planned order releases 1000 1000 1000 0 0 1500
Week
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MRP Systems
Bill of Material (BOM): A listing of all components required for each end-
item.
Example personal stapler no. 12468. This stapler is assembled from 3
sub-assemblies.
Standard , Personal
Stapler
Base Assembly Top Jaw Bottom Jaw Top Assembly Pin Spring Assembly
Base
Plate
Base
Molding
Jaw
Support
Stake
Rivet
Tension
Plate
Top Top
Cover
Locator
Plate
Stake
Rivet
Pin Copper
Spring
Slide
Pin
Slide
Housing
2 2
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MRP Systems
Inventory Status Records: Dynamic information about the current level of
inventory for all components designated in the BOM of each end item. In
practice, accurate inventory levels are difficult to maintain.
Example Component Inventory Status
Top Assembly 1212Spring Assembly 1150
Locator Plate 146
Slide Pin 558
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MRP Systems
Lead Times: the time from when an order to replenish a part is initiated until
the part becomes available for use.
Lead times in practice are variable, but for the MPS, a fixed value is applied,
usually the mean plus some safety factor.
Example Component Lead Time (weeks)Top Assembly 1
Spring Assembly 1
Locator Plate 2
Slide Pin 1
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MRP Systems
Item Master Data - unique data for each part or component. This data
includes:
unique part number
annual demand
nominal order quantity cost
scrap rate
production lead time
resource requirements
pointers to engineering drawings (if produced internally)
vendor information (if purchased)etc
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MRP Systems
Requirements explosion and order release plan:
Example order release plan for personal stapler no. 12468
Level One Planning Top Assembly
0 1 2 3 4 5 6
Top Assembly: Lead time = 1
Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500Planned Order Releases 788 1000 1500
Week
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MRP Systems
Requirements explosion and order release plan:
Example order release plan for personal stapler no. 12468
Level One Planning Spring Assembly
0 1 2 3 4 5 6
Spring Assembly: Lead time = 1
Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1150 150
Net Requirements 850 1000 1500Planned Order Releases 850 1000 1500
Week
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MRP SystemsRequirements explosion and order release plan:
Ex. order release plan for personal stapler no. 12468, an order for 750 locator
plates is expected to arrive early in week 1
* The 892 units released in week 1 will not arrive till week 3 unless some
expedited actions occur
Level Two Planning Spring Assembly
0 1 2 3 4 5 6
Locator Plate: Lead time = 2
Gross Requirements 788 1000 1500
Scheduled Receipts 750
(Projected) On-hand 146 108
Net Requirements 892 1500Planned Order Releases 892* 1500
Week
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MRP SystemsRequirements explosion and order release plan:
Ex. order release plan for personal stapler no. 12468, a batch of 650 slide
pins is just about complete.
Level Two Planning Spring Assembly
0 1 2 3 4 5 6
Slide Pins: Lead time = 1
Gross Requirements 850 1000 1500
Scheduled Receipts 650
(Projected) On-hand 558 358
Net Requirements 642 1500
Planned Order Releases 642 1500
Week
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MRP Systems
Recall the requirements explosion and order release plan from Ex. order
release plan for personal stapler no. 12468
How might you allow for quality losses and or demand variability and lead-time
variability?
0 1 2 3 4 5 6
Top Assembly: Lead time = 1
Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500
Planned Order Releases 788 1000 1500
Week
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MRP SystemsScrap losses recall on the item master data record, quality yield is a field
which has been populated using historical data or a guess. If yield for the
stapler top assembly is say 90%, then more units should be planned for release
than are required for the planned end-items according to:
Ex. If there is a 90% yield for for top assembly then:
0 1 2 3 4 5 6
Top Assembly: Lead time = 1Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500
Planned Order Releases 876 1111 1667
Yeild = 90%
yield
reqnetreleaseorder .
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MRP SystemsSafety Stock and Safety Lead Time to protect against demand variability and
lead time variablity, a safety factor may be applied. Numerous application a
safety factors exist, the simplest may be multiply by some percentage.
Ex. If a 15% safety factor has been identified for top assembly then:
0 1 2 3 4 5 6
Top Assembly: Lead time = 1Gross Requirements 1000 1000 1000 1500
Scheduled Receipts
(Projected) On-hand 1212 212
Net Requirements 788 1000 1500
Planned Order Releases 906 1150 1725
Safety facotr = 15%
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MRP Systems
Rough-Cut Capacity Planning:
When developing an MPS, one must consider if the schedule is feasible based
on the capacity of workcenters within the plant.
