MATERIALS REQUIREMENTS

PLANNING MRP

What is MRP?

MRP Input: Master Production Schedule (MPS) Bill of Materials (BOM)

MRP Processing & Output Exploding Netting Offsetting

Advantages & Disadvantages of MRP

Manufacturing Resource Planning (MRPII)

Controls inventory levels, plans production & helps

with manufacturing control system of production of

assembled parts to support forecasted demand

What is Material Requirements Planning?

What is MRP? Developed in 1960s Used in manufacturing

Achieve low per unit costs

Objectives Improve customer service Reduce inventory investment Improve plant operating efficiency

Quantity Schedule

What is MRP?

Demand Managemen

tProduction

Plan

Master Production Schedule

Inventory Record File

Material Requirements Planning

Bill of Materials

Components of MRP

MRP Inputs: MPS & BOM

http://www.resoco.co.uk/rstores.htm

MRP Input: Master Production Schedule

Inputs Forecasts Aggregate Plan

Company policies Inventory File

Take capacity from aggregate plan & allocate Short-range Cost-driven

DescriptionItem Canopy

Item No. 8479

Item Type Manuf.

Product/sales class Ass’y

Value class B

Buyer/planner RB

Vendor/drawing 07142

Phantom code G

Unit price/cost 15

Pegging Y

LLC 3

Physical InventoryOn hand 20

Location Y352

On order 50

Allocated 75

Cycle 5

Difference 4

Inventory File

MRP Input: MPS

Computerized MPS Inputs: forecast, safety stock,

inventory status & lot sizes Calculates: temporary MPS Compares: against load &

capacity

Outputs Rough Cut Capacity Plan

MRP Input: Bill of Materials Raw materials,

assemblies, components, and the quantities of each needed to manufacture an end item

4 Different Contexts: Engineering Manufacturing Sales Service

3 Different Formats Single-Level Indented Modular

MRP Input: BOM Contexts Engineering BOM

Used as products are designed

Manufacturing BOM Used as products are built

Sales BOM As products are ordered

Service BOM As products are maintained

MRP Input: BOM Formats Single Level BOM

Indented BOM

Modular BOM

XYZ Umbrella CompanyBill of Material, Part PH01

Part Number

Description Qty for Each Assembly

Unit of Measure

B100 Base 1 Each

1100 Panel 4 Each

1200 Panel 4 Each

1300 Cross Piece 2 Each

1400 Base Support Bars 4 Each

P100 Receiving Pole 1 Each

1500 Pole 1 Each

1600 Washer 1 Each

1700 Bolt 1 Each

1800 Netting 1 Each

1900 Sand Bag 1 Each

2000 Cover Board 1 Each

C100 Canopy 1 Each

2100 Pole Assembly 1 Each

2200 Button 1 Each

XYZ Umbrella CompanyBill of Material, Part PH01-Umbrella

Part Number

Description Qty for Each Assembly

Unit of Measure

B100 Base 1 Each

P100 Receiving Pole 1 Each

C100 Canopy 1 Each

MRP Processing & Output MRP Matrix 4 basic steps

Exploding Bill of Materials

Netting out Inventory Determining how many

units are required Time-phasing for future

demand & supply

Item: Low-Level Code: Lot Size: Lead Time:

PD 1 2 3 4 5

Gross Requirements

Scheduled Receipts

Projected on Hand

Net Requirements

Planned Order Receipts

Planned Order Releases

MRP Processing Explodes MPS into

amount of Raw materials Parts Subassemblies Assemblies

Netting Order quantity needed

Offsetting Sufficient time to build

goods

Needed in each week of the

planning horizons

MRP Processing: Explosion

Offset Umbrell

a

Base (1)

Receiving Pole

(1)

Canopy (1)

Panel A (4)Panel B (4)

Cross Pieces (2)Base Support Bars

(4)

Pole (1)Washer (1)

Bolt (1)Water/Sand Bag

(1)Cover Board (1)Pole Assembled

(1)Canopy Button (1)

