Material Requirements Planning (MRP)

Accurate Records

Accurate inventory records or absolutely required for MRP (or any department demand system) to operate correctly, generally MRP systems require 99% accuracy, outstanding purchase orders must accurately reflect quantities and schedule receipts.

Lot-Sizing Techniques

*Lot-sizing decision-The process of, or techniques used in, determining lot size. *Lot-for-lot- A lot-sizing technique that generates exactly what is required to meet the plan. *Periodic order quantity-A lot-sizing technique that issues order on a predetermined time interval with an order quantity equal to all of the interval's requirements. * Economic order quantity- Expects a known constant demand and MRP systems often deal with unknown and variable demand Lot for lot techniques order just what is required for production based on net requirements. May not be feasible If setup costs are high, lot-for-lot can be expensive

Four approaches for integrating MRP and JIT

1. Finite capacity scheduling 2. Small Buckets 3. Balanced flow 4. Supermarkets

Material requirements planning (MRP)

A dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements.

Planning Bills

A material grouping created in order to assign an artificial parent to a bill of material; also called "pseudo" bills; used to group subassemblies to reduce the number of items planned and scheduled

Time fences

A means for allowing a segment of the master schedule to be designated as "not to be rescheduled."

Load Report

A report for showing the resource requirements in a work center for all work currently assigned these as well as all planned and expected orders. Tactics for smoothing the load and minimizing the impact of change lead time

Provides product structure

Bill of Material

Modular Bills

Bills of material organized by major sub assemblies or by product options

Order or lot splitting

Breaking up the order into smaller lots and running part ahead of schedule

Dependent Demand

Demand for items is dependent when the relationship between the items can be determined. For any product, all components of that product are dependent demand items.

Which system extend MRO II to tie in customers and suppliers?

ERP

System nervousness

Frequent changes in an MRP system.

Net requirements=

Gross requirements + Allocations - On-hand inventory- scheduled receipts

Pegging

In material requirements planning system, tracing upward the bill of material from the component to the parent item.

Bill of Material

Lists of components, their description, and the quantity of each required to make one unit of a product.

Part Period Balancing (PPB)

Looks at future orders to determine most economic lot size

MRP Management

MRP is a dynamic system, facilitates re-planning when changes occur, system nervousness can result from too many changes, time fences put limits on re-planning, pegging links each item to its parent allowing effective analysis of changes

A statement of what is to be produced, not a forecast of demand.

Master Production Schedule

Specifies what is to be made and when, must be in accordance with the aggregate production plan, result of the production planning process, including forecasts, is established in terms of specific products, is quite often fixed or frozen in the near term part of the plan, and rolls through time

Master Production Schedule

MRP II stands for

Material resource planning.

Can significantly simplify planning and scheduling

Modular Bills

Modules are not final products but components that can be assembled into multiple end items

Modular Bills

Overlapping

Sends part of the work to following operations before the entire lot is complete. Reduces lead time.

Operations splitting

Sends the lot to, two different machines for the same operation Shorter through out time but increased setup costs

The difference between a gross material requirements plan (gross mrp) and a net material requirements plan (net mrp) is:

The net MRP includes consideration of the inventory on hand, where as the gross MRP doesn't include the inventory consideration.

Lead Times

The time required to purchase, produce, or assemble an item In purchasing systems; the time between the recognition of a need and the availability of the item for production In production; the sum of the order, wait, move, setup, store, and run times

Dependent Demand in General

Used whenever a schedule can be established for an item

Items below given level are called

children

In a product structure diagram

children are found a every level of the diagram except the top level

Items above given level are called

parents

A lot-sizing procedure that orders on a predetermined time interval with the order quantity equal to the total of the interval's requirement is

periodic order quantity

Top level in a Bill of Material

0 level

Benefits of MRP

1) Better response to customer orders 2)Faster response to market changes 3) Improved utilization of facilities and labor 4)Reduced inventory levels

Effective use of dependent demand inventory requires the following

1) Master production schedule 2) Specifications or bill of material 3) Inventory availability 4) Purchase orders outstanding 5) Lead times

Distribution resource planning

A time phased stock-replenishment plan for all levels of a distribution network

Master Production Schedule

A timetable that specifies what is to be made and when

A_______ MRP system provides information to the capacity plan, to the master production schedule, and ultimately to the production plan.

Closed-loop

The Wagner-Whitin algorithm

Complex dynamic programming technique, assumes a finite time horizon Effective, but computationally burdensome