Session 12 System Transactions The MRP Planner’s Job Transaction Example Key Transactions Concepts Procedural Inadequacies Example Complex Transactions Processing Company Examples Material Planning: Concluding Principles

The MRP Planner’s Job Primary Actions Release Orders Reschedule Open Order due dates Analyze and Update Planning Factors Reconcile Errors Problem Solving Use the system to solve critical material shortages Improve the system

Transaction Example Master production schedule The MPC system at the Duckworth Manufacturing Company is run each period to update the master production schedule (MPS) and MRP records. At the start of period 1, the MPS for end products A and B is: Master production schedule Period Number 1 2 3 4 5 6 Product A 10 - 25 Product B 20

Transaction Example: Problem 14 One unit of component C is required to manufacture one unit of either end product A or B. Purchasing lead time for component C is two periods. an order quantity of 40 units is users and no (zero) safety stock is maintained for this item. Inventory balance for component C is 5 units at the start of period l, and there's an open order (scheduled receipt) for 40 units due to be delivered at the beginning of period l. Complete the MRP record for component C as it would appear at the beginning of period 1.

Transaction Example (Continued: Component C) Period 1 2 3 4 5 6 Gross Requirements 15 20 25 10 Scheduled Receipts 40 Projected Available Balance 30 Planned Order Release Q = 40, LT = 2, SS = 0

Transaction Example Problem 14 (Continued) During period l , the following transactions occurred for component C: The open order for 40 units due to be received at the start of period l was received at the start of period 1 with a quantity of 30 ( 10 units of component C were scrapped on this order). An inventory cycle count during period l revealed that five units of component C were missing. Thus. an inventory adjustment of -5 was processed. Ten units of component C were actually disbursed (instead of the l5 units planned for disbursement to produce end products A and B). (The MPS quantity of 5 in period 1 for product B was canceled due to a customer order cancellation.) The MPS quantities for period 7 include 15 units for product A and 0 units for product B. Due to a change in customer order requirements, marketing has requested that the MPS quantity of 25 units for product A scheduled in period 3 be moved to period 2. An order for 40 units was released.

Transaction Example Problem 14 (Continued) Given this information, complete the MRP record for component C as it would appear at the beginning of period 2. What action(s) are required by the inventory planner at the start of period 2 as a result of transactions occurring during period 1?

Transaction Example (Continued) b. Component C Period 2 3 4 5 6 7 Gross Requirements 45 25 10 20 15 Scheduled Receipts 40 Projected Available Balance 20* -25 30 Planned Order Release Q = 40, LT = 2, SS = 0 *20 = 5 (Previous) + 30 (Receipt) - 5 (Adjustment) - 10 (Disbursement) The inventory planner should “expedite” the scheduled receipt from period 3 to be delivered in period 2.

Key Transactions Concepts Order Launching Allocation and Availability Checking Exception Codes Bottom-up Replanning

Procedural Inadequacies Example: Part A Consider the MRP record at right for Cactus Cups. 5 units of the scheduled receipt for 40 units due at the start of period 2 are scrapped during period 1. No scrap ticket is issued. Assume this lot isn’t counted before it’s put away in the stockroom at the start of period 2, but is recorded as a receipt of 40 units. What impact will these actions have on factory operations? Period 1 2 3 4 5 6 Gross requirements 25 30 15 10 Scheduled receipts 40 Projected Available Balance 35 20 Planned order releases Q = lot-for-lot; LT = 5; SS = 0

Procedural Inadequacies Example: Part B Without recording the scrap, the MRP record will appear as it does in the previous slide. If the scrap had been reported, it would be: The 5 unit shortage may not be discovered until period 4. At that time, it will be necessary to expedite the scheduled receipt of 15 from period 5 into period 4, and cover the deficiency in period 6. Period 1 2 3 4 5 6 Gross requirements 25 30 15 10 Scheduled receipts 35 Projected Available Balance -5 Planned order releases Q = LFL; LT = 5; SS = 0

MRP Record Relationships for Several Parts

Example MRP Record

Jet Spray MRP System Inquiry (part S3273) – Bucket-Less System

Jet Spray MRP System Exception Messages (part S3273)

Concluding Principles Effective use of an MRP system allows development of a forward-looking (planning) approach to managing material flows. The MRP system provides a coordinated set of linked product relationships, thereby permitting decentralized decision making on individual part numbers. A1l decisions made to solve problems must be done within the system, and transactions must be processed to reflect the resultant changes. Effective use of exception messages allows focusing attention on the "vital few," not on the "trivial many." System records must be accurate and reflect the factory's physical reality if they're to be useful. Procedural inadequacies in processing MRP transactions need to be identified and corrected to ensure material plans are accurate.