IME 410 MRP testarooni
Root causes of unsuccessful implementation of MRP
1. management not sincere/ no project management 2. People resist change
inputs to the MRP s
1. master production schedule 2. inventory records (IMF) 3. BOM
scrap compensation
due to the inherent scrap in any production, extra production must be scheduled to produce the desired end amount. to account for scrap, MRP increases the planned order release from the amount needed for the planned order receipt planned order release = planned order receipt(1 - scrap factor)
MRP operational issues: types or orders
planned orders (not authorized or open) Planned Order Released row of MRP table open orders (SCHEDULED/active/open/authorized... get recommendation from computer) Planned Order Receipt row or MRP table firm planned orders (own flashcard) past due orders (TROUBLESOME ISSUE (own flashcard))
Manufacturing efficiency
(sum of theoretical RT)/ Actual MFG lead time
dependent demand
- directly related to the demand for higher-level assemblies or products - can be calculated through MRP
MRP operational issues: pegging requirements** KNOW WELL
- scarce resources - tracing the gross requirements of a component item to its parent parts planned order releases (flip what we do in MRP calculations) - single-level or multi-level pegging possible
MRP operational issues: MRP planners (soldiers in trenches!!)
- see everything 1st hand - release the orders; reschedule if necessary - revise/update the MRP planning data; eg: SS, lot sizes, LT - identify sources of data inaccuracy - suggest enhanced system's and/or management reports (if the software provided doesn't cut it ... change it !!!)
routing file (input of CRP)
- sequence of operations for the job; work centers to be used - possible alternate WC(s) - tooling at each operation - Set up (SU) times and run times (RT)
managing the MRP... the planner receives feedback from many sources such as...
- suppliers' actions through purchasing - changes to open orders in the factory such as early/late completions or differing quantities - management actions such as changing the MPS
what happens when an order is released?
-planned order receipt cancelled -scheduled receipt created
objectives of MRP
1) determine requirements 2) keep priorities current determine what components are needed to meet the MPS, and based on lead time, to calculate the periods when the components must be available
objectives of mrp
1. determine requirements 2. keep priorities current
Actual LT
= (fudge factor) * ( Theoretical LT)
past due orders: example
A (1 - level 1) B (2 - level 2) C (1 - level 3) if A is past due, B and C are past due if past due at B/C levels: better start at level A - offset GR by LT - drop POREL to GR for B - offset GR by LT - drop POREL to GR for C - offset GR by LT
Which is greater, Actual MFG LT or Theoretical MFG LT
Actual MFG LT is greater than Theoretical MFG LT
Where use needs ____
BOM
CRP input and output (capacity resource planning ... timing: capacity reported daily)
CRP inputs: - open orders (working on it rn) - future planned order releases (needs to be imported) - routing file (how I make the product ... where does it travel - work center file ... **CAPACITY RESIDES ON WORK CENTER** CRP outputs: - WC load report (open and planned orders per unit time) - revised capacity plan (revised schedule of planned factory order releases)
validation between the PAC --> MRP validation between PAC <--> Purchasing & Supply Chain validation between MRP --> Purchasing & Supply Chain
Closed loop system (#3 on image) - prompt and real-life feedback - problem if not a closed-loop
What is the root cause of past due orders
Customer order time is shorter than cumulative lead time
FPO
Firm planned orders happen when changes need to be made to the mrp/ a planner will override the computer (changes occur at scheduled receipt or planned order release rows)
Objective of ERP
Integrate financials
What drives mrp
MPS
CRP process
MPS MRP Open orders & planned orders enough capacity? No Additional capacity possible? No reschedule enough capacity? Yes PAC Additional capacity possible? Yes Additional capacity costs okay?? Yes PAC Additional capacity costs okay?? No reschedule
MRP techniques: capacity requirements planning (CRP)
MRP priority plan must be checked against available capacity. if the capacity is available, the plan can proceed. if not, either capacity has to be made available or the priority plans must be changed
Pegging needs ___
MRP table
safety stock policy
NOTHING below safety stock always that much MINIMUM
Firm planned order (FPO)
OLPlanned order that can be frozen in time and qty; computer isn't allowed to change it automatically, must be done by planner in charge of item; this technique can aid planners working with MRP systems to respond to material and capacity issues what causes this: -- external issues: customer changes orders, suppliers change -- internal issues: assembly issues: personnel and machinery issues changes affect: SR and POREL rows scenario: SR quantity of 100 units cannot be delivered in full amount in period 2 solution alternative 1 (all solution alternatives MUST be reviewed by all the entities/customers that may be impacted): delay to period 3 * once moved to period 3: FIRM ORDER* solution alternative 2: divide 100 units between period 2 (30 FO) and period 3 (70 FO) -- bolded once it becomes a FO when MRP runs again, algorithm follows the BOLDED NUMBERS and will not change anything during the designated time fence
CRP inputs
Open orders Future Planned Order Releases Routing File Work Center File
vertical dependency
The relationship between a parent item and a component in its bill of material that defines the need for the component based on producing the parent, without regard to the availability of other components at the same level in the bill of material.
