MRP Cja

1
Materials
Requirements Planning
OBJECTIVES
Material Requirements
Planning (MRP)
MRP Logic and Product
Structure Trees
Time Fences
MRP Example
Lot Sizing
Material Requirements
Planning
Materials requirements planning (MRP) is a
means for determining the number of parts,
components, and materials needed to produce a
product
MRP provides time scheduling information
specifying when each of the materials, parts,
and components should be ordered or produced
Dependent demand drives MRP
MRP is a software system
Example of MRP Logic & Product

Structure Tree
Given the product structure tree for A and the lead time and
demand information below, provide a materials requirements
plan that defines the number of units of each component and
when they will be needed
Product Structure Tree for Assembly A
A
B(4)
D(2)
Lead Times
A
1 day
B
2 days
C
1 day
D
3 days
E
4 days
F
1 day
C(2)
E(1)
D(3)
F(2)
Total Unit Demand

Day 10
50 A
Day 8
20 B (Spares)
Day 6
15 D (Spares)
First, the number of units of A are scheduled backwards to

allow for their lead time. So, in the materials requirement
plan below, we have to place an order for 50 units of A on
the 9th day to receive them on day 10.
Day:
A Required
Order Placement
10
50
50
LT = 1 day
Next, we need to start scheduling the components that make up

A. In the case of component B we need 4 Bs for each A.
Since we need 50 As, that means 200 Bs. And again, we back
the schedule up for the necessary 2 days of lead time.
Day:
A Required
Order Placement
B Required
Order Placement
20
50
200
Spares
20
200
LT = 2
A
B(4)
D(2)
C(2)
E(1)
D(3)
F(2)
10
50
Finally, repeating the process for all components, we have the

final materials requirements plan:
Day:
A
LT=1
B
LT=2
C
LT=1
D
LT=3
E
LT=4
F
LT=1
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
20
20
50
200
200
100
55
20
400
55
400
20
200
100
300
300
200
200
200
A
B(4)
D(2)
Part D: Day 6
C(2)
E(1)
D(3)
40 + 15 spares
F(2)
77
10
50
Master Production Schedule (MPS)

Time-phased plan specifying how many
and when the firm plans to build each end
item
Aggregate Plan
(Product Groups)
MPS
(Specific End Items)
Master Production Schedule (MPS)

Time-phased plan specifying how many
and when the firm plans to build each end
item
10
Types of Time Fences

Frozen
No schedule changes allowed within this
window
Moderately Firm
Specific changes allowed within product
groups as long as parts are available
Flexible
Significant variation allowed as long as
overall capacity requirements remain at
the same levels
11
Example of Time Fences
Moderately
Firm
Frozen
Flexible
Capacity
Forecast and available

capacity
Firm Customer Orders
15
Weeks
26
12
Material Requirements Planning

System
Based on a master production schedule, a
material requirements planning system:
Creates schedules identifying the specific parts
and materials required to produce end items
Determines exact unit numbers needed
Determines the dates when orders for those

materials should be released, based on lead
times
13
Aggregate
product
plan
Firm orders
from known
customers
Engineering
design
changes
Forecasts
of demand
from random
customers
Master production
Schedule (MPS)
Bill of
material
file
Primary reports
Planned order schedule for
inventory and production
control
Inventory
transactions
Material
planning
(MRP
computer
program)
Inventory
record file
Secondary reports
Exception reports
Planning reports
Reports for performance
control
The McGraw-Hill Companies, Inc.,
14
Bill of Materials (BOM) File

A Complete Product Description
Materials
Production
sequence
Parts
Modular
BOM
Subassembli
es
Component
s
Super BOM
Fractional
options
15
Additional MRP Scheduling

Terminology
Gross Requirements
Scheduled receipts
Projected available balance
Net requirements
Planned order receipt
Planned order release
16
MRP Example
Item
X
A
B
C
D
X
A(2)
C(3)
B(1)
C(2)
On-Hand Lead Time (Weeks)

50
2
75
3
25
1
10
2
20
2
D(5)
Requirements include 95 units (80 firm orders and 15 forecast) of X

in week 10
17
Day:
A(2)
It
takes 2
As for
each X
X
LT=2
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planner order release
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
18
Day:
X
LT=2
A(2)
B(1)
It
takes 1
B for
each X
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
19
Day:
X
LT=2
A(2)
B(1)
C(3)
It takes
3 Cs for
each A
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
20
Day:
X
LT=2
A(2)
C(3)
B(1)
C(2)
ItIttakes
takes22
Cs
Csfor
for
each
eachBB
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
21
Day:
X
LT=2
A(2)
C(3)
B(1)
C(2)
It takes 5
Ds for
each B
D(5)
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
Gross requirements
Scheduled receipts
Net requirements
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
22
Lot Sizing in MRP Programs
Lot-for-lot (L4L)
Economic order quantity (EOQ)
Least total cost (LTC)
Least unit cost (LUC)
Which one to use?
The one that is least costly!
23
Lot For Lot
24
EOQ
25
Least Total Cost
26
Least Unit Cost

MRP Cja

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MRP Cja

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1

Example of MRP Logic & Product

Total Unit Demand

First, the number of units of A are scheduled backwards to

Next, we need to start scheduling the components that make up

Finally, repeating the process for all components, we have the

Master Production Schedule (MPS)

Master Production Schedule (MPS)

Types of Time Fences

Example of Time Fences

Forecast and available

Material Requirements Planning

Determines exact unit numbers needed

Determines the dates when orders for those

The McGraw-Hill Companies, Inc.,

Bill of Materials (BOM) File

Additional MRP Scheduling

On-Hand Lead Time (Weeks)

Requirements include 95 units (80 firm orders and 15 forecast) of X

Lot Sizing in MRP Programs

Lot For Lot

Least Total Cost

Least Unit Cost

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