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Transcript of mrp
13 - Manufacturing Resource Planning
Dr. Ron Tibben-Lembke
Historical Perspective
mrp – material requirements
planning
MRP II – ManufacturingResource Planning
ERP- Enterprise Resource Planning
MRP Crusade (1975)
Material Requirements PlanningMake sure you have enough parts when
you need themTake future demands, factor in lead times
(time phase), compare to on hand, orderDetermine order size and timingControl and plan purchasing vs. OSWO
inventory management
Closed-Loop MRP
Capacity Consideration:Part routingsCalculate loads on each work stationSee if scheduled load exceeds capacityLead-time long enough to allow some
shuffling to make plan feasible
MRP II -- Manufacturing Resource Planning
“A method for the effective planning of all resources of a manufacturing company” (APICS def.)
Financial accounting incorporated Sales Operations Planning Simulate capacity requirements of different possible
Master Production Schedules 1989, $1.2B MRPII sales in U.S., one third of total software sales
Success? MRP CrusadeBegins
Electronic Data Interchange
My computer talks to yours, tells you exactly what I want to order, when
You fill out a form, very compressed message sent, viewed as form
Software, hardware expensive to implement
Sample Purchase TransactionST88850*1 Transaction Set identifierBEG*00*NE*00498765**010698 Beginning of SegmentPID*X*08*MC**Large Widget Description of ProductP01**5*DZ*4.55*TD Baseline Item DataCTT*1 Transaction TotalsSE*1*1 End of Segment
XML
eXtensible Markup Language
XML provides self-describing information. Much easier, faster to implement or modify
than EDI. Expected to replace EDI. Standardization through RosettaNet efforts
ERP differences
Material planningCapacity planningProduct designInformation warehousing
All functions in the entire company operate off of one common set of data
Instantaneous updating, visibility
Historical Perspective
DatabaseServer(s)
ApplicationServer(s)
User PCs
ERP Sales
Worldwide sales of top 10 vendors1995 $2.8 B1996 $4.2 B1997 $5.8 B $3.2 B SAP
Fortune survey: 44% reported spending at least 4 times as much on implementation as on software
ERP Challenges
Modules assume “best practices:”Change software to reflect company ($)Change company to follow software (?)
Accuracy of dataDrives entire systemOwnership of / responsibility for
Ability to follow structure
ERP Novel?
“Goal-like” novel Hero learns more about ERP,
deciding if it is right for his company
Company rushes through installation
General introduction to ERP systems, what they do, how different from MRP
SAP R/3 screen shots
3 Reasons for ERP
1. Legacy systems outdated and need replacing anyway
2. Desire for greater communication between locations
3. Reconfigure business to take advantage of current and future communications and computing breakthroughs
Why ERP?
Common ClientMultiple Processes
Multiple ClientsMultiple Processes
Common Client“Best Practices”
Multiple ClientsMostly “Best Practices”
High LowCentralization
High
LowFlexib
ility
ERP Considerations
1. Control: how much centralization, drill-down visibility?2. Structure: How large & dispersed, how tightly
integrated does it need to be?3. Database: desired structure, accessibility4. Customization: out/in source, how willing? Ability to
modify in real time. Creating in-house experts vs. continued consulting dependence
5. Best practices: how willing to embrace?Source: Carol A. Ptak “ERP: Tools, Techniques and Applications for
Integrating the Supply Chain,” St. Lucie Press, APICS Series on Resource Management, 1999, p. 252.