horizontal dependency
The relationship between the components at the same level in the bill of material, in which all must be available at the same time and in sufficient quantity to manufacture the parent assembly
past due orders
VISCIOUS/TOXIC ORDERS - when customer due date or promised date IS LESS THAN the cumulative lead time: -- one or more parts at the purchase level and/or at the low fabrication and assembly levels are forced to have a shorter LT and hence MUST BE EXPEDITED this creates: - unfavorable, costly & chaotic situations
how to improve the mfg LT
WT + MT + QT + SU + RT WT & MT: modern material technology & facility design QT: pull system/queue management SU: SMED ≤ 9 minutes RT: faster equipment ($$), increase operators, training, WS ergonomics critical WIP: enough material to leave the door
capacity definition and terms: manufacturing lead time (cycle time)
WT + MT + QT + SU + RT note 1: EDC affects the RT and possibly the SU time note 2: only value added term is RT note 3: ACTUAL MFG LT >> THEORETICAL MFG LT manufacturing efficiency = (sum(theoretical RT)/Actual MFG LT)) theoretical LT * fudge factor = actual MFG lead time (trying to reduce... ideally 1)
What components of lead time are highly variable?
WT, MT, QT
CRP output
Work Center Load Report (open and planned orders per unit time) Revised Capacity Plan (Revised Schedule of planned factory order releases)
little's law: GRAPH stuff
Y axis: throughput X axis: WIP graph: production production rate plateaus: bottleneck rate DOES NOT GO TO INFINITY: misconception ** if you decrease CT incrementally, you could bring the production rate a littleeee but it will flatten out after a while**
components that go into the MRP: BOM
a list of all the subassemblies, intermediates, parts, and raw materials that go into making the parent assembly showing the quantities of each required to make an assembly
Queue management
actual - planned = delta input of WC: actual input - planned input = delta(i) IDEAL DELTA: 0 output of WC: actual output - planned output = delta(0) inventory changes = beginning inventory at the WC + AI - AO (everything you start with - what you need to do output) beginning inventory at the WC: the previous WC ending inv
MRP operational issues: scrap factor
is NOT included in the algorithm (gives a false feeling) - formula: correction for scrap = requirements/(1 - scrap rate) - example: demand = 100 units for a certain sub-assembly X ... scrap rate is 5%. The corrected requirements for X will be 100/(0.95) = 106 - may be covered by SS ** this way we account for scrap by allotting more inventory **
BOM: formats for bills: summarized parts list
lists all the parts needed to make one complete assembly. the parts list is produced by the produce design engineer and does not contain any information about the way the product is made or assembled
MRP is the system used to avoid...
missing parts by establishing a schedule showing the components required at each level of the assembly, and based on lead times, calculates the time when these components will be needed
scrap rate correction example
organizational POV: not good.. stores massive amount of raw material in order to do scrap rate... instead: carry safety stock & bring the yield DOWN A is parent to B and C B is parent to D and E requirements for A: 100 units scrap rate for Assembly A: 10% scrap rate for assembly B: 5% requirements for B & C: 100/0.9 = 112 units (always round up) requirements for D & E: 112/0.95 = 118 units although one can easily incorporate the scrap rate correction into the MRP computational algorithm, it would inflate all the lower level requirements and typically gives the wrong message to MRP planners. Instead, it is more common to carry safety stocks as a "just-in-case" policy and then improve the process to decrease and eventually eliminate the manufacturing scrap.