This is performed by determining the number of hours impact on all
workcenters required to produce the end item, and identified by time bucket.
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Rough-Cut Capacity Planning:
For example, suppose for every unit of end item A that is planned for
production, the following workcenters are impacted:
Part C has a 2-week lead time, and uses both workcenter 200 and 300. Part D
consists of part E which requires WC 300 and part F (a purchased component).
MRP Systems
C C
A
ED
F
-5 -4 -3 -2 -1 0
OP#1
WC200
.10 hr/unit
OP#2
WC300
.15 hr/unit
Purchased
WC200
.20 hr/unit
WC300
.15 hr/unit
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MRP SystemsRough-Cut Capacity Planning:
An aggregated, time phased profile for end item A and another end item B is
shown below.
End Item A End Item B
Period Period
Workcenter 0 -1 -2 0 -1 -2
100 0.05 0.05
200 0.2 0.1 0.2 0.2
300 0.15 0.15 0.3 0.15
Aggregated time-phased load profiles for end items (Hrs/Unit)
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MRP SystemsRough-Cut Capacity Planning:
Given a master production schedule for the facility:
And the time-phased load profile, results in the total resource requirements
End Item 1 2 3 4 5 6
A 50 75 25 50 200B 75 125 100 150
Period
Workcenter -1 0 1 2 3 4 5 6
100 6.25 3.75 7.5 7.5 10 7.5
200 20 32.5 42.5 55 50 70 30
300 18.75 41.25 33.75 63.75 67.5 52.5 45
Period
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MRP SystemsRough-Cut Capacity Planning:
Given this rough cut capacity plan, and the knowledge that you operate a single
shift 10 hours a day, and 6 days a week, do you foresee a problem? If so, how
might you adjust?
Workcenter -1 0 1 2 3 4 5 6
100 6.25 3.75 7.5 7.5 10 7.5
200 20 32.5 42.5 55 50 70 30
300 18.75 41.25 33.75 63.75 67.5 52.5 45
Period
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MRP SystemsCapacity Requirements Planning (CRP):
Similar to rough cut capacity planning, but includes details such as current
inventory levels and the impact of lot-sizing decisions.
Ex. Assume initial inventory levels:
Then net MPS becomes:
On-Hand Inventory
A 100
B 125
End Item 1 2 3 4 5 6
A 25 25 50 200
B 75 100 150
Period
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MRP SystemsCapacity Requirements Planning:
From the net MPS, the workstation loading levels by part:
Therefore capacity plan is:
Are there any concerns?
0 1 2 3 4 5 6
WC100-A 1.25 1.25 2.5 3 12 10 0
WC200-A 0 5 7.5 22.5 0 0 0WC300-A 0 3.75 7.5 11.25 45 20 0
WC100-B 0 3.75 5 0 37.5 30 0
WC200-B 0 0 15 35 7.5 0 30
WC300-B 0 0 22.5 41.25 20 30 22.5
Period
0 1 2 3 4 5 6
WC100 1.25 5 7.5 3 49.5 40 0
WC200 0 5 22.5 57.5 7.5 0 30
WC300 0 3.75 30 52.5 65 50 22.5
Period
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MRP Systems
Master Production Schedule (MPS): Planned production quantities for end-
items in each time period of the planning horizon.
Planning horizon length of time over which to plan the production
schedule. This length of time must exceed the cumulative lead time to
replenish an end-item through all production stages.
Time period (or time bucket) smallest unit of time in which end-item
production is schedule. In practice, time buckets of one week are typical
used.
EVOLUTION OF MRP
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EVOLUTION OF MRP
Manufacturing
ResourcePlanning
Links up the closed loop MRP system with the financial
systems of the company
(Links functions
-Capacity planning
-Inventory management
-Shop floor control
-MRP)
Improved
computational
efficiency of
computers
Unrealistic M/c
schedules, ignoring
plant capacities
Not only plans prioritiesbut provides feedback to
executing the priority plan
AN IMPROVED ORDERING METHOD
PRIORITY PLANNING
CLOSED LOOP MRP
MRP II
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Gross & Net requirements
report
Capacity vs
Load report
Shop floor
Planning
report
Production Order
Status & exceptions
report
Service
Parts
requirements
Sales
forecasts
Customer
orders
Inventory
transactions
Master
Production
schedule
Engg.
changes
InventoryRecord
file
MRP
PROCESSOR
Bill ofMaterials
file
OUT PUT
REPORTS
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