How do we
System for organizing WIP releasesConsider LT for each itemLook at BOM to see what parts neededRelease so they will arrive just as needed
Example – Snow ShovelOrder quantity is 50 unitsLT is one week
MRP Table
1 2 3 4 5
Gross Requirements 10 40 10
Scheduled receipts (begin) 50
Projected Available Balance (ending) 4
54
44
44
4
Net Requirements 6
Planned Order Receipts
Planned Order Releases
6 units short
MRP Table
1 2 3 4 5
Gross Requirements 10 40 10
Scheduled receipts (begin) 50
Projected Available Balance (ending) 4
54
44
44
4
Net Requirements 6
Planned Order Receipts 50
Planned Order Releases 50
Order 50 units week earlier
Ending Inventory
1 2 3 4 5
Gross Requirements 10 40 10
Scheduled receipts (begin) 50
Projected Available Balance (ending) 4
54
44
44
4
44
Net Requirements 6
Planned Order Receipts 50
Planned Order Releases 50
Ending inventory
Terminology
Projected Available balance Not on-hand (that may be greater) Tells how many will be available (in ATP sense)
Planned order releases ≠ scheduled receipts Only when material has been committed to their
production Move to scheduled receipts as late as possible Preserves flexibility
1605 Snow Shovel
1605 Snow Shovel
048Scoop-shaftconnector
13122 Top Handle Assy314 scoop assembly
118 Shaft (wood)
062 Nail (4)
14127 Rivet (4)
314 scoop assembly
314 scoop assembly
14127 Rivet (6)019 Blade (steel)
2142 Scoop (aluminum)
13122 Top Handle Assembly
1118Top handle
Coupling (steel)
11495 WeldedTop handle bracket
Assembly
13122 Top Handle Assembly
457 Top handle(wood)
129 Top HandleBracket (steel)
082 Nail (2)
BOM Explosion
Process of translating net requirements into components part requirementsTake into account existing inventoriesConsider also scheduled receipts
BOM Explosion Example
Need to make 100 shovelsWe are responsible for handle
assemblies.
13122 Top Handle Assembly
1118Top handle
Coupling (steel)
11495 WeldedTop handle bracket
Assembly
13122 Top Handle Assembly
457 Top handle(wood)
129 Top HandleBracket (steel)
082 Nail (2)
Net Requirements
Sch Gross NetPart Description Inv Rec Req ReqTop handle assy 25 -- 100 75
Top handle 22 25Nail (2 required) 4 50Bracket Assy 27 --
Top bracket 15 --Top coupling 39 15
Net Requirements
Sch Gross NetPart Description Inv Rec Req ReqTop handle assy 25 -- 100 75
Top handle 22 25 75 28Nail (2 required) 4 50 150 96Bracket Assy 27 -- 75 48
Top bracket 15 --Top coupling 39 15
13122 Top Handle Assembly
1118Top handle
Coupling (steel)
11495 WeldedTop handle bracket
Assembly
13122 Top Handle Assembly
457 Top handle(wood)
129 Top HandleBracket (steel)
082 Nail (2)
Net Requirements
Sch Gross NetPart Description Inv Rec Req ReqTop handle assy 25 -- 100 75
Top handle 22 25 75 28Nail (2 required) 4 50 150 96Bracket Assy 27 -- 75 48
Top bracket 15 -- 48 33Top coupling 39 15 48 --
Timing of Production
This tells us how many of each we needDoesn’t tell when to startStart as soon as possible?Dependent events (oh no, not that!)Front schedule Cutting approachBack schedule
13122 Top Handle Assy
13122 Top handle LT = 2
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9
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Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
25
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5
Net Req 5
Pl Order Rec 5
Pl Order Rel 5
13122 Top Handle Assy-2
13122 Top handle LT = 2
1
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Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
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5
0
0
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0
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Net Req 5 20 35 10
Pl Order Rec 5 20 35 10
Pl Order Rel 5 20 35 10
13122 Top Handle Assy -3
13122 Top handle LT = 2
1
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10
Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
25
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5
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0
