MATERIAL REQUIREMENT PLANNING In assembly operations of product (finished goods), there are many items, which are themselves,

sub assemblies. Joining small components makes these sub assemblies. The requirements of these components are called dependent demand items. MATERIAL REQUIREMENT PLANNING (MRP) is a system used for planning the future requirements of dependent demand items. BILLS OF MATERIALS: It is a document, which tells their required numbers and us about an items product structure, showing the sequence in which components/ sub-assemblies are assembled. It also contains details about the level at which the items are assembled. M finished product level 0 N(3) P(1) Q(2) O(1) N(2) sub-assemblies level 1 components level 2

MRP Gives - 1. Planned order reports Information about planned orders to be released on some future date or during a given interval of time. It is helpful to arrange the funds requirement in future. 2. Order release report Information about planned orders to be released on the present date. It helps the purchase manager to release purchase orders (PO) to the suppliers. QUESTIONS FOR PRACTICE Q 1) Draw the MRP. Economic order quantity is 300 units and lead time (LT) is 1 week. Period 0 1 2 3 4 5 6 7 Projected requirement 10 15 14 20 14 300 0 0 0 0 0 Receipts Stock on hand 150 Planned order release Q 2) Order quantity=200 1 2 3 4 5 6 7 8 9 Lead time=2 weeks Requirement 90 10 14 55 5 15 11 95 10 0 5 0 Schedule receipts On hand at the end 110 Planned order release Q 3) draw the MRP. Order quantity=400 units, lead time= 2 weeks, safety stock= 100 units, requirements: week 1-10, week 2 0, week 3 180,

week 4 0, week 5 360, week 6 270, week 7,8 0, week 9 40, week 10 50 units. Q 4) Order quantity=70 Lead time=4 weeks Safety stock 40 Requirement Schedule receipts On hand at the end 65 Planned order release Q 5) Jayanagar Chair Co. makes office chairs mainly with a steel frame, plastic thread work and two beautifully carved wooden arm rests. The later are procured from a wood turning shop, which supplies JCC with a leadtime of five weeks, and in a lot size of 2000 arm rests. As per JCCs customers requirements, the delivery schedule for completed chairs is: Week no. 1 2 3 4 5 6 7 8 9 No. Of chairs required - 200 200 - 500 700 300 The wooden chair handles are almost the last item to go into JCCs chairs and the lead-time for the final assembly of the chair would be taken as 1 week. There are 50 completed chairs in the stock and 800 wooden handles in the plant stores. Due to the order placed earlier, 2000 wooden handles are schedule to arrive in week 4. Draw a MRP for the wooden handles. Q 6) The lead-time to procure Paracetamol from a supplier is four weeks. At present 54 kg of drug is available with us. There is also a scheduled receipt of 45 kg of it in four weeks. The production requirements of paracetamol over the next nine weeks are as: Week 1 2 3 4 5 6 7 8 9 Amount in kg 24 29 11 5 19 27 18 If we use an order quantity of 45 kg, when shall we release the order for paracetamol? Q 7) From the bill of material of a product given below, compute the net requirement for A, B, C and D to produce 20 units of X in 8th week. Component A B C D On hand inventory 10 5 10 10 X (LT = 2) 1 2 3 4 5 6 7 8 9 10 11 12

2 0

2 0 7 0

2 5

20 20

25 20

20

30

25 25 25

A (1) (LT =3)

B (2) (LT = 2)

C (1) D (2) LT =1 LT = 2 Q 8) A multi national company involved in the manufacture of product A has the product structure for all parts/ subassemblies as shown below. If 100 units of the product A are required to be shipped in the 10th week, then: i) Prepare the bill off materials ii) Compute the requirement of various levels and draw the planned order release A LT = 2 B (2) LT = 1 E (3) LT =3 C (4) LT = 3 F (3) LT = 3 D(3) G (5) LT= 3 LT = 2 H(6) LT=1

Q 9) Laxmi Industries Pvt. Ltd. Produces product X &Y which has demand, product structures and lead time shown in the figures given below: Demand Product 1 2 3 4 5 6 7 8 X - 300 - 200 - 250 Y - 400 X LT =2 A (1) LT=3 B(2) LT=2 Y LT=3

C(1) D(1) C(1) D(4) LT=1 LT=2 LT=1 LT=2 The on hand inventories are as follows X=100, Y=30, A=70, C=200 & D=800. the lot size for A is 250, for D is 1000, & all other items are specified on lot for lot basis. The only schedule receipts are 250 units of X due in period 2. Determine the order quantities and order release dates for all items. Q 10) Component A is a level 2 item in the product structure of the chair whose tree is shown below. If 100 units of A are required in week 9, when should the purchase order be sent out for these items?

A B (2) D(2) F(2) G(2 E(1) G(3) F(1) D(1) C(1)

Item A B C D E F G

Lead time (weeks) 2 2 2 3 1 1 2

On hand inventory 90 50 40

Q 11) Dell computers makes a special model for blind people. Develop MRP. COMPUTER FOR BLIND SPECIAL SCREEN SPEAKERS 2 Item CPU-XTRA INTERACTIVE KEYBOARD

OUTER BOX LT

COMPUTER FOR 3 BLIND SPECIAL SCREEN 2 CPU-XTRA 3 INTERACTIVE 2 KEYBOARD SPEAKERS 1 OUTER BOX 2 INNER BOX 2 Master production schedule Computer 1 2 Quantity -

INNER BOX Quantity in hand 50 60 20 50 70 50 3 30 4 5 20

Schedule Receipt Period Quantity 2 3 1 6 7 8 150 40 50 20 9 100

Q12) A Company produces two products A & B. Given the following product structure, determine when order should be released for A,B,C & D and the size of those orders. Ite On Schedul Lot Requirement A LT=3 B m hand ed size LT=2 receipts C(3) D(2) D(3) A 10 0 LFL 100,period 8 LT =4 LT= 1 LT=1 B 5 0 LFL 200, period 6 C 140 0 150 D 200 250, 250 Period 2