MRP is a...
priority plan for the components needed to make the products in the MPS MUST BE CHECKED AGAINST CAPACITY
goal for MRP & life??¿¿¿
simplify automate integrate
capacity definition and terms: theoretical (available) capacity vs effective (rated) capacity
theoretical (available) capacity versus effective (rated) capacity: theoretical capacity: 3 machines X 2 shifts X 8 hours/shift = 48 hours labor efficiency: labor std hours/actual hours = 0.8 -- impacts set up time and run time machine utilization: actual hours used/available hours = 0.9 theoretical capacity & labor efficiency decrease theoretical efficiency effective daily capacity (EDC) = 48*0.9*0.8 = 34.56 std hours (34.56 < 48 when taking planning into account) **EDC < theoretical available capacity** EDC directly affects the RT aspect of the manufacturing cycle time (CT). however, depending on the available/utilized technology, it may affect SU as well
BOM: formats for bills: multiple bill
used when companies usually make more than one product, and the same components are often used in several parts: usual with FAMILIES OF PRODUCTS.
MRP determines:
what to order how much to order when to order when to schedule delivery
components that go into the MRP: inventory records
when a calculation is made to find out how many are needed, the quantities available must be considered. within inventory master file: need: planning factors - includes information such as order quantities, lead times, safety stock, and scrap need: status of each item - MRP system needs to know much is available, how much is allocated, and how much is available for future demand
BOM: formats for bills -- multi-level bill
when single-level components have been expanded into their components multilevel bills: formed as logical groupings of parts into subassemblies based on the way the product is assembled convention of multi-level bills: last item on the tree are all purchase items -- a BOM is not complete until all branches of the product structure tree end in an purchase part
MRP is capacity ___
insensitive
LITTLE'S LAW
TH = WIP/CT TH = units/time for a given CT, as WIP increases, TH increases, but is limited by the bottleneck rate for a given WIP, as CT increases, TH increases (up to IEs to decrease CT!!!) findings: throughput is limited by bottlenecks!! decrease the cycle time to increase the throughput
capacity work center file (input of CRP)
capacity (including efficiency and utilization factors) queue time wait time (from - to); move time (from - to) SU similarity matrix (from job to job)
root cause of past due orders
due date to customer / delivery time IS LESS THAN the cumulative lead time needed to complete order
Types of changes that affect MRP
external- customer order changes, supplier issues internal- machine break down, maintenance ( order quantities will not change but time frame will)
pegging requirements example
if we have problems receiving part Y, pegging traces it up to the PLanned Order Release (and GR) of the parent part's requirements. Additionally, a multi-level upward pegging may be processed until we can identify the end-customer(s), where corrective actions must take place NEEDS MRP table where-used file DOES NOT need MRP table: needs BOM
how do you reduce inventory
increased planned output planned output > planned input
Service parts have what kind of demand
independent and dependent
EDC (effective daily capacity) effects the __
Run Time possibly Set Up Time
where does an order appear once it is released?
Scheduled orders
What kind of companies use BoB (best of breed)
Small companies - bob are small computer packages that don't encompass all of mrp
Littles law
TH = Wip /CT Throughput rate = work in progress/ Cycle time
As Wip increases
TH increases, but is limited by bottleneck rate
MRP is a backwards scheduling model T or F
TRUEEE!!