0
0
0
0
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Net Req 5 20 5 35 10
Pl Order Rec 5 20 5 35 10
Pl Order Rel 5 20 5 35 10
457 Top Handle
13122 Top handle LT = 2
1
2
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8
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10
Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
25
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5
0
0
0
0
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0
Net Req 5 20 5 35 10
Pl Order Rec 5 20 5 35 10
Pl Order Rel 5 20 5 35 10
LT = 2
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Gross Req 5 20 5 35 10
Sch receipts 25
Proj. Avail Bal (ending)
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22
Net Req
Pl Order Rec
Pl Order Rel
One handle forEach assembly
457 Top Handle
LT = 2
1
2
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5
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10
Gross Req 5 20 5 35 10
Sch receipts 25
Proj. Avail Bal (ending)
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Net Req
Pl Order Rec
Pl Order Rel
457 Top Handle
LT = 2
1
2
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9
10
Gross Req 5 20 5 35 10
Sch receipts 25
Proj. Avail Bal (ending)
22
22
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42
22
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17
Net Req 18 10
Pl Order Rec 18 10
Pl Order Rel 18 10
082 Nail (2 required)
LT = 1 Lot Size = 50
1
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6
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9
10
Gross Req 10 40 10 70 20
Sch receipts 50
Proj. Avail Bal (ending)
4
54
Net Req
Pl Order Rec
Pl Order Rel
13122 Top handle LT = 2
1
2
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10
Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
25
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5
0
0
0
0
0
0
0
Net Req 5 20 5 35 10
Pl Order Rec 5 20 5 35 10
Pl Order Rel 5 20 5 35 10
Two nails forEach assembly
082 Nail (2 required)
LT = 1 Lot Size = 50
1
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10
Gross Req 10 40 10 70 20
Sch receipts 50
Proj. Avail Bal (ending)
4
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44
4
Net Req 6
Pl Order Rec 50
Pl Order Rel 50
082 Nail (2 required)
LT = 1 Lot Size = 50
1
2
3
4
5
6
7
8
9
10
Gross Req 10 40 10 70 20
Sch receipts 50
Proj. Avail Bal (ending)
4
54
44
44
4
44
Net Req 6 26 20
Pl Order Rec 50
Pl Order Rel 50
082 Nail (2 required)
LT = 1 Lot Size = 50
1
2
3
4
5
6
7
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10
Gross Req 10 40 10 70 20
Sch receipts 50
Proj. Avail Bal (ending)
4
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44
4
44
44
24
4
4
4
Net Req 6 26
Pl Order Rec 50 50
Pl Order Rel 50
11495 Bracket Assembly
13122 Top handle LT = 2
1
2
3
4
5
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9
10
Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
25
5
5
0
0
0
0
0
0
0
Net Req 5 20 5 35 10
Pl Order Rec 5 20 5 35 10
Pl Order Rel 5 20 5 35 10
LT = 2
1
2
3
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5
6
7
8
9
10
Gross Req
Sch receipts
Proj. Avail Bal (ending)
27
Net Req
Pl Order Rec
Pl Order Rel
One bracket forEach assembly
11495 Bracket Assembly
13122 Top handle LT = 2
1
2
3
4
5
6
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8
9
10
Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
25
5
5
0
0
0
0
0
0
0
Net Req 5 20 5 35 10
Pl Order Rec 5 20 5 35 10
Pl Order Rel 5 20 5 35 10
LT = 2
1
2
3
4
5
6
7
8
9
10
Gross Req 5
Sch receipts
Proj. Avail Bal (ending)
27
Net Req
Pl Order Rec
Pl Order Rel
One bracket forEach assembly
11495 Bracket Assembly
13122 Top handle LT = 2
1
2
3
4
5
6
7
8
9
10
Gross Req 20 10 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
25
25
5
5
0
0
0
0
0
0
0
Net Req 5 20 5 35 10
Pl Order Rec 5 20 5 35 10
Pl Order Rel 5 20 5 35 10
LT = 2
1
2
3
4
5
6
7
8
9
10
Gross Req 5 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
27
