Session 10 Material Requirements Planning http://www. pom Session 10 Material Requirements Planning http://www.pom.edu/mpc/lectures_in_manufacturing_planning.htm lecture session 10 Material Requirements Planning: Role in the MPC System Evolution in Material Planning Basic MRP of Record Processing Information Timing Technical Issues

Manufacturing Planning and Control System

Evolution in Material Planning Independent vs. Dependent Demand Items MRP Closed loop MRP systems MRP II (Manufacturing Resource Planning) ERP

Basic MRP Records and Record Processing: Example Develop an MRP spreadsheet record for six periods using the following parameters for the item: Period 1 2 3 4 5 6 Gross requirements 20 20 20 30 30 30 Lead time 1 period Lot size 40 units Safety stock 0 units Inventory 2 units Scheduled receipt 40 units in period 1

Basic MRP Records and Record Processing: Example (Continued) In what periods are there planned order releases? What happens to the timing, number of planned order releases, and average inventory (for periods l through 6) if 10 units of safety stock are required? What happens to the timing, number of planned order releases, and average inventory (for periods 1 through 6) if a one-period safety lead time is used instead of the safety stock?

Basic MRP Records and Record Processing No safety stock Three planned orders in periods 2, 3, and 5. Average projected inventory is 15.33 units.

Information Timing Gross Requirements - Beginning of Period Scheduled Receipts - Beginning of Period Projected Available Balance - End of Period Planned Order Release - Beginning of Period

Basic MRP Records and Record Processing (Continued) Safety stock of 10 units Q = 40, LT = 1, SS = 10 Three planned orders in periods 1, 3, and 4. Two planned orders were moved up because of the safety stock requirement. Average projected inventory is 28.67 units.

Basic MRP Records and Record Processing No safety stock Three planned orders in periods 2, 3, and 5. Average projected inventory is 15.33 units.

Basic MRP Records and Record Processing (Continued) Safety Lead Time of 1 period Three planned orders in periods 1, 2, and 4. All of the planned orders were moved up by 1 period to account for the safety lead time. Average projected inventory is 35.33 units. Using safety stocks or safety lead time causes the system to hold more inventory and order earlier. The safety lead time causes all orders to be held an extra period in inventory

Technical Issues Net Requirements Lot Sizing Lot-For-Lot (L4L) Fixed Order Quantities (Q) Safety Stock and Safety Lead Time Incorporating Service Part Demand Scheduled Receipts versus Planned Order Releases Firm Planned Orders