Work Center File
-Capacity (efficiency and utilization) -Queue time -Wait time -Move time -Set up similarity matrix
MRP operational issues: lot sizing policies (also depends on who is supplying it for you)
- a dozen different techniques available - typical policy for MFG parts is L4L -- perfect as long as yeild is good, NO leftover inventory which is IDEAL - for purchasing parts: timing, quantity, and cost issues are considered (EOQ at lower level items -- purchase parts)
examples of independent demand
- finished goods - end items - service/replacement parts
MRP operational issues: Safety stock policies
- for BTS mfg, carry SS at end-item level - for ATO mfg, may carry SS at common sub-assembly levels - for BTO mfg, may carry SS at raw material *** CARRY AT MPS LEVEL/STAGE WITH LEAST AMOUNT OF PRODUCT OPTIONS*** - for MFG parts, may carry SS if the reject rate is unpredictable - for service parts, may carry SS at that particular level of MFG/assembly
examples of dependent demand
- manufactured parts - purchase parts used in final good products
MRP techniques: releasing orders
- means that authorization is given to purchasing to buy the necessary material or to manufacturing to make the component. - before a manufacturing order is released, component availability must be checked. - when a manufacturing order is released, the computer will allocate the required quantities of a parent's components to that order. *** This does not mean the components are withdrawn from inventory, but that the projected available balance is reduced *** scheduled receipts: orders placed on manufacturing or on a vendor and represent a commitment to make or buy... row shows the quantities ordered and when they are expected to be completed and available open orders: scheduled receipts on the MRP record are open orders on the factory or a vendor and are the responsibility of purchasing and of production activity control (PAC). when the goods are received into inventory and available for use, the order is closed out & the scheduled receipt disappears to become part of on-hand inventory net requirements: the actual amount needed in each time period (modified version of gross requirements equation) net requirements = gross requirements - scheduled receipts - available inventory
independent demand
- not related to the demand of any other product - MPS items are independent demand items - does not relate to the demand for any other assemblies or products, so it MUST BE FORECASTED
Material Requirements Planning (MRP) Process
- planning and control take place for each component on the bill - purpose: determine the components needed, quantities, and due dates so items in the master production schedule are made on time MRP TECHNIQUES USED TO DO SO: -exploding and offsetting - gross and net requirements - releasing orders - capacity requirements planning - low-level coding and netting - multiple bills of material
an MRP must be able to...
- reorganize priorities to keep plans current - add/delete/expedite/delay & change orders
Weaknesses of MRP
-Assumes constant Lead time - Assumes infinite inventory capacity
Routing file
-Sequence of operations (work centers to be used) -Possible alternative work centers -Tooling at each operation -Set up time and Run time
MRP planner considers priority, bottom-up replanning, and reducing system nervousness in managing the MRP
1) priority: maintaining the correct due dates by constantly evaluating the true date-date need for releasing orders & expediting or de-expediting (pg 82) 2) bottom- up replanning: action to correct for changed conditions should occur as low in the product structure as possible (make changes on component before parent) 3) reducing system nervousness: the planner must judge whether the changes are important enough to react to and whether an order should be released... method of reducing system nervousness = firm planned orders
uses for the BOM
1) product definition: specifies the components needed to make the product 2) engineering change control: product design engineers sometimes change the design of a product and the components used 3) service part: replacement parts needed to repair a broken component are determined from the BOM 4) planning: BOM defines what components have to be purchased or made to satisfy the MPS 5) order entry: the order-entry system often configures the end product bill of materials 6) manufacturing: BOM provides a list of parts needed to make or assemble a product 7) costing: BOM provides not only a method of determining direct material, but also a structure for recording direct labor and distributing overhead.
what places do we look at capacity?
1. Production Plan (RRP) 2. MPS (RCCP) 3. MRP (CRP)
responsibilities of MRP planners
1. launch (release) orders to purchasing or manufacturing 2. reschedule due dates of open (existing) orders as required 3. reconcile errors and try to find their cause 4. solve critical material shortages by expediting or replanning 5. coordinate with other planners, MPSrs, production activity control, and purchasing to resolve problems
important points about the BOM:
1. the bill of material shows all parts required to make ONE of an item 2. each part or item has only one part number. A specific number is unique to one part and is not assigned to any other part. If a part number appears on two different bills of material, the part so identified is the same 3. a part is defined by its form, fit, or function. If any of these change, then it is not the same part and it must have a different part number. for example, if the part could be painted in three different colors, then each must be identified with its unique number
process efficiency
= (sum of value added elements)/ (sum of value added and non value added elements)
Theoretical capacity
Available capacity capacity that does not take into account efficiency "capacity in a perfect world" ex 3 machines, 2 shifts, 8 hours per shift = (3 x 2 x 8) = 48 hours total capacity
Data integrity for a Class A mrp 2 practitioner
BOM file accuracy - 99% or better Inventory master file accuracy - 99% or better Routing file accuracy - 95% or better
inputs for MRP
BOM, MPS, Inventory master file
ind/dep demand: service part
BOTH
when to go to the ~cloud~
BTS: YES CLOUD small company no complex customization variable products diversification/customization: NO CLOUD too many things to keep track of
MRP techniques: exploding and offsetting
EXPLODING & OFFSETTING: lead time: span of timing needed to perform a process -- order preparation + queueing + processing + moving + receiving + inspecting + expected delays exploding the requirements: exploding is the process of multiplying the requirements by the usage quantity and recording the appropriate requirements throughout the product tree offsetting: offsetting is the process of placing the exploded requirements in their proper periods based on lead time planned orders: if planned to receive 50 units of part A in week 5 and the LT to assemble A is 1 week, the planned order release & production are in week 4
what comes out of the MRP engine
Manufactured Orders (M.O) ---> production activity control (PAC) Production Orders (P.O) ---> purchasing and supply chain
what does MRP stand for
Material Requirements Planning
BOM: formats for bills -- product tree
Product tree: convenient way to think about bill of material, but it is seldom used except for teaching and testing ---- it shows parent & component (single level structure)
What component of LT is constant ?