Net Req
Pl Order Rec
Pl Order Rel
One bracket forEach assembly
11495 Bracket Assembly
LT = 2
1
2
3
4
5
6
7
8
9
10
Gross Req 5 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
27
22
22
2
Net Req 3 35 10
Pl Order Rec 3 35 10
Pl Order Rel 3 35 10
129 Top Bracket
LT = 1
1
2
3
4
5
6
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8
9
10
Gross Req 3 35 10
Sch receipts
Proj. Avail Bal (ending)
15
Net Req
Pl Order Rec
Pl Order Rel
LT = 2
1
2
3
4
5
6
7
8
9
10
Gross Req 5 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
27
22
22
2
Net Req 3 35 10
Pl Order Rec 3 35 10
Pl Order Rel 3 35 10
129 Top handle bracket
LT = 1
1
2
3
4
5
6
7
8
9
10
Gross Req 3 35 10
Sch receipts
Proj. Avail Bal (ending)
15
15
15
12
12
Net Req 23 10
Pl Order Rec 23 10
Pl Order Rel 23 10
1118 Top handle coupling
LT = 3 Safety Stock = 20
1
2
3
4
5
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8
9
10
Gross Req 3 35 10
Sch receipts
Proj. Avail Bal (ending)
39
Net Req
Pl Order Rec
Pl Order Rel
LT = 2
1
2
3
4
5
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9
10
Gross Req 5 20 5 35 10
Sch receipts
Proj. Avail Bal (ending)
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22
22
2
Net Req 3 35 10
Pl Order Rec 3 35 10
Pl Order Rel 3 35 10
1118 Top handle coupling
LT = 3 Safety Stock = 20
1
2
3
4
5
6
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10
Gross Req 3 35 10
Sch receipts 15
Proj. Avail Bal (ending)
39
39
54
51
51
16
Net Req 4
Pl Order Rec 4
Pl Order Rel 4
1118 Top handle coupling
LT = 3 Safety Stock = 20
1
2
3
4
5
6
7
8
9
10
Gross Req 3 35 10
Sch receipts 15
Proj. Avail Bal (ending)
39
39
54
51
51
20
20
20
20
20
20
Net Req 4 10
Pl Order Rec 4 10
Pl Order Rel 4 10
Other considerations
Safety stock if uncertainty in demand or supply quantity Don’t let available go down to 0
Safety LT if uncertainty in arrival time of supplyPlace order earlier than necessary
Order quantitiesEOQ, Lot-For-Lot, Periodic Order quantity,
others
MRP Priorities
First:Get installed, part of ongoing managerial
process, get users trainedUnderstand critical linkages with other areasAchieve high levels of data integrityLink MRP with front end, engine, back end
Then:Determine order quantities more exactlyBuffering conceptsNervousness
Ordering Policies
Dependent DemandNot independent demandDiscrete – not continuousLumpy – may have surges
ComplexityReduces costs – ordering & holdingAnything other than lot-for-lot Increases
lumpiness downstream
Assumptions
All requirements must be available at start of period
All future requirements must be met, and can’t be backordered
System operated on periodic basis (e.g. weekly)
Requirements properly offset for LTsParts used uniformly through a period
Use average inventory levels for holding cost
Example Demands
Try several lot-sizing methods Economic Order Quantity Periodic Order Quantity Part Period Balancing Wagner Within
Order cost = $300 per order = CP
Inventory Carrying cost = $2 / unit/ week = CH
Avg Demand = 92.1 / wk = D
Week number
1
2
3
4
5
6
7
8
9
10
11
12
Requirements 10 10 15 20 70 180 250 270 230 40 0 10
EOQ
Minimizes total ordering & holding costs
Assumes demand same every period Definitely not always
true for this use Avg. demand and
holding cost need same time units (e.g. per week)
Economic Lot Size:
Where: D = avg demand CP = ordering cost
CH = holding cost
H
P
C
DCELS
2
EOQ
Sqrt( 2 * 300 * 92.1 / 2) = 166
Week number
1
2
3
4
5
6
7
8
9
10
11
12
Requirements 10 10 15 20 70 180 250 270 230 40 0 10
Order Quant 166
Begin Inv
Ending Inv
EOQ
Ordering cost = 6 * 300 = $1,800 Inv carry cost = 1,532.5 * 2 = $3,065 Total $4,865
Week number
1
2
3
4
5
6
7
8
9
10
11
12
Requirements 10 10 15 20 70 180 250 270 230 40 0 10
Order Quant 166 166 223 270 230 166
Begin Inv 166 156 146 131 111 207 250 270 230 166 126 126
Ending Inv 156 146 131 111 41 27 0 0 0 126 126 116
Periodic Order Quantities
EOQ Gave good tradeoff between ordering &
holding resulted in a lot of leftovers.
