1. Chapter 15 Resource Requirements Planning: MRP and CRP

2. Overview of MRP Master Production Schedule Bills of Material File Inventory Transactions Data Exception Reports MRP System Inventory Status File Changes to Planned Orders Planned Order Schedule Performance Reports Planning Reports Primary Outputs Secondary Outputs MRP Inputs MRP Outputs MRP Computer Program

3. Inventory Status File 1 record for each part number Each record may contain the following information –part number –description –supplier(s) –# units on hand –safety stock –order quantity –lead time –# units already allocated (reserved, ear-marked) –open orders –# units –receive date –other information

4. Product Structure Tree A 2B 3C D 3E2D H 4G 2F 2E 3J A1 B C D E F G H J 1. How many of each part are needed to make one end item A? 2. If the warehouse has 2000 E’s, 800 F’s, 220 H’s, and 2500 J’s, then how many units of A can be produced? (A product structure tree is one way to display the information from a bill of material.)

5. At 8:00 in the morning an important customer places an order for as many units of item A as you can deliver by 5:00 that afternoon, and offers to pay a 30% premium for the item since this is a rush job. Subcomponents can be assembled very quickly if all of the lower level components are on hand. The lowest level materials are ordered from suppliers and it is not possible to place and receive an order from the suppliers on such short notice. So any units shipped must be produced with inventory you have on hand. The indented bill of materials for item A is shown below. Inventory records show the quantity in the warehouse for all relevant items. How many units of item A can be shipped by 5:00?

6. Indented Bill of Materials Inventory on Hand Level: 0123 ItemQuantity A A 45 B(2) B 150 D(3) C 20 E(5) D 700 F(3) E 200 G F 1200 C(4) G 100 F(2) H 1100 D(2) H(3)

7. A 2B4C 2F2D3H3D5EG 3F OH1st2nd3rd4th A45 B150 C20 D700 E200 F1200 G100 H1100 Iterations (1 st page) Total # of A’s:

8. A 2B4C 2F2D3H3D5EG 3F OH1st2nd3rd4th A4500 B150 140 C20 0 D700 400 E200 F1200 G100 H1100 Iterations (2 nd page) Total # of A’s:

9. A 2B4C 2F2D3H3D5EG 3F OH1st2nd3rd4th A45000 B150 1400 C20 00 D700 140 E200 F1200 640 G100 H1100 260 Iterations (3 rd page) Total # of A’s:

10. The product structure tree for end item A is shown below. The following quantity of each item is available in inventory: A—20, B—40, C—0, D—30, E—180, F—120. Assembly of an item can be done quickly if all necessary materials are available. If there is no time to order any additional materials, what is the maximum number of end item A’s that can be produced and shipped from materials on hand? A 4B3C D2E3E 2F Answer: 35 A’s

11. Order Quantity Restrictions (lot size rules) LFL – lot-for-lot Q – specified order quantity (multiples) 400+ – minimum order quantity

12. 12345 5000+Gross Req. 10,0007,500 LT=2Scheduled Rec. 5000 OH=5000Available SS=2500Net Req. Alloc=2000Pl. Or. Receipt Pl. Or. Release MRP Table

13. Evolution of MRP MRP – Material Requirements Planning MRP II – Manufacturing Resource Planning ERP – Enterprise Resource Planning ????