RT
Effective Capacity
Rated Capacity takes into account labor efficiency and machine utilization EDC= effective daily capacity EDC = Available capacity x labor efficiency x machine utilization = 48 x .8 x .9
MRP techniques: low level coding & netting
a component may reside on more than one level in a bill of material. if this is the case then it is necessary to make sure that all gross requirements for that component have been recorded BEFORE NETTING TAKES PLACE. must find net requirements at level 1 (parent) before level 2 (component) low-level code: lowest level on which a part resides in all bills of material (low = highest number). procedure: 1. starting at level zero of the tree, determine if any of the parts on that level have a low-level code (these parts can be netted and exploded down to the next level (to their components)) 2. move down to level 1 on the product tree and repeat step 1. 3. move down to level 2 on the product tree... purchase part?? no explosion needed.
BOM: formats for bills: planning bill
artificial grouping of components for planning purposes. they are used to simplify forecasting, master production scheduling, and material requirements planning. does not represent buildable products, but an average product
administrative and operational issues with MRP II
data validity (#1) data integrity (#2) closed-loop system (#3)
challenges and opportunities associated with MRP II (continuation of the administrative and operational issues 1, 2, 3)
assumptions of constant lead times MFG lead time: WT + MT + WT + SU + RT -- HIGHLY VARIABLE: WT, MT, QT -- CONSTANT: RT, SU assumption of infinite capacity -- ** MRP is capacity INSENSITIVE -- MRP computations DO NOT INCLUDE CAPACITY -- ** MRP I known to be an infinite capacity and backward scheduling system** -- *MRP II is capacity SENSITIVE financial integration - ERP implementation - objective of ERP: integrate financials with business interactions (in manufacturing environment) -- very challenging ERP vs best of breed (BOB) - ERP (enterprise resource planning: mix of financials, engineering, and field services) - BOB is best for smaller companies computer solutions that are functionally very rich but do not encompass full process - field of middle wear (besides ERP & BOB): not mature -- always determine the TCO (total cost ownership) when considering a technology change (boundaries of time are well defined) make note of: --- front cost (hardware/software) --- training cost --- future revenue (?) --- lifecycle cost Enterprise Data Analytics 1) top of business (use for marketing) 2) MES system design 3) supply chain (all predictive/descriptive/prescriptive/diagnostic models)
How long should the planning horizon be?
at least as long as cumulative lead time
purpose of mrp
backwards scheduling
BOM: formats for bills: single-level bill
contains only the parent and its immediate components advantages of using a single-level bill: 1. duplication of records is avoided 2. the number of records and the file size are reduced by avoiding duplication of records 3. maintaining bills of material is simplified
EXCEPTION & TRANSACTION MESSAGES
exception messages: problems need to be addressed by the planner - components for which planned orders are in the action bucket and should be considered for release - open orders for which the timing or quantity of scheduled receipts does not satisfy the plan transaction messages: planner must tell the MRP software of all actions taken that will influence the MRP records - when the planner releases and order, or a scheduled receipt is received, or when any change to the data occurs, the MRP program must be told
what goes into MRP & what validation goes into it (front end)
front end: top level planning and validation business plan S & OP PP MPS data validity (#1 on image) - is it a realistic/doable plan?? - if checks and balances are not done, it is not valid - is PP in balance with RRP? - is MPS realistic with RCCP??
