MRP

Material Requirements Planning
LS Murty
Indian Institute of Management Bangalore
Feb 13, 2017 lsmurty@iimb.ernet.in 1

EOQ Model
A main assumption:
Demand is known constant and uniform
overtime
What happens if this assumption is violated

EOQ Model Demand:
Independent
and Dependent
Item Month
1 2 3 4 5 6 Uniform and
P1 10 10 10 10 10 10 Lumpy
Q1 20 20 20
Usage of EOQ
Common items
P2 25 25 25 25 25 25
Q2 75 75
P3 5 5 5 5 5 5
Q3 5 5 5 5 5 5
C 100 5 25 80 25 5 Setups ICC
EOQ(C) 100 100 40 3 200
OUR 130 110 2 90

Bill of Materials (BoM)
Consider a toy car consisting of four wheels, two
axles, a chassis, and a body
how do you think is the car made:
made from a heap of all these parts?
Or,
made systematically by progressively adding the
parts?
Yes, it is made by progressively adding the parts

Car making can pictorially be shown as:
Car
Chassis assembly Body
Rear Axle Front Axle

Chassis
One rear axle and two wheels
Assembly Assembly
are taken and assembled
to make one
Wheels
Rear Front
Wheels rear axle assembly (2)
axle (2) axle
Bill of Material Some Issues
Develop the BoM for ballpoint pen
Explode till bought-out-finished (BOF)
items or raw materials
Explode crucial items as well (even BOF)
Phantom assembly
Modular BoM, Planning BoM
Product versus process design
This representation of a product is called tree
structure form of bill of materials (BoM)
Other forms: indented BoM, GOZINTO
matrix
It shows the items - how and how many are
assembled to make the product
notice that in this example quantity per unit of
next assembly by default was one.

Bill of Material - Low Level Code
Level
P 0 Q
A2 K2 L1 M1 1 B3 L2 M2 N1
N1 B2 2 K2 M3
3
K2 M3
Component Summary
A B K L M N
P: 2 4 10 1 13 2
Q: - 3 6 2 11 1

Item Commonality
An item like wheel occurs at two places in
the BoM
This phenomenon is called commonality
Commonality can occur within and across
products
Within: wheels for front and rear axles
Across: same wheels for two different cars

Item Commonality
Thus, commonality of items can make the
net requirement computation complex.
Policy of firm to cannibalize or not affects
computation of net requirements
MRP system accounts for these factors and
computes net requirements for all parts

Types of Demand
What are the items from this system that
market demands?
Yes, market demands cars
Is that all?
No - market may demand, for example, rear
axle assembly as spare or for replacement
So, the market demand is not necessarily for
end products alone, it can be for spares also
Types of Demand
For what market demands, say, cars, the
firm has to make other parts like chassis,
body etc
the demand for these other parts is derived
from the demand for the end products and
spares
For example, for each car demanded, the
firm has to make one body.
Types of Demand
Independent demand - for end products /
spares to be delivered to market uniform?
Dependent / derived demand - for other
items computed to meet the independent
demand lumpy, mostly if so dont use
EOQ

Bill of Material - Low Level Code
Level
P 0 Q
A2 K2 L1 M1 1 B3 L2 M2 N1
N1 B2 2 K2 M3
3
K2 M3
Component Summary
A B K L M N
P: 2 4 10 1 13 2
Q: - 3 6 2 11 1
Component Requirements
Item: P Q A B K L M N
Demand: 50 70 20 25 - - - -
Inventory: 20 30 10 15 90 50 300 40
Computation of Net Requirements of Item-M
Where- Qty/set Gross Requirements Gross Available

used Rqmnt Total Avbl Total
P 13 50 650 20 260
Q 11 70 770 30 330
A 6 20 120 10 60
B 3 25 75 15 45
M 1 nil nil 300 300
Total 1615 995
Net Requirements = 1615 995 = 620

MRP Logic
So this table computes
gross requirements and availability
Then the difference is the net requirement
Is this correct?
Correct provided B can be disassembled to
get some M to assemble Q
What are + / - with this disassembly
assembly
Cannibalization (if technically feasible)
Pros
High Responsiveness
Low inventory Low cost
Cons
Quality
Re-planning effort
Rework loss of productivity high cost
Potentially loss of customers, if not properly managed

MRP Logic
Notice that this method allows
cannibalization
Should we allow cannibalization?