Only order enough to get through a certain number of periods – no leftovers
How many? EOQ / avg. demand166 / 92.1 = 1.805 ~ 2 weeks’ worth
Periodic Order Quantities
Week No. 1 2 3 4 5 6 7 8 9 10 11 12Req. 10 10 15 20 70 180 250 270 230 40 0 10Orders 20 35 250 520 270 10Begin 20 10 35 20 250 180 520 270 270 40 10 10End 10 0 20 0 180 0 270 0 40 0 10 0
Avg Inv 15 5 28 10 215 90 395 135 155 20 10 5
Ordering cost = 6 * 300 = $1,800 Inv carry cost =1,082.5 * 2 = $2,145 Total $3,945
Part Period Balancing(Least Total Cost)
Increase the quantity until holding costs equal the ordering cost
Order 10 – holding = 10/2*2 = 10 Order 20 – holding = 10 + 10*1.5*2 = $40 Order 35 = 40 + 15*2.5*2 = $115 Order 55 = 115 + 20*3.5*2 = $255 Order 125 = 255 + 70*4.5*2 = $85
Week No. 1 2 3 4 5 6 7 8 9 10 11 12Req. 10 10 15 20 70 180 250 270 230 40 0 10
Part Period Balancing
Week 5: Order 70: Holding = 10*0.5*2 = $10 Order 250: 10 + 180*1.5*2 = $550 So I could:
Order 250 units, pay $300 in ordering and $540 holding, for a total of $840,
Order 70 now, 180 next week, and pay $600 in ordering and $10 + 180*0.5*2=180 in holding = $790
Seems like the second option is best.
Week No. 1 2 3 4 5 6 7 8 9 10 11 12Req. 10 10 15 20 70 180 250 270 230 40 0 10Orders 55 0 0 0
Part Period Balancing
When should we place a separate order? If 1.5*$2*D > 300. D>300/3 = 100
Whenever demand is >= 100, we might as well place a separate order.
What about week 9? Order 230: holding = 230*0.5*2 = $230 Order 270: = 230 + 40*1.5*2 = $350 Order 280: = 350 + 10*3.5*2 = $420
Week No. 1 2 3 4 5 6 7 8 9 10 11 12Req. 10 10 15 20 70 180 250 270 230 40 0 10Orders 55 0 0 0 70 180 250 270
Part Period BalancingWeek No. 1 2 3 4 5 6 7 8 9 10 11 12Req. 10 10 15 20 70 180 250 270 230 40 0 10Orders 55 0 0 0 70 180 250 270 280 0 0 0Begin 55 45 35 20 70 180 250 270 280 50 10 10End 45 35 20 0 0 0 0 0 50 10 10 0
Wagner-Within
Mathematically optimal Work back from planning period farthest
in the futureConsider all possibilities:
Order for 5, 4 and 5, 3 and 4, then 5, etc.Uses “dynamic programming” – similar to
linear programming
Simulation Experiments
What is best under real-world conditions?Multiple levels to be concerned aboutReal-time changes