where-used reports
gives the same information as bill of material, but the where-used report gives the parent for a component whereas the bill gives the component for a parent. where-used: a listing of all the parents in which a component is used
basic MRP record
important points: 1. current time is the beginning of the first period 2. top row shows periods, called time buckets. These are often a week but can be any length of time convenient to the company 3. number of periods in the record is called the planning horizon, which shows the number of future periods for which plans are being made. it should be at least as long as the cumulative product lead time 4. an item is considered available at the beginning of the time bucket in which it is required 5. the quantity shown in the projected available row is the projected on-hand balance at the END of the time period 6. the immediate or most current period is called the action bucket. a quantity in the action bucket means that some action is needed now to avoid a future problem 7. a bucketless system shows only the time buckets which have MRP activity omitting the time periods with no activity
As CT decreases TH__
increases
input/output of MRP
input: MPS BOM inventory capacity output: time-phased manufacturing and purchase orders - for raw materials - for components
input/output of MPS
input: production plan forecasts customer orders inventory capacity output: detailed plan: - by week - by end Item
input/output of production plan
input: - business plan - financial plan - marketing plan - capacity output: - aggregate plan - by-product groups - inventory levels
MRP techniques: gross & net requirements
involve what inventory is available and calculating quantities to be produced. Net Requirements = Gross Req - Inventory Available
MRP techniques: multiple bills of materials
most companies make more than one product and often use the same components in many of their products. The MRP system gathers the planned order releases from all the parents and creates a schedule of gross requirements for the componenets
material planner works with three types of orders: planned, released and & firm
planned orders: automatically scheduled and controlled by the computer. released orders: releasing, or launching, a planned order is the responsibility of the planner. When released, an order becomes and open order to the factory or to purchasing & appears on the MRP record as a scheduled receipt firm planned orders: the computer-based MRP system automatically recalculates planned orders as the gross requirements change at times
what goes into MRP & what validation goes into it (planning data)
planning data -- > MRP engine data integrity (#2 on image) - also data accuracy - are the IMF, BOM, and routing files accurate and up to date? - routing files: what workstations will it go to * IMF, BOM, and routing files directly coming into the MRP* * CAPACITY SITS AT WORK STATIONS *
MRP planning drives, or is the input to...
production activity control (PAC) & purchasing -- they must plan and control the performance of the orders to meet the due dates MRP plans the release and receipt dates for orders
MRP is a scheduling ___ system
push
MRP operational issues: Administration of MRP
regeneration (not responsive) - take all past data - regenerate all documents - make a new file net change - at any given time if there's a customer change we can do it - random access - very responsive --> reactive ** TOO MANY CHANGES AT TOP LEVEL & RANDOM ACCESS = NERVOUS SYSTEM** new product: 1) regen on sunday 2) within a week: net change
pegging report
shows only those parents for which there is an existing requirement, whereas the where-used report shows all parents for a component. pegging report: shows the parents creating the demand for the components, the quantities, and when they are needed
components that go into the MRP: MPS
statement of which end items are to be produced, the quantity of each, and the dates they are to be completed. it drives the MRP system by providing the initial input for the items needed
BOM: formats for bills: indenting bill
the bill uses indentation as a ways of identifying parents from components the components are linked to their parents by indenting them as subentries and by listing them immediately below the parents
bill of material processor
the computer software that organizes and maintains the bills of material structures and their linkages
summary
the job of the MRP is to produce the right amount of components at the right time so that the MPS can be maintained. The MRP depends on accurate bills of material and on accurate inventory records. the MRP process uses the bill of materials that lists components used to make a product, the lead time to make or obtain those components, and the existing inventory of those components to calculate a series of planned order releases to obtain or make components to meet future product needs
what is included in the routing file:
the steps or process used to make the parent or the components
What is greater, theoretical capacity or effective capacity?
theoretical capacity is greater than effective capacity
