material requirement planning presentation
TRANSCRIPT
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What is MRP?• Computerized Inventory Control
• Production Planning System
• Management Information System
• Manufacturing Control System
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When to use MRP
• Job Shop Production
• Complex Products
• Assemble-to-Order Environments
• Discrete and Dependent Demand Items
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What can MRP do?
• Reduce Inventory Levels
• Reduce Component Shortages
• Improve Shipping Performance
• Improve Customer Service
• Improve Productivity
• Simplified and Accurate Scheduling
• Reduce Purchasing Cost
• Improve Production Schedules
• Reduce Manufacturing Cost
• Reduce Lead Times• Less Scrap and Rework• Higher Production
Quality
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What can MRP do?• Improve
Communication• Improve Plant
Efficiency• Reduce Freight Cost• Reduction in Excess
Inventory
• Reduce Overtime• Improve Supply
Schedules• Improve Calculation of
Material Requirements• Improve Competitive
Position
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Three Basic Steps of MRP
• Identifying Requirements• Running MRP – Creating the
Suggestions• Firming the Suggestions
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Step 1: Identifying the Requirements
• Quantity on Hand• Quantity on Open Purchase Order• Quantity in/or Planned for
Manufacturing• Quantity Committed to Existing Orders• Quantity Forecasted
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MRP 8
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aw m
ater
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TimeLT LT
R Time LT
R TimeLT
Order point system with dependent demand
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Step 2: Running MRP – Creating the Suggestions
• Critical Items• Expedite Items• Delay Items
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Step 3: Firming the Suggestions
• Manufacturing Orders• Purchasing Orders• Various Reports
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Overview of the MRP SystemProduct
Structure File
Master Production Schedule
Inventory Master File
Material Requirements
Planning
Manufacturing Orders
Purchase Orders
Various Reports
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MRP Inputs• Product Structure File• Master Production Schedule• Inventory Master File
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Product Structure File
• The Product Structure File describes each parent-component relationship, using the following information:– Part number for the parent item– Part number for the component– Quantity of the component used in the parent item
• Bill of Materials
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Master Production Schedule
• Schedule of Finished Products• Represents Production, not Demand• Combination of Customer Orders and
Demand Forecasts• What Needs to be Produced
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Inventory Master File• On-Hand Quantities• On-Order Quantities• Lot Sizes• Safety Stock• Lead Time• Past-Usage Figures
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MRP Outputs• Manufacturing Orders• Purchasing Orders• Various Reports
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MRP Process• Schedules the Production of all items using
an MRP Matrix
Item: Low-Level Code:
Lot Size: Lead Time: PD 1 2 3 4 5Gross Requirements
Scheduled Receipts
Projected on Hand
Net Requirements
Planned Order Receipts
Planned Order Releases
MRP Matrix
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Terms Defined• Item – name or number for the item being
scheduled• Low-Level Code – the lowest level of the item on
the product structure file• Lot Size – order multiples of quantity• Lead Time – the time from when an order is
placed to when it is received• PD – Past Due Time Bucket, orders behind
schedule
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Terms Defined
• Gross Requirements – demand for an item by time period
• Scheduled Receipts – material already ordered• Projected on Hand – expected ending inventory• Net Requirements – number of items to be
provided and when• Planned Order Receipts – net requirements
adjusted for lot size• Planned Order Releases – planned order receipts
offset for lead times
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Lot sizing techniques used in MRP systems
• Lot-for-lot (L4L) – most used
• Economic order quantity (EOQ)
• Period order quantity (POQ)
MRP 21
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Lot-for-lot (L4L) example
(Assume Ø LT)
The L4L technique:
Minimizes carrying costs
Is certainly the best method for- highly discontinuous demand- expensive purchased items
Period 1 2 3 4 5 6 7 8 9 Total
Net rqmts. 35 10 40 20 5 10 30 150
Planned order 35 10 40 20 5 10 30 150
MRP 22
MRP1.xls
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EOQ example
Setup cost, S = $100Unit price, C = $50Holding costs, HR = .24 per annum
HP = .02 per period
Annual demand, D = 200 Q = (2DS / CHR)1/2 = 58
MRP 23
Period 1 2 3 4 5 6 7 8 9 10
Net rqmts. 35 10 40 20 5 10 30
Planned orders 58 58 58
Remnants 23 13 13 31 31 11 6 54 24 24
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Period order quantity exampleTechnique:1. Compute EOQ to determine number of orders per year
2. Divide number of periods in one year by number of orders to get ordering interval
EOQ = 58Number of periods in one year = 12D = 200200 / 58 = 3.4 (orders per year)12 / 3.4 = 3.5 (ordering interval)
MRP 24
Period 1 2 3 4 5 6 7 8 9 Total
Net rqmts. 35 10
40 20 5 10
30
150
Planned orders 85 35 30
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Example of the MRP ProcessItem: A Low-Level Code: 1
Lot Size: 25 Lead Time: 1PD 1 2 3 4 5
Gross Requirements 10 15 25 25 30
Scheduled Receipts 25
Projected on Hand 20
Net Requirements
Planned Order Receipts
Planned Order Releases
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Example of the MRP ProcessItem: A Low-Level Code: 1
Lot Size: 25 min Lead Time: 1PD 1 2 3 4 5
Gross Requirements 10 15 25 25 30
Scheduled Receipts 25
Projected on Hand 20 10 20 20 20 15
Net Requirements 5 5 10
Planned Order Receipts 25 25 25
Planned Order Releases 25 25 25 30 25
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Case Study
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Hubbell Lighting Case
• Manufactures Industrial Lighting Products• Good-Quality Products• Poor at Meeting Due Dates• Work is Specialized for Each Customer• Job Shop Environment• Complex Products
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Hubbell Lighting Case
Before MRP Implementation
• Less than 75% of orders completed on time
After MRP Implementation
• 97% of orders completed on time
• 2% of orders completed with 1 to 2 days after due date
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ReferencesRussell, Roberta S., and Bernard W. Taylor III. Operations Management. 3rd
Edition: Prentice Hall, 2000
Grubbstrom, Robert W. Material Requirements Planning and Manufacturing Resource Planning. 03/12/2002. http://www.itbp.com/opsmanagement/iebm/material_requirements.htm.
Vormittag Associates, Inc. System 2000 MRP. 03/12/2002. http://www.vaihome.com/s2000mrp.htm.
Inventory Solutions. What is MRP?. 03/12/2002. http://www.inventorysolutions.org/def_mrp.htm.
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Summary of MRP
MRP is…– Computerized Inventory Control
– Production Planning System…
– Schedules Component Items as Needed which will…
– Track Inventory and…
– Help in many other aspects of business…
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