MRP: Material Requirements Planning

bill of materials (BOM)

document that shows an inclusive listing of all component parts & assemblies making up the final product. -dependent demand: internal demand for parts is based on the demand of the final product in which the parts are used (ie: subassemblies) direct relationship -independent demand: shows the parent-component relationships & the specific qty of components known as the planning factor. (often presernted as indented bill of materials)

parent

item generating demand for lower level components

scheduled receipt

a committed order awaiting delivery for a specific period

Material Requirements Planning (MRP)

a computer-based materials mgmt system that calculates the exact qty, need dates, and planned order releases for subassembles & materials required to manufacture a final product.

implosion

a look upward, to see a component and all the parents that it makes. used by buyers/planners when they want to look into possibly changing a part, so they know what it is used on.

gross requirement

a time phased requirement prior to netting out on-hand inventory and lead-time

low-level coding

assigns the lowest level on BOM to all common components to avoid duplicate MRP computations (ie steel bar in table 6.4)

components

parts demanded by a parent

firmed planned order

planned order that the MRP computer logic system does not automatically change when conditions change to prevent system nervousness

explosion

process of converting a parent item's planned order releases into component gross requirements

projected on-hand inventory

projected closing inventory at end of period. beginning inventory - gross requirement + scheduled receipt & planned receipt & planned receipt from planned order releases

safety stock

protects against uncertainties in demand supply, quality, and lead time

system nervousness

small changes in the upper-level production plan cause major changes in the lower-level production plan

planned order release

specific order to be released to the shop or to the supplier

lot size

the order size for MRP logic

net requirement

the unsatisfied item requirement for a specific time period. (gross requirement for period minus current on-hand inventory)

time bucket

time period used to the MRP. typically days or weeks

planning factor

number of components needed to produce a unit of the parent item

MRP requirements

-independent demand info -parent component relationship from BOM -inventory status of final products/components -planned order releases (output of the MRP system) -advantanges: provides planning info -disadvantages: loss of visibility, especially acute for products with a deep BOM & ignores capacity due to shop floor conditions