week 12 mrp july

7/27/2019 Week 12 MRP July

1/44

Outcome 4:Use software-generated information to make decisions at

operational, tactical and strategic levels in an organization.

Assessment Criteria:4.3 Prepare a spreadsheetto enable material

requirements planning and calculate economic order

quantities.


2/44

Manufacturing

computer information

system

Determines quantity &

timing of dependent

demand items

1 2 3 4 5

Gross Requirements 2 20 25 15

Scheduled Receipts 5 30

Available 25 23 33 33 8

Net Requirements 7

Planned Order Receipts 7

Planned Order Releases 7


3/44

Demand for one item is related to the demand for

another item.

Consider Ford Explorer:

Fords demand for auto tires and radiators depend on

the production of Explorer.

o 4 tires and 1 radiator go into each finished Explorer.


4/44

Computer system

Mainly discrete products

Accurate bill-of-material

Accurate inventory status

99% inventory accuracy

Stable lead times


5/44

Increased customer satisfaction due to meeting

delivery schedules

Faster response to market changes

Improved labor & equipment utilization

Better inventory planning & scheduling

Reduced inventory levels without reduced customerservice


6/44

1. Master Production Schedule (MPS)

2. Bills of Materials (BOM)

3. Accurate Inventory Records

4. Purchase Orders Outstanding

5. Lead Times for Each Component


7/44

Specifies WHAT(No. of finished product or item) is tobe made and WHEN

Must accordance with aproduction planwhich: sets the overall level of output in broad terms

MPS tells what is required to satisfy demand and meet the

production plan

Establishes what items to make and when, in terms

of specific products.

Reasonable length of time time takes to produce a

product.


8/44

Aggregate

Production Plan

Execute capacity plans

Material Requirements

Plan (MRP)

Marketing:

Customer DemandFinance:

Cash flow

Engineering:

Design completion

Human Resources:

Manpower planning

Production:

Capacity Inventory

Management:

Return on Investment

Capital

Procurement:

Supplier performance

Master

Production

Schedule (MPS)

Changeproductionplan?


9/44

1,2001,500

Aggregate Production Plan(shows the total quantity ofamplifiers

10030075 watt amplifier



Master ProductionSchedule (Shows thespecific type and quantity ofamplifier to be produced

87654321Weeks

FebruaryJanuaryMonths


10/44

Make to Order

(Process Focus)

Assemble toOrder or

Forecast

(Repetitive)

Stock to Forecast

(Product Focus)

Schedule finished

product

Steel, Beer,Bread Lightbulbs, Paper

Print shopMachine shop

Fine dining restaurant

Examples:

Number of end

items

Number of

inputs

Typical focus of the

master production

schedule Scheduleorders

Schedule

modules

Motorcycles, autos,

TVs, fast-food

restaurant


11/44

List of the raw materials, sub-assemblies, intermediate

assemblies, sub-components, components, parts and the

quantities of each needed to manufacture an end product dovary somewhat in scope

E.g: recipe for cake, specifying ingredients and

quantities/amount, full set of drawings for an ambulance


12/44

Provides product structure (tree)

Parents: Items above given level

Children: Items below given level

Shows low-level coding

Lowest level in structure item occurs

Top level is 0; next level is 1 etc.


13/44

Speaker Kits, Inc., packages high-fidelity components for mail order.

Components for the top-of-the-line speaker kit, AiWA II (A),

include 2 standard 12-inch speaker kits (Bs) and 3 standard 12-inch

speaker kits with amp-booster (Cs).

Each B consists of two 12-inch speakers (Ds) and 2 shipping boxeseach with an installation kit (E). Each of the three speaker kits with

amp-booster kits (Cs) has 2 speaker boosters (Fs) and 2 installation

kits (Es). Each speaker booster (F) includes two 12-inch speakers

(Ds) and 1 amp-booster (G). The total for each AiWA II is 4 standard

12-inch speakers and twelve 12-inch speakers with the amp-booster

(Gs).

As we can see, the demand for B, C, D, E, F and G is completely

dependent on the master production schedule for A the AiWA II

speaker kits.


14/44

A

B(2) Std 12 Speaker kit C(3) Std 12 Speaker kitw/ amp-booster

F(2)Std 12 Speaker booster

assembly

E(2)E(2)

Packing box of

installation kit of wire,

bolts and screwsG(1)

amp-booster

D(2)12 speaker

D(2)12 speaker

Level

0

1

2

3


15/44

Product structure (tree) for AiWA II Speaker Kit shows

four levels : 0, 1, 2, 3

four parents: A, B, C, F - has at least one level below B, C, D, E, F, G are components (children) has at least

one level above

B, C, F are both parent and component (children)

Number in parentheses ( ) no.of units needed to

make the item immediately above it.


