Session 4 - MRP (MS)

Component Availability for MRP Calculations - item availability is considered to be at the (1) of the week in which they are displayed

(1) beginning

MRP Creates a _______________ (1) consisting of _______________(2) receipt and releases.

1. priority plan 2. planned order

MRP is the set of (1) for planning component items below the (2) level.

1. priority planning techniques 2. end item

3 types of Bill of Materials Explosion

1. single level 2. indented 3. summarized

MRP net requirements

derived as a result for applying gross requirements and allocations against inventory on hand, scheduled receipts, & safety stock

BOM is used in Service and Repair to:

determine the replacement parts necessary to repair a broken assembly

BOM is used in Engineering Change Control to:

document changes made in the design of a product and the components used; the recording and control of changes to the product and the BOM are absolutely essential.

BOM is used in Costing to:

enable cost accounting to determine the quantity of direct materials consumed in making specific products

To create a priority plan MRP uses a process called:

*lead time offsetting and exploding

*note the difference between BOM and planning bill

*BOM lists components necessary to build an end product (specific model bicycle) *planning bill - plans material requirements for a FAMILY of end products (ex. average bicycle)

Product Structure File inputs into MRP Process *Data *Description

*Data - BOM *Description - components required and quantity of each component per parent

Item Master File inputs into MRP Process *Data *Description

*Data - Planning factors *Description - lot size, lead time, yeild and scrap factors, safety stock

MPS Inputs into MRP Process *Data *Description

*Data - planned/scheduled orders for end items *Description - end item quantities; end item due dates

Inventory Record File inputs into MRP Process *Data *Description

*Data-inventory Status *Description - component and end items on hand, allocated or on order

planner/material planner (APICS-D)

*personal normally responsible for managing inventory levels, schedules and availabilty of selectted items (mfg or purcahse) *in MRP, person responsible for reviewing and acting on order release, action, and exception messages from the system *releases planned orders and firmed planned orders *expedite, de-expedite, change, cancel planned orders

purchased item

*a component that has no other component going into it; it cannot be a subassembly

Summarized Bill of Material (APICS-D)

*a forem of multilevel BOM; lists all parts and their quantities required in a given product structure *unlike the indented bill it does not list the levels of manufacture and lists a component only once for the total quantity used

BOM (Bill of Materials)

*a listing of all the subassemblies, intermediates, parts, raw materials that go into a parent assembly showing the quantity of each required to make the assembly *list of all material needed to make one production run of a product, by a contract manufacturer, of piece parts or components for its customers

*where-used list

*a listing of every parent item that calls for a given component, and the respective quantity required, from a bill of material file. *lists all items/parents where a materail is used whether ornot there is a currrent demand for the parent

Planning Horizon (APICS-D)

*amount of time a plan extends into the future *for a master schedule, it is normally set to cover a minimum lead time plus time for lot sizing low level components and for capacity changes or primary work centers or key suppliers *number of periods in the record - should be as long as the cumulative lead time

2 major business functions of MRP

*creates a time phases plan that determines what is needed to make a product and when *maintain and adjust the priority plan to account for changes

*pegging report

*focus is on the component *lists the parents creating a demand for a component for which there is a current requirement. Includes the components by parent + quantities demanded by period uses: -assess the impact of component shortages on a current due dates (priority plans) for parent items requiring the same components in the same period

*where used report

*focus is on the component *lists the parents in which a component is used whether or not there is a current requirement for it *inversion of BOM information uses: -identify parents affected by an engineering change -assess aggregate impact of costing change -assess the impact of component scarcity

Bill of Materials is also known as

*formula, receipt or ingredients list in certain process industries

Production Activity Control

*function of routing and dispatching the work to be accomplished through the production facility and of performing supplier control. *encompasses the principles, approaches and techniques needed to schedule, control, measure and evaluate the effectiveness of production operations

*MRP - independent vs. dependent demand

*independent demand - demand for an item is independent of any other item (depends on forecast, customer orders or both) *dependent demand is calculated by MRP after independent demand is entered - MRP calculates the number of all compnents required

Projected Available Balance (APICS-D)

*inventoty balance projected in the future *quantity shown in this row is considered availalbe at the end of the period during MRP calculations

Closed Loop MRP System

*is one example of a manufacturing planning and control system

*pegging (APICS-D)

*it shows only those parents for which there is an existing requirement *in MRP & MPS the capability to identify for a given item the sources of its gross requirements and/or allocations. *Pegging can be thought of as active where used information.

