Material Requirements Planning Chapter 2

MRP in MPC

MRP and in MPC An MRP system translates the MPS’s into the detailed individual steps necessary to accomplish those plans. It also provides information to develop capacity plans. An MRP II system has a “what if” capability and involves other functions (e.g., sales, finance, human resources, accounting, etc.)

MRP Record Processing

MRP Terms Time bucket: period, e.g., 1 week. Planning horizon: number of periods. Lead time offset: offsets a planned order release from a required replenishment. Net requirement: difference between the gross requirements and the available inventory (including scheduled receipts).

Gross to Net Explosion and Lead Time Offsetting Explosion : process of translating an item’s requirements into component requirements, taking existing inventories and scheduled receipts into account. Basis for the concept of dependent demand. Precedent relationships: [from the BOM] indicate the order in which assembly must be done. MRP achieves the benefits of the backward scheduling and performs the gross to net explosion

Technical Issues Processing frequency – cost versus timeliness and accuracy Regeneration Net change Bucketless systems Lot sizing – setup cost versus carrying cost, cascading effect Safety stock, safety lead time Low-level coding

Technical Issues Pegging Firm planned orders Service parts Planning horizon Cumulative lead time Scheduled receipts vs. planned order releases

Using the MRP System MRP Planner- Primary actions [see list, p. 36] Order launching - process of releasing orders to the shop or to vendors; done when planned order release is in the action bucket. Allocation and availability checking - step prior to order launching that involves an availability check for the necessary component(s). Exception codes Bottom-up replanning - using pegging data to solve material shortage problems.

System Dynamics Transactions during a period. Rescheduling. Complex transaction processing. Procedural inadequacies – data auditing and reconciliation.

MRP Data Base Item master file - individual part data that is static. Subordinate item master file - information on part status. Bill of materials file - usually set up on a single-level basis; i.e., part number is linked only to part numbers of immediate components required to produce it.

MRP Data Base Location file - physical storage locations. Calendar file. Open order file - files of scheduled receipts (purchase orders and shop orders). Other file linkages: forecasting, capacity planning, production scheduling, cost accounting, budgeting, order entry, shop- floor control, distribution, invoicing, payroll, job standards, and engineering.

Concluding Principles Effective use of an MRP system allows development of a forward-looking (planning) approach to managing material flows. The MRP system permits decentralized decision making on individual part numbers. All decisions made to solve problems must be done within the system, and transactions must be processed to reflect the changes.

Concluding Principles Effective use of exception messages allows focusing attention on the “vital few,” not the “trivial many.” System records must be accurate and reflect the factory’s physical reality. Procedural inaccuracies in processing MRP transactions must be identified and corrected to ensure that material plans are accurate.

Homework Assignments Problems 2.6 and 2.14 Due Thursday, October 3 Use spreadsheets for the assignments