16/44

Determine the number of units of each item required to

satisfy demand for a new order of 50 AiWA II speaker

kits.

Part A = 50 units Part B = 2 x number of As = 2 (50) = 100

Part C = 3 x number of As = 3 (50) = 150

Part D = 2 x number of Bs + 2 x number of Fs

= 2 (100) + 2 (300) = 800


17/44

Firm should achieved at least 99% record accurate

Should exist as a by-product of well-managed

purchasing and inventory-control department

Good purchasing data (purchase data execute, recordsof those orders and scheduled delivery dates available)

good production plans effective MRP system.


18/44

Time required to acquire (purchase, produce or

assemble)

Example 3: Lead times for AiwA II Speaker

Component Lead Time

A 1 week

B 2 weeks

C 1 week

D 1 week

Component Lead Time

E 2 weeks

F 3 weeks

G 2 weeks


19/44

1 2 3 4 5 6 7 8

A

B

C

D

E

E

F

G

D

2 weeks to

produced

1 week

2 weeks

1 week2 weeks

2 weeks

3 weeks

1 week

1 week

Start production of

D

Must have D and Ecompleted here so

production can begin on B


20/44

Outcome 4:

Use software-generated information to make decisions at

operational, tactical and strategic levels in an organization.

Assessment Criteria:

4.3 Prepare a spreadsheet to enable material

requirements planning and calculate economic orderquantities.


21/44

Aggregate Production Plan

Master ProductionSchedule

Material Requirement Plan

Set due dates for theavailability of end items NOT

when end item will be

manufactured

Bill of Material(Product

Structure Tree)

Lead time

Inventory level


22/44

WEEK LEAD TIME

1 2 3 4 5 6 7 8

A. Required date

Order released date1 week

B. Required date

Order released date 2 weeks

C. Required date


E. Required date

Order released date2 weeks

F. Required dateOrder released date

3 weeks

D. Required date


G. Required date

Order released date2 weeks

50

100

300

50

150

200

300

600

100

150

300200

300

600

200

200

300

300

= Lead Time BOM Lead Time


23/44

Example 4 : Gross MRP

- assumes that there is no inventory on hand

If there is inventory on hand

net requirement plan include:

i. gross requirement ii. on-hand inventory

ii. net requirements

iv. planned order receipt (quantity planned to be

received at a future date)

v. planned order release (schedule date for an order to

be released)


24/44

ITEM ON HAND

A

B

C

D

EF

G

10

15

20

10

105

0

Constructing a netrequirements plan is similar to

constructing a GRP.

Stating with item A - workbackward to determine net

requirements for all item.


25/44

LotSize

LeadTime

(weeks)

OnHand

SafetyStock

Allo-cated

Low-level

Code

ItemIdenti-

fication

Week1 2 3 4 5 6 7 8

Gross Requirements

Schedule Receipts

Project On

Hand

Net RequirementPlanned Order

Receipts

Planned Order

Releases

Refer to product structure, on-hand inventory, and lead times.i. ITEM A:Gross requirement = 50 units (at week 8), item on-hand = 10 units

net requirement & planned order receipt

= 50 10 = 40 units (at week 8)

Lead times = 1 week, so planned order release = week 7 (40 units)


26/44

LotSize

LeadTime

(weeks)

OnHand

SafetyStock

Allo-cated

Low-level

Code

ItemIdenti-

fication

Week1 2 3 4 5 6 7 8

Gross

Requirements

Schedule Receipts

Project OnHand

Net Requirement

Planned Order

Receipts

Planned Order

Releases

Lot-

for-

lot

1 10 - - 0 A 50

101010101010101010

40

40

40

Lead Time

of 1 week

B C


27/44

ii. ITEM B:Gross requirement = 100 units (week 7) - BA

item on-hand = 15 units

** Requirement for item B depends on the net requirement of

A:net requirement for A = 40

Requirement for BA= 2(40) = 80 (at week 7)

net requirement & planned order receipts for BA

= 80 15 = 65 (at week 7)

Lead times = 2 week, so planned order release

= 65 (week 5)

PT TP


28/44

LotSize

LeadTime

(weeks)

OnHand

SafetyStock

Allo-cated

Low-level

Code

ItemIdenti-

fication

Week1 2 3 4 5 6 7 8

Gross

Requirements

Schedule Receipts

Project OnHand

Net Requirement

Planned Order

Receipts

Planned Order

Releases

Lot-

for-

lot

2 15 - - 1 B 80

1515151515151515

65

65

65

Lead Time

of 2 weeks

E D


29/44

iii. ITEM C:Gross requirement = 150 units (week 7) - CA


** Requirement for item C depends on the net requirement of

A:net requirement for A = 40

Requirement for CA= 3(40) = 120 (at week 7)

net requirement & planned order receipts for CA

= 120 20 = 100 (at week 7)


