2. Structure of the MRP System MRP by period report MRP by date report Planned orders report Purchase requirements Exception reports MRP Programs Master Production Schedule BOM Lead Times (Item Master File) (Bill-of-Material) Inventory Data Purchasing data

3. Master Production Schedule Drives MRP process with a schedule of finished products Quantities represent production not demand Quantities may consist of a combination of customer orders & demand forecasts Quantities represent what needs to be produced, not what can be produced

4. Master Production Schedule

5. Clipboard Rivet (2) Iron Rod (3 in.) Spring (1) Spring Steel (10 in.) Level 0 Level 1 Level 2 Level 3 Bottom Clip (1) Top Clip (1) Pivot (1) Sheet Metal (8 in 2 ) Clip Assembly (10) Sheet Metal (8 in 2 ) Product Structure Tree Board (1) Pressboard (1) Finish (2oz.)

6. Indented Bill of Material LEVELITEMUnit of MeasureQuantity 0 - - - -ClipboardEa1 - 1 - - -Clip AssemblyEa10 - - 2 - -Top ClipEa1 - - - 3 -Sheet MetalIn 2 8 - - 2 - -Bottom ClipEa1 - - - 3 -Sheet MetalIn 2 8 - - 2 - -PivotEa1 - - - 3 -Iron RodIn3 - - 2 - -SpringEa1 - - - 3 -Spring SteelIn10 - 1 - - -RivetEa2 - 1 - - - BoardEa1 - - 2 - - Press BoardEa1 - - 2 - - FinishOz2

7. The MRP Matrix Item name or number identifying scheduled item LLC low-level-code; lowest level at which item appears in a product structure

8. Parts Of MRP Matrix Lot size order multiples of this qty; can be min/max qty LT ( lead time) time from order placement to receipt PD ( past-due) orders behind schedule Gross requirements demand for item by time period

9. Scheduled receipts quantity already on order & receipt date released orders become scheduled receipts Projected on hand expected on-hand inventory at beginning of period Net requirements net amount needed after on-hand adjustments Planned order receipts net requirements adjusted for lot-sizing Planned order releases planned order receipts offset by lead time

10. The Alpha Beta Company ItemOn HandScheduled Receipts Lot SizeMPS A 1001100, period 8 B 5 01200, period 6 C 1400150- - - D200250, period 2250- - - A LT=3 C(3) LT=4 D(2) LT=2 D(3) LT=2 B LT=2

11. MRP Matrices For A & B

12. MRP Matrices For C & D

13. Alpha Beta Planned Order Report PeriodItemQuantity 1C150 2D250 3D250 4B195 5A 90

14. Forecast & Firm Orders Material Requirements Planning Aggregate Production Planning Resource Availability Master Production Scheduling Shop Floor Schedules Capacity Requirements Planning Realistic? No, modify CRP, MRP, or MPS Yes MRP and The Production Planning Process

15. Increased customer satisfaction due to meeting delivery schedules Faster response to market changes Improved labor & equipment utilization Better inventory planning & scheduling Reduced inventory levels without reduced customer service Mechanism for communication between departments MRP Benefits

16. Computer system Mainly discrete products Accurate master production schedule Accurate inventory status 99% inventory accuracy Stable lead times © 1984-1994 T/Maker Co. MRP Requirements

17. Inventory Accuracy 1. Maintain orderly stockrooms 2. Control access to stockrooms 3. Establish & enforce procedures for inventory withdrawal 4. Ensure prompt and accurate entry of inventory transactions 5. Take physical inventory count on a regular basis 6. Reconcile inventory discrepancies in a timely manner (use cycle counting)

18. Inventory Hides Problems Poor Quality Unreliable Supplier Machine Breakdown Inefficient Layout Bad Design Lengthy Setups

19. Lower Levels Of Inventory To Expose Problems Poor Quality Unreliable Supplier Machine Breakdown Inefficient Layout Bad Design Lengthy Setups