Flat (2)Round (2)

MRP Output

Primary Outputs Recommended Production

Schedule

Recommended Purchasing Schedule

Secondary Reports

Purchase Orders

Action Notices

Advantages & Disadvantages of MRP

Advantages of MRP

Minimize Inventory

Accurate Information

Greater Responsiveness to Market

Future Capacity Planning

Production Planners/Managers

Plant Foremen

Customer Service Representative

Purchasing Manager

Inventory Manager

Company Advantages Individual Advantages

Disadvantages of MRP Reliance on Information

Increased Material Costs

Hazard of Production Slowdown or Shutdown

Hazard of Stock Out

Doesn’t account for Plant & Distribution Capacity

Implementation Difficulties

Evolution of MRP: MRPIIhttp://sapplanning.wordpress.com/2008/01/31/material-master-mrp-tabs/

MRPII: Manufacturing Resource Planning

Developed 1980s

Extended to include Materials, Finance, HR & Plant Capacity

MPS develops MRP Integrates machine & labour capacity

Provides schedule of production Runs according to when materials arrive

Data on cost of production Machine time, labour time & materials provided to finance

MRPII: Advantages & Disadvantages

Includes shop floor feedback & adjusts accordingly

Capacity taken into consideration

Integrates information throughout company

Integration problems

Often limited to one location

No supply chain capabilities

Advantages Disadvantages

In Conclusion

Backward scheduling process for materials

Drastically increased efficiency & decreased inventory upon implementation

Morphed into MRPII

Replaced by more integrated ERP system

Questions

ReferencesAlexander, Dusty. "Integrating Engineering And Manufacturing Bill Of Material (BOM)

Through ERP Software Solutions." Ezine Articles. 2007. Global Shop Solutions. 21 Mar 2009 <http://ezinearticles.com/?Integrating-Engineering-And-Manufacturing-Bill-Of-Material-(BOM)-Through-ERP-Software-Solutions&id=487112>.

Bicheno, John & Elliot, Brian B.R. ‘Managing Demand and Supply of Materials: MRP.’ Operations Management: An Active Approach to Learning. Malden, MA: Blackwell, 1997.

Clancy, Jon. "Engineering Bill of Materials." CIRAS News Vol 32. No 1.1997 21 Mar 2009 <http://www.ciras.iastate.edu/publications/CIRASNews/fall97/bom.html>.

Gaither, Norman. ‘Resource Requirements Planning Systems.’ Production and Operations Management. 6th ed. Orlando, FL: Dryden Press, 1994.

Greasley, Andrew. ‘MPR, JIT and OPT.’ Operations Management in Business. London: Stanley Thornes, 1999.

"Master Scheduling: An Overview." MCTS . March 2009. 21 Mar 2009 <http://www.mcts.com/Master-Scheduling.html>.

Mazzola, Joseph et al. ‘Multistage Manfacturing System: Material Requirements Planning.’ Operations Management: Production of Goods and Services. 3rd ed. Englewood Cliff, NJ: Prentice-Hall, 1992.

ReferencesMbaya, Martin. "The Constraints and Limitations of Manufacturing Resource

Planningas A Tool For Shop Control." Jun 2000 19 Mar 2009 <http://dspace.mit.edu/bitstream/handle/1721.1/28226/47981810.pdf?sequence=1>.

Pandey, P.C.. "MRP II Should its Simplicity Remain Unchanged." Industrial Management 01 05 1996 19 Mar 2009 <http://www.allbusiness.com/specialty-business/579473-1.html>

"Product Structure and Bill of Materials." Conflow Project. March 2009. DRM Associates. 23 Mar 2009 <http://www.npd-solutions.com/bom.html>.  

"Sales BOM Implementation." SAP . March 2009. SAP Basis, ABAP Programming . 23 Mar 2009 <http://www.sap-img.com/sap-sd/sales-bom-implementation.htm>.

Sirapobthada, Pantit. IT for Productions & Manufacturing. <http://www.slideshare.net/> 12 March 2009.