= 100 (week 6)


30/44

LotSize

Lead

Time

(weeks)

OnHand

SafetyStock

Allo-cated

Low-

level

Code

Item

Identi-

fication

Week1 2 3 4 5 6 7 8

Gross

Requirements

Schedule Receipts

Project OnHand

Net Requirement

Planned Order

Receipts

Planned Order

Releases

Lot-

for-

lot

1 20 - - 1 C 120

2020202020202020

100

100

100

Lead Time

of 1 week

E F


31/44


32/44

ITEM E:Gross requirement = 300 units (week 6) - Ec

** Requirement for item E is also depends on the net

requirement of C:net requirement for C = 100

Requirement for EC = 2(100) = 200 (at week 6)

net requirement & planned order receipts for EC

= 200 (**no more on-hand inventory for item E, after been

used for B)

Lead times = 2 weeks, so planned order release

= 200 (week 4)

Net E


33/44


34/44

v. ITEM F:Gross requirement = 300 units (week 6) - FC


** Requirement for item F depends on the net requirement of

C:net requirement for C = 100

Requirement for FC= 2(100) = 200 (at week 6)

net requirement & planned order receipts for FC

= 200 5 = 195 (at week 6)


= 195 (week 3)


35/44

LotSize

Lead

Time

(weeks)

OnHand

SafetyStock

Allo-cated

Low-

level

Code

Item

Identi-

fication

Week1 2 3 4 5 6 7 8

Gross

Requirements

Schedule

Receipts

Project On

Hand

Net Requirement

Planned Order

Receipts

Planned OrderReleases

Lot-

for-

lot

3 5 - - 2 F 200C

555555

195

195

195

5

Lead Time

of 3 weeks

D G


36/44

vi. ITEM D:Gross requirement = 600 units (week 5) - DF

= 200 units (week 6) - DB


** Requirement for item D depends on the netrequirement of F:

net requirement for F = 195

Requirement for DF = 2(195) = 390 (at week 3)

net requirement & planned order receipts for DF

= 390 - 10= 380 (at week 3)


= 380 (week 2)Net D


37/44

ITEM D:Gross requirement = 200 units (week 6) - DB


** Requirement for item D is also depends on the net

requirement of B:

net requirement for B = 65

Requirement for DB = 2(65) = 130 (at week 5)

net requirement & planned order receipts for DB

= 130 (**no more on-hand inventory for item D - after been

used for F)


= 130 (week 4)Net D


38/44


39/44


40/44

LotSize

Lead

Time

(weeks)

OnHand

SafetyStock

Allo-cated

Low-

level

Code

Item

Identi-

fication

Week1 2 3 4 5 6 7 8

Gross

Requirements

Schedule

Receipts

Project On

Hand

Net Requirement

Planned Order

Receipts

Planned OrderReleases

Lot-

for-

lot

2 0 - - 3 G 195F

0000

195

195

195

Lead Time

of 2 weeks

Complete MRP
http://localhost/var/www/apps/conversion/tmp/examples%20excel/MRPtemplate.xlsxhttp://localhost/var/www/apps/conversion/tmp/examples%20excel/MRPtemplate.xlsx


41/44

Assessment Criteria:

4.3 Prepare a spreadsheetto enable material

requirements planningand calculate economic order

quantities.


42/44

BOM

Lead Times

(Item Master File)

Inventory Data

Purchasing data

Master Production

Schedule

MRP

planning

programs

(computer

and

software)

MRP by Period Report

MRP by date report

Planned order report

Purchase advice

Exception report


43/44

A BOM AiWAIILead

Time1 Lot Size

Minimum

quantity

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Gross Requirements 50

Schedule Receipts

Project OnHand

10 10 10 10 10 10 10 10 10

Net Requirement 40

Planned Order Receipts 40

Planned Order Releases 40


44/44

A BOM AiWAIILead

Time1 Lot Size

Minimum

quantity

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Gross Requirements=BOM!$G

$7

Schedule Receipts

Project OnHand =BOM!$

E$7=BOM!$E

$7

=BOM!$E

$7

=BOM!$E

$7

=BOM!$E

$7

=BOM!$E

$7

=BOM!$E

$7

=BOM!$E

$7

=BOM!$E

$7

Net Requirement=$L$7-

$L$9

Planned Order Receipts =$L$10

Planned Order Releases =$L$11

AiWAII Speaker Kit - MRP Excel
http://localhost/var/www/apps/conversion/tmp/examples%20excel/MRP.xlsxhttp://localhost/var/www/apps/conversion/tmp/examples%20excel/MRP.xlsx

week 12 mrp july

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