3 Components of Lead Time offsetting and Exploding are:

*lead time - time takes to make a subassembly or component or receive delivery of a purcased component *offsetting - process of determining when a planned order release is needed in advance of the planned order receipt date of the item *exploding - process of determining the total of each component needed for a parent

*planned order, firm planned order and open orders

*planned order created by MRP software; moves with MRP runs based on MRP changes in system; created when there are net requirements after MRP nets inventory *firm planned order - planner overrides MRP logic and the planned order is excluded from MRP runs; planned order becomes "locked" *open order - has been released into production or purchasing for action

firm planned order (APICS-D)

*planned order that can be frozen in quantity and time; computer is not allowed to change it automatically; changes become the planner's responsibility

*scheduled receipts

*planned orders that have already been released or placed with suppliers and the factory and have receipt dates within the planning horizon

PAC (acronym for:)

*production activity control *is an output of MRP

MRP keeps priorities current by

*reacting to changes in supply and demand *expedite, de-expedite, add, cancel or change planned orders

*Events that follow the release of a planned order

*release of a planned order by a planner with the assistance of hte mrp logic ensures that the work is done in time to meet the net requirments 1-release planned order 2-scheduling a reciept 3-creating an open order 4-allocating the components to the order Page: 4-52 diagram

planned order (APICS-D)

*suggested order qty, release and due date created by planning system logic when it encounters net requirements in processing MRP *planned by the computer, exist only in computer & may be changed or delted by the computer during MRP runs if conditions change *at one level will be exploded into gross requirements for components at the next level *and released orders serve as input to capacity requirements planning

cumulative lead time

*the longest planned length of time to accomplish the activity in question *equal to the longest lead time among all the BOM parths below the end item *it is found ny reviewing the lead time for each BOM path below the end item; whichever path adds up to the greatest number defines cumulative lead time

planning horizon

*the number of periods in the planning record *it should be as long as the cumulative lead time which is equal to the longest lead time among all the BOM paths below the end item

*planned order receipt

*the quantity planned to be recieved at a future date as a result of a planned order release

What is one objective of MRP?

*to keep priorities current

7 areas where BOM is used

-product definition -engineering change and control -planning -customer service -manufacturing -service and repair -costing

MRP Logic creates the priority plan through:

1- exploding and offsetting requirements 2- calculating gross and net requirements

2 major functionsof MRP planning software

1- perform gross to net, lead time offset and explosion calculations 2-create action and exception messages

6 key points about BOMs

1-all manufactured end items have a BOM 2-end items usually have multilevel bill consisting of 2 or more single bills 3-all single level bills consist of a parent & components below it 4-for each assembly made by the manufacturer (not purchased) there also will be a single level bill 5-the parent in a subassembly single bill is also a component of a final assembly or a subassembly 6-if a part has no other parts going into it on the BOM, it is a purchased part

*2 Major Functions of the Role of MRP Software in Using and Managing Priority Plan

1-perform gross to net, lead-time offset and explosion calculations - given an end item due date MRP performs gross to net offsetting and explosion calculations for end items and components quicklly, accurately and in high volumes 2-creates action and exception messages ~ actions and eceptions messages are critical to planners in managing the priority plan because planners monitor the messages to guide them to take actions manage orders

MRP is a set of techniques that used (1), (2), and (3) to calculate requirements for materials.

1. BOM Data 2. Inventory Data 3. Master Production Schedule

*3 MASTER PLANNING AND CONTROL FUNCTIONS THAT MRP IS LINKED TO:

1. MASTER SCHEDULING-MPS established specific end item due dates & quantities. MRP = component planner - it calculates a time based priority plan; of order release/receipt dates + final assembly operation 2. CAPACITY REQUIREMENS PLANNING - MRP is only valid if ther eis sufficient production capacity when its needed. 3. PRODUCTION ACTIVITY CONTROL - MRP is the input to PAC - it plants the release and receipt date of orders but purchasing and PAC must implement and control these orders

*4 major data inputs of MRP process

1. MPS - master production schedule 2. Product Structure File 3. Inventory Record File 4. Item Master File

2 inputs of priority plan

1. Master production Schedule 2. Material Requirements Planning

Subassemblies and purchased components are(1) components of the assemblies they go into but they are also (2) of the subassemblies and purchased components that go into them.

1. components 2. parents

Two major objectives of MRP

1. determine requirements 2. keep priorities

MRP Benefits

1. due dates inthe priority plan 2. status of materials and production 3. advises planners when to release planned orders 4. advises whento expedite or take action to maintain due dates in priority plan 5. repland MRP on aperiodic basis to update Material Requriements, due dates and inventory status.

