Professional Documents
Culture Documents
Planning
Lecture Notes
"MRP (Material Requirements Planning)" is a
concept of creating material plans and
production schedules based on the lead times
of a supply chain.
Management Engineering
Return on Aggregate Design
investment production completion
Capital plan
Change
production
Master production plan?
schedule
The Planning Process
Master production
schedule Change
master
Change production
requirements? Material schedule?
requirements plan
Change capacity?
Capacity
requirements plan
No Is capacity Is execution
Realistic? plan being meeting the
met? plan?
Yes
Execute capacity
plans
Execute
material plans
Focus for Different
Process Strategies
Make to Order Assemble to Order or Stock to Forecast
Forecast
(Process Focus) (Repetitive) (Product Focus)
Number of
end items Schedule finished
product
Schedule orders
Number of
inputs
Table 14.1
Bills of Material
List of components, ingredients, and
materials needed to make product
Provides product structure
Items above given level are called parents
Items below given level are called children
BOM Example
Level Product structure for “Awesome” (A)
0 A
Amp-booster
Amp-booster
1 2 3 4 5 6 7 8
Time in weeks
MRP Structure
Data Files Output Reports
MRP by period
BOM Master report
production schedule
MRP by date
report
Lead times
(Item master file) Planned order
report
Inventory data
Purchase advice
Material
requirement
planning
programs
(computer and Exception reports
Purchasing data software)
Order early or late or
not needed
B C B C
Master schedule
Lead time = 4 for A Lead time = 6 for S for B
Master schedule for A Master schedule for S sold directly
Periods 5 6 7 8 9 10 11 8 9 10 11 12 13 1 2 3
40 50 15 40 20 30 10 10
Periods 1 2 3 4 5 6 7 8
Therefore, these are
40+10 15+30
Gross requirements: B 10 40 50 20 the gross
=50 =45
requirements for B
Net Requirements Plan
The logic of net requirements
Gross requirements
+ Allocations
Total requirements
Available inventory
MRP Management
MRP is a dynamic system
Time fences put limits on replanning
Pegging links each item to its parent
MRP II
Closed-Loop MRP
Capacity Planning
Outputs include
Scrap
Packaging waste
Carbon emissions
Data used by purchasing, production scheduling, capacity planning,
inventory
Closed-Loop MRP System
Aggregate Production Plan
OK?
NO Priority Management Capacity Management
Uncooked
Sauce Veal
linguini
#30006 #30005
#30004
Safety Stock
Lot-for-lot $700
EOQ $730
PPB $490
Lot-Sizing Summary
In theory, lot sizes should be recomputed
whenever there is a lot size or order quantity
change
In practice, this results in system
nervousness and instability
Lot-for-lot should
be used when
low-cost JIT can
be achieved
Lot-Sizing Summary
Lot sizes can be modified to allow for scrap,
process constraints, and purchase lots
Use lot-sizing with care as it can cause
considerable distortion of requirements at
lower levels of the BOM
When setup costs are significant and
demand is reasonably smooth, PPB,
Wagner-Whitin, or EOQ should give
reasonable results
About Just In Time (JIT)
Steps of Lean Production
ERP and MRP
Enterprise Resource Planning (ERP)
▶ ERP systems have the potential to
▶ Reduce transaction costs
▶ Increase the speed and accuracy of information
▶ Facilitates a strategic emphasis on JIT
systems and supply chain integration
▶ Can be expensive and time-consuming to
install