1. Operations Management Material Requirements Planning
Material Requirements Planning (MRP)
MRP Logic and Product Structure Trees
Time Fences
MRP Example
MRP II
Lot Sizing in MRP Programs
Benefits of MRP Programs
MBA.782.Mat'l.Reqm'ts.Planning 2 2

2. M. R. P. The Planning Hierarchy
Aggregate Production Planning
Forecast & Firm Orders
Master Production Scheduling
Capacity Requirements Planning
Material Requirements Planning
Purchase Orders & Shop Floor Schedules
MBA.782.Mat'l.Reqm'ts.Planning 22

3. _____________ demand drives MRP. MRP is a ______________ system.
M. R. P M.R.P. - Defined
Materials requirements planning (MRP) is the _________ for determining the number of parts, components, and materials needed to produce a product.
MRP provides time ________________ information specifying when each of the materials, parts, and components should be ordered or produced.
_____________ demand drives MRP.
MRP is a ______________ system.
MBA.782.Mat'l.Reqm'ts.Planning 3 3

4. __________ on demand of a finished good
M. R. P Types of Demand
Independent Demand
Requirements that are ____ related to the demands for any other product
Products that face the demand of the _____________
Demand must be ___________
Dependent Demand
__________ on demand of a finished good
Demands can be ____________
ordering in lots or batches, thus “ _______ ”
MBA.782.Mat'l.Reqm'ts.Planning

5. not replenished when inventory level is low
M. R. P Demand Patterns
What is “Lumpy” demand
results from need to have all components available ________ a production run begins
Lumpy demand items are manufactured / ordered in a ____ - ________ manner
“time phasing”
not replenished when inventory level is low
is replenished when ___________
MBA.782.Mat'l.Reqm'ts.Planning

6. Determines ________ unit numbers needed.
M. R. P. M. R. P. System Structure
The goal of MRP is getting “the right materials to the right place at the right time.”
Based on a master production schedule, a material requirements planning system:
Creates schedules identifying the _____________ parts and materials required to produce end items.
Determines ________ unit numbers needed.
Determines the _________ when orders for those materials should be released, based on lead times.
MBA.782.Mat'l.Reqm'ts.Planning 11 11

7. M. R. P System Structure
The theme of MRP is "getting the right materials to the right place at the right time." The objectives of inventory management under an MRP system are the same as under any inventory management system: to improve customer service, minimize inventory investment, and maximize production operating efficiency.
The philosophy of material requirements planning is that materials should be expedited (hurried) when their lack would delay the overall production schedule and de-expedited (delayed) when the schedule falls behind and postpones their need. Traditionally, and perhaps still typically, when an order is behind schedule, significant effort is spent trying to get it back on schedule. However, the opposite is not always true; when an order, for whatever reason, has its completion date delayed, the appropriate adjustments are not made in the schedule. This results in a one-sided effort—later orders are hurried, but early orders are not rescheduled for later. Aside from perhaps using scarce capacity, it is preferable not to have raw materials and work in process before the actual need since inventories tie up finances, clutter up stockrooms, prohibit design changes, and prevent the cancellation or delay of orders.
MBA.782.Mat'l.Reqm'ts.Planning 12

8. Aggregate Plan (Product Groups) MPS (Specific End Items)
Inputs to M.R.P. Master Production Schedule (MPS)
Time-phased plan specifying ____ ______ and ______ the firm plans to build each end item
Aggregate Plan
(Product Groups)
Master Production Schedule
 Decide which items to produce when
- so as to minimize the total costs
 Determine the feasibility of the Schedule
- does it meet demand
- are there capacity issues
- other constraints
- availability of supplies
- lead times
- policies / rules
- flexibility / contingencies
 Primary Objective of M.P.S.
- Sales - schedule to meet delivery needs
- on-time !
- Operations - efficient utilization
- avoid over / under loading
MPS
(Specific End Items)
MBA.782.Mat'l.Reqm'ts.Planning 8 8

9. Inputs to M.R.P. Master Production Schedule
MBA.782.Mat'l.Reqm'ts.Planning

10. MBA.782.Mat'l.Reqm'ts.Planning

11. Stock-Keeping-Unit ( _____ )
Inputs to M.R.P Inventory Record
Part number
Stock-Keeping-Unit ( _____ )
refers to a given part number at a given _________.
Captures ______ data about each SKU, including:
Quantity on hand
Quantity on order and when delivery is expected
Lead time
Ordering Policies
Other management data, e.g. part name, description, cost
MBA.782.Mat'l.Reqm'ts.Planning

12. A list of components and quantities needed to make _____ assembly
Inputs to M. R. P Bill of Materials
A list of components and quantities needed to make _____ assembly
each component has a unique part number
Provides product structure (tree)
Parents: Items _______ given level
Children: Items _______ given level
A purchased item has ___ children
Shows low-level coding
Lowest level in structure item occurs
Top level is 0; next level is 1 etc.
MBA.782.Mat'l.Reqm'ts.Planning 14

13. Bill of Materials Lead Times, Exploding, and Offsetting
Lead time: The time from when an order is placed until the part is _______ for use
Offsetting: Placing the requirements in their _________ time periods based on lead time
Exploding: Multiplying the parent requirements by the usage ___________ through the product tree
MBA.782.Mat'l.Reqm'ts.Planning