MRP system
Inputs for MRP:
BoM, Inventory, MPS, lot sizes, lead-times
Output:
Order release schedule for production and
purchase items

MRP Logic
MPS MPS - Master Inventory
Production Schedule
is a schedule of market-deliverable
products - with time-phased quantities
Net
The
Independent
The result
item
netisof
Inventory:in
These
These batches exploded
explode
demand
requirements
are
is
from
using
dependent
MPS
BoMor
in-process
offset
are batched
using isleadtime
to
demand
netted
using
finished
BoM Explode Lot This
against
determine
form
to is combined
inventory
lotdetermine
size itsorder
rules
with
constituents
releaseindependent
dates parts,
demand
if any from MPS
Offset and inventory to
obtain NET for next
Order releases: part
Feb 13, 2017 Production & Procurement
lsmurty@iimb.ernet.in 24
MRP Logic
MPS Inventory
Thus MRP system

Net
consists of four steps
net, lot, offset,
BoM Explode Lot explode
executed cyclically
to get order releases
Offset for all items
Order releases:
Feb 13, 2017 Production & Procurement
lsmurty@iimb.ernet.in 25
MRP System Illustration
P
2 each 3 each Period
0 1 2 3 4 5 6
C1 C2 Component P:
GR 50 75 90 100 35 100
SR 120 - - - - -
R1 1 unit 1 unit R2 OH 15 85 10 - - - -
NR - - 80 100 35 100
PR - - 180 - 135 -
PO - 180 - 135 - -
MRP Logic Component C1:

GR 20 360+20 30 300 25 25
Net SR 360
=380
- - - - -
Lot OH
NR
90 430
-
50
-
20
-
-
280
-
25
-
25
Offset PR
PO
-
-
-
330
-
-
330
-
-
-
-
-
Explode
180*2 135*2 + 30

MRP Some Features
Updation
Regenerative
Net change
Pegging
Implosion or where-used
Uncertainty
Safety stock
Safety time
MRP System - Precautions
MRP system works best when its inputs are
accurate.
Inventory:
Inventory record accuracy - the physical stock
should agree with the inventory records
Required accuracy - 98%
Why inventory records are not accurate?
Cycle counting is used to improve this accuracy

Bill of Materials:
accurate when each assembly list contains all
items with appropriate code, quantity and unit
of measurement
required accuracy: 98%
Why BoM accuracy is poor?
to improve accuracy: proper engineering
change management process and linking CAD
system to BoM of MRP system where possible
Master Production Schedule
Accurate when the quantities and times do not
change
but it is dependent on customers
hence we use the concept of time fence
LT
time fence
LT: Procurement, Production & Distribution lead-time
Any changes beyond time fence are ok
because theres time for the firm to react
changes within the time fence are
discouraged
Marketing versus Manufacturing conflict
Short term: manage market
Long term: continuous endeavor by the
production system to shrink time fence

Some methods to shrink time fence
Procurement: supplier development, storing
inventory
Production: improved production process and
layout, excess capacity, improved technology
Distribution: better distribution channel,
logistics
Could you give some examples?
Manage MPS Product Structure
Cost added
Lead-time
MTO / MTS
Product / Process Redesign
Procurement Process
Manage MPS Modular Design
Car Radio Radio
High variety and high
uncertainty
Modular design for PSU Rx DU
pooling variance
Phantom assemblies

Material Requirements Planning
Prerequisites:
Accurate BoM
INV
MPS Net Accurate inventory records
Accurate MPS
Gains:
Explode Lot Good info-processing
Problems:
Decision support? Lot Size
BoM Offset and Leadtime - Customization
`Feasibility?
Feb 13, 2017 Order Releases lsmurty@iimb.ernet.in 42

MRP System Capacity Issues
Setting them is called customization of the
MRP software
But what is the major drawback of MRP
System?
Think of your college days
Think of your boss assigning tasks to you
Yes capacity is the problem MRP
considers only requirements
MRP System Capacity Issues
Major drawback of MRP system:
it is not capacity sensitive - assumes infinite
capacity
result: possible infeasible schedule
So output of MRP is checked for capacity
feasibility at
each work center
each time period

Checking Capacity Feasibility
For each workcenter Re-routing
160
Order Capacity
140
Split/Shift Expansion
120
Total Load (hours)
100
Total Load (hours)

80
Capacity (hours)
60
40
20
0
1 2 3 4 5 6
Weeks

Manufacturing Resources
Planning (MRP II)
Closed loop MRP
MRP Order shifting

Capacity Order splitting
Requirements Re-routing
Planning No Sub-contracting
F?
F?: Feasible?

Planning
Any number of iterations like this need not
lead to feasible schedule - if MPS is
infeasible
So similar feasibility check is made for
MPS also - it is called RRP (Resource
Requirement Planning)
Likewise Rough Cut Capacity Plan is done
to check feasibility of aggregate plans
Manufacturing Resources Planning-MRP II
Marketing Business Plans Financial

Plans F?
Objectives
APP
RCCP
F?
MPS
RRP
F?
MRP
CRP
F?
Planning
The focus of attention in this system is on
resource feasibility (rather than mere
requirement dates) - hence the name
Manufacturing Resources Planning (MRP II
- the suffix to distinguish it from MRP)
It integrates all planning decisions of the
Operations function

MRP II System Classification
CLASS D
The system works only in EDP.
Master Schedules and Inventory Records are
inaccurate.
CLASS C
The System is used for inventory ordering.
Shortage lists override and Master Schedule is
inaccurate.
CLASS B
MRP, Capacity Planning, and Inventory
Control are in place and used.
The System is not used to run the business.
Shortage lists override.