3 Examples of MRP Planning software calculations

1. explodes BOM for determining end item component quantities down to raw material level 2. checking inventory records for quantity on hand; on order or allocated 3. offsetting order release/receipt dates for net component and raw material requirements from end item due date

4 pieces of information each material listed on BOM has

1. unit of measure 2. unique part number 3. description 4. quantity needed

MRP determines requirements by asking these 3 questions:

1. what is required to manufacture end item 2. what quantity of each is required 3. when will orders be released/received for purchased components and/or manufactured or assembled components *aka - what, how and when.

Net Requirements - Formula

= gross requirements - scheduled receipts - projected available

Projected Available Balance - Formula

= running sum of on hand inventory - requirements + scheduled receipts and planned orders

Gross Requirements - Formula

=total independent and dependent demand for a component before netting of on hand inventory and scheduled receipts

CRP

Capacity Requirements Planning is the check against capacity availability

events affecting the priority plan

External *changes to customer orders *supplier shortages *late deliveries Internal *lower yeilds or higher scrap *late or early open order completions *capacity or resource shortages *material shortages caused by inaccurate inventory

*two sets of actions avilable to the planner when internal/external events affect the plan

Maintain Priorities by expediting, de-expediting or changing requirements Replanning by changing end item due dates

MRP

Materials requirement planning.

Single Level Bill of Material (APICS-D)

a display of components that are directly used in a parent item. It shows only the relationship one level down.

Indented Bill of Material (APICS-D)

a form of multilevel BOM; exhibits highlest level parents closest to the left margin, and all the components going into these parents are show indented toward the right. All subsequent levels of components are indented farther to the right. *if a part is used more than once it will appear under EACH subassembly in which it is used

PEGGED REQUIREMENT (APICS-D)

a requirement that shows the next-level parent item (or customer order) as the source of demand

MRP Capcity Check

a second capacity check is performed focusing on resources available to meet due dates in the priority plan at the component level

lead-time offset

a technique used in MRP where a planned order receipt in one time period will require the release of that order in an earlier time period based on lead time for the item

Planning BOM

an artificial grouping of items or events in BOM formate used to facilitate master scheduling and master planning,

scheduled receipt

an open order (PO or work order) that has a scheduled receipt

independent demand (APICS-D)

demand for an action that is unrelated to the demand for other items. ex: finished goods; parts for destructive testing; service parts

a subassembly parent can also be a

component of an assembly or subassembly

BOM is used in Customer Service to:

configure make to order products during order entry.

priority plan

function of determining what material is needed & when.

BOM is used in Planning to:

identify the materials that have to be scheduled to make an end product and what components have to be purchased or made to satisfy the MPS.

net requirements (APICS-D)

in MRP the net reqruiements for a part of an assembly are derived as a result of applying gross requirements and allocations against inventory on hand, scheduled reciepts, and safety stock. Net requirements become planned orders.

RCCP (ROUGH CUT CAPACITY PLANNING)

in master scheduling is used to check the MPS against available capacity at end item level

multilevel BOM

is a collection of single level bills

MRP is the bridge between

master planning and production in the factory

*Parent vs. Component

parent =the upper level item/assembly produced from one or more components components = parts that go into an assembly **a multilevel bill illustrates that subassemblies + purchased components are components of the assemblies that they go into but are also parents of subassemblies + components that go into them

Lest Time for a material extablished the offset of the:

planned order release from the planned order receipt

Bill of Material explosion (APICS-D)

process of determining component identities, quantities per assembly, and other parent/component relationship data for a parent item

planned order receipt

quantity planned to be received at a future date as a result of a planned order release.

parent/child relationship (APICS-D)

refers to the logical linkage between higher and lower level items in the bill of material

BOM is used in Product Definition to:

specify the components needded to make the product. This occurs early in product design process as engineers discover the best way to design and make the product

MRP is NOT normally programmed to release planned orders because

that is the planner role; planners bases decisions on action and excedption messages in MRP

Pegging in MRP & MPS

the capability to identify for a given time the sources of its gross requirements or allocations

priority planning

the function of determining what material is needed and when, and maintaining proper due dates for required materials

component

the raw material, part or subassembly that goes into a higher level assembly, compound or other item

*gross requirement

the total of independent and dependent demand for a component before the netting of on-hand inventory and scheduled receipts

*gross requirement (APICS-D)

the total of independent and dependent demand for a component before the netting of on-hand inventory and scheduled receipts

exploding

using the BOM to calculate component quantities