14. Bill of Materials Backward Scheduling
R = WK 10
Order for final assembly, item #A, due in week 20:
R = Release
F = Finish
Component part #P
F = WK 17
R = WK 17
Final assembly item #A
F = WK 20
R = WK 5
Component part #C
F = WK 13
R = WK 13
Subassembly part #I
F = WK 17
R = WK 7
Component part #S
F = WK 13 5 10 15 20
Time
Weeks
MBA.782.Mat'l.Reqm'ts.Planning 2

15. Problem 4.1 Number of Gs needed? Purchased components?
MBA.782.Mat'l.Reqm'ts.Planning

16. MBA.782.Mat'l.Reqm'ts.Planning

17. total units that are on order, but _____ yet received.
M.R.P. Worksheet Elements of Worksheet
Gross Requirements
the ________ demand derived from all parents at the MPS level and lower levels
Scheduled Receipts
total units that are on order, but _____ yet received.
Projected on-hand inventory (for a planning period) (aka. _________ __________ _____)
= On-hand Amount (from the previous period) + Scheduled Receipts + Planned Order Receipts - Gross Requirements
MBA.782.Mat'l.Reqm'ts.Planning

18. Net Requirement = Safety Stock - PAB, otherwise Net Requirement = 0
M.R.P. Worksheet Elements of Worksheet
Net requirements
If the Projected on-hand inventory (PAB) is ______ than the Safety Stock,
then.....
Net Requirement = Safety Stock - PAB,
otherwise
Net Requirement = 0
MBA.782.Mat'l.Reqm'ts.Planning

19. when we need to ________ the order considering the delay of lead time
M.R.P. Worksheet Elements of Worksheet
Planned Order Receipt
how much we need to put on order to _______ at the beginning of this planning period
Planned Order Release
when we need to ________ the order considering the delay of lead time
MBA.782.Mat'l.Reqm'ts.Planning

20. MBA.782.Mat'l.Reqm'ts.Planning

21. Problem 4.2
Given the following product tree, explode, offset, and calculate the gross and net requirements. All lead times and the quantities required are shown in parenthesis. The master production schedule calls for 70 J’s in week 7. There is a scheduled receipt of 50 K’s in week 3. There are 20 J’s, 100 L’s, and 200 N’s on hand.
MBA.782.Mat'l.Reqm'ts.Planning

22. Problem 4. 2 {Insert mba782mrpworksheetho. xls”APICS BSCM Prob. 4
Problem 4.2 {Insert mba782mrpworksheetho.xls”APICS BSCM Prob. 4.2(c)” here}
MBA.782.Mat'l.Reqm'ts.Planning

23. Problem 4.2 An item is available at the __________ of the period
Proj. Avail. Balance is at the _____ of the period
Planned order release becomes the gross requirement at the _____ ________ level
MBA.782.Mat'l.Reqm'ts.Planning

24. MBA.782.Mat'l.Reqm'ts.Planning

25. _____________ lot size
M.R.P. Planning Factors Lot Sizing Rules
Lot-for-Lot (L4L)
Order just __________ to meet net requirement
Fixed Order Quantity (FOQ)
_____________ lot size
Least Total Cost
finds the order quantity that comes closest to _____________ ordering costs with holding costs
Least Unit Cost
selects the lot size with the _________ cost per unit
MBA.782.Mat'l.Reqm'ts.Planning

26. _______ planned orders, and keep priorities current
M.R.P M.R.P. Outputs
The MRP logic will
Gross, net, offset, and explode requirements
_______ planned orders, and keep priorities current
Inventory status data
Action Notes
__________ new orders
adjust the due dates of scheduled receipts
Cancellations or suspensions of open orders
Capacity Reports
__________ time-phased labor requirements
MBA.782.Mat'l.Reqm'ts.Planning

27. MRP Benefits
____________ customer satisfaction due to meeting delivery schedules
____________ inventory levels without reduced customer service
Faster response to market changes
Improved labor & equipment utilization
Better inventory planning & scheduling
MBA.782.Mat'l.Reqm'ts.Planning 20

28. Distribution Resources Planning (DRP)
M.R.P Resource Planning
Distribution Resources Planning (DRP)
application of M.R.P. concepts to ___________
Manufacturing Resources Planning (MRP II)
ties M.R.P. to financial system
used by managers in _____ functional areas
Enterprise Resource Planning (ERP)
encompasses the customer and supplier firms
operate as if suppliers are ______ of the firm’s own processes
MBA.782.Mat'l.Reqm'ts.Planning

29. MRP in Services
Can be used when demand for service items is directly _________ __ or __________ from demand for other services
restaurant - rolls required for each meal
hospitals - implements for surgery and availability of personnel
MBA.782.Mat'l.Reqm'ts.Planning 33

30. _____ Knowledge and Acceptance
M.R.P Implementation Issues
Successful Implementation Requires
Management ___________
Computer Support
___________ and Realistic Input
B.O.M.s, M.P.S., Inventory status
Job Routings and Time Requirements
Machine Capacity
_____ Knowledge and Acceptance
MBA.782.Mat'l.Reqm'ts.Planning

31. MBA.782.Mat'l.Reqm'ts.Planning

32. Concepts / Terminology Review Lecture notes Recommended Problems
M.R.P Chapter Wrap-Up
Read Chapter 14
Concepts / Terminology
Review Lecture notes
Recommended Problems
MBA.782.Mat'l.Reqm'ts.Planning