CLASS A
MRP, Capacity Planning, Shop Floor
Dispatching, and Vendor Scheduling systems
are in place and used.
Companywide game plan including sales,
finance, manufacturing, purchasing and
engineering.
What-if capability
No overriding expedition or shortage lists
System superiority improves D A.
Why do we need this classification?
Determinants of system performance:
Data discipline class D
Process orientation class C
Enterprise systems- class B
Decision-making class A

It is the belief that if all these are in place
the system performance is superior
Oliver Wight developed ABCD Checklist
Diagnostic questions with audit facilitation
Helps to determine the class system belongs to
The system has to be class A to adopt ERP

Evolution of Planning Systems
Enterprise focus
ERP
Marketing Finance Manufacturing HR
Function focus
Function-task focus MRP MRP II

Enterprise Resources Planning
Functional task focus: Operations functions,
production planning - MRP
Function focus: Operations function with all
operations planning decisions integrated -
MRP II
Enterprise focus: All functional areas are
integrated - Enterprise Resources Planning -
ERP
ERP Corner Stones
Information
ERP
Process Planning
Enterprise Systems
Sales / operations planning
ATP (Available To Promise)
Cash collection systems
Customer credit rating system
Competitors profile
Costing system
back
SAPs R/3 - An ERP Product
Comprehensive
Business functionality
process
solutions FI
SD Financial
Sales &
Accounting
Distribution
MM CO
Materials Controlling
Mgmt.
PP PS
Client / server
architecture
Production
Planning R/3 Project
System
Open
systems
QM
Quality
Client / Server AM
Manage-
ment PM
ABAP/4 Fixed Assets
Mgmt.
Plant Main- WF
tenance Workflow
IS HR
Industry Human
Solutions Resources
Designed
Comprehensive for all types
implementation support: of business
Business
FebEngineering
13, 2017 Workbench lsmurty@iimb.ernet.in 60
Enterprise Resource Planning
System (software?)
Organisation-wide seamlessly integrated
database
Processes embedded
Comprehensive decision making supported

MRP

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

MRP

Încărcat de

Drepturi de autor:

Formate disponibile

Material Requirements Planning

Feb 13, 2017 lsmurty@iimb.ernet.in 1

Feb 13, 2017 lsmurty@iimb.ernet.in 2

C 100 5 25 80 25 5 Setups ICC

EOQ(C) 100 100 40 3 200

OUR 130 110 2 90

Feb 13, 2017 lsmurty@iimb.ernet.in 3

Feb 13, 2017 lsmurty@iimb.ernet.in 5

Chassis assembly Body

Rear Axle Front Axle

Feb 13, 2017 lsmurty@iimb.ernet.in 8

Feb 13, 2017 lsmurty@iimb.ernet.in 9

Feb 13, 2017 lsmurty@iimb.ernet.in 10

Feb 13, 2017 lsmurty@iimb.ernet.in 11

Feb 13, 2017 lsmurty@iimb.ernet.in 14

Where- Qty/set Gross Requirements Gross Available

Net Requirements = 1615 995 = 620

Feb 13, 2017 lsmurty@iimb.ernet.in 19

Feb 13, 2017 lsmurty@iimb.ernet.in 21

Feb 13, 2017 lsmurty@iimb.ernet.in 22

Feb 13, 2017 lsmurty@iimb.ernet.in 23

Thus MRP system

MRP Logic Component C1:

Feb 13, 2017 lsmurty@iimb.ernet.in 26

Feb 13, 2017 lsmurty@iimb.ernet.in 28

Feb 13, 2017 lsmurty@iimb.ernet.in 31

Feb 13, 2017 lsmurty@iimb.ernet.in 34

Feb 13, 2017 Order Releases lsmurty@iimb.ernet.in 42

Feb 13, 2017 lsmurty@iimb.ernet.in 44

Total Load (hours)

Feb 13, 2017 lsmurty@iimb.ernet.in 45

MRP Order shifting

Feb 13, 2017 lsmurty@iimb.ernet.in 46

Marketing Business Plans Financial

Feb 13, 2017 lsmurty@iimb.ernet.in 49

Feb 13, 2017 lsmurty@iimb.ernet.in 51

Feb 13, 2017 lsmurty@iimb.ernet.in 53

Feb 13, 2017 lsmurty@iimb.ernet.in 54

Marketing Finance Manufacturing HR

Function-task focus MRP MRP II

Comprehensive decision making supported

Feb 13, 2017 lsmurty@iimb.ernet.in 61

S-ar putea să vă placă și