Process Planning

Longrange

Strategic Capacity Planning

Intermediaterange
Manufacturing

Aggregate Planning
Services

Master Production Scheduling

Material Requirements Planning
Order Scheduling
Shortrange

Weekly Workforce &

Customer Scheduling
Daily Workforce &
Customer Scheduling

Master Production Schedule

(MPS)
Time-phased plan specifying how many and
when the firm plans to build each end item.
Aggregate Plan
(Product Groups)

MPS
(Specific End Items)

MRP
MPS

Inv..

Net
Explode

Lot
Offset

BOM
Order Release

Prerequisites
Accurate BOM
Accurate Inv..Records
Accurate MPS
Gains
Good Info-Processing
Problems
Decision Support
Feasibility?

MRP
ERP - Evolution
MRP - Materials Requirement Planning
Functional Task Focussed

MRP II - Manufacturing Resource Planning

Function Focussed

ERP - Enterprise Resource Planning

Organization Focussed

Example of MRP Logic and

Product Structure Tree
Given the product structure tree for A and the lead time and demand
information below, provide a materials requirements plan that defines
the number of units of each component and when they will be needed.
Lead Times
A
1 day
B
2 days
C
1 day
D
3 days
E
4 days
F
1 day

Product Structure Tree for Assembly A

A
B(4)
D(2)

C(2)
E(1)

D(3)

Demand
Day 10 50 A
Day 8
20 B (Spares)
Day 6
15 D (Spares)

F(2)

First, the number of units of A are scheduled backwards to

allow for their lead time. So, in the materials requirement plan
below, we have to place an order for 50 units of A on the 9th
day to receive them on the 10th day.

Day:
A Required
Order Placement

10
50

50

LT = 1 day

Next, we need to start scheduling the components that make up A. In

the case of component B we need 4 Bs for each A. Since we need 50
As, that means 200 Bs. And again, we back the schedule up for the
necessary 2 days of lead time.
A
B

Day :
R e qu ire d
O rd e r P la c em e n t
R e qu ire d
O rd e r P la c em e n t

20

LT = 2

20

50
20 0

Spares
4x50=200

B(4)

C(2)
E(1)

D(3)

F(2)

Finally, repeating the process for all components, we have the

final materials requirements plan:
A
LT=1
B
LT=2
C
LT=1
D
LT=3
E
LT=4
F
LT=1

Day:
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement

10
50

200

D(2)

20

20

50
200

10
50

200
100

55
20

400

55

400

20

200

100
300

300

200
200
200

A
Part D: Day 6

B(4)
D(2)

C(2)
E(1)

D(3)

40 + 15 spares

F(2)

MRP
Three Principle Inputs to MRP Logic
Master Production/Maintenance Schedule (MPS/MMS)
Bill of Material (BOM)
Inventory Status (Inv.File)
What are we planning to make and when ? MPS
What ingredients we need to make/maintain?BOM
What do we already have on hand or order ? Inventory
Determine: What must we need to get and when?
Net Requirements

Closed Loop MRP

Production Planning
Master Production Scheduling
Material Requirements Planning
Capacity Requirements Planning

No
Feedback

Realistic?

Feedback

Yes
Execute:
Capacity Plans
Material Plans

Material Requirements Planning

MRP inputs
MPS/MMS
BOM
Item Master
MRP Logic
Explosion
Gross Requirements
Netting
Lot Sizing
Off setting

MRP Outputs
* MRP report
* Exception report
* Pegging report
MRP Processing
* Regeneration
* Net Change

MRP Example
Item
X
A
B
C
D

X
A(2)

B(1)
C(2)

C(3)

On-Hand Lead Time (Weeks)

50
2
75
3
25
1
10
2
20
2

D(5)

Requirements include 95 units (80 firm orders and 15 forecast) of X in

week 10 plus the following spares:
Spares

1
A
B
C
D

9
12

10

7
10
15

Spares

A
B
C
D

On-Hand
50
75
25
10
20

9
12

10

10
15

45
10
35
35
35

36

36

64

36
36
64
15
15

64
64
135
5
130
130

On-Hand Lead Time (Weeks)

50
2
75
3
25
1
10
2
20
2

A(2)

B(1)
C(2)

C(3)

Item
X
A
B
C
D

C Gross Requirements
LT=2 On-Hand=10
Net Requirements
Planned Order Receipt
Planner Order Release
D Gross Requirements
LT=2 On-Hand=20
Net Requirements
Planned Order Receipt

Item
X
A
B
C
D

D(5)

Lead Time (Weeks)

2
3
1
2
2

A(2)1

Week
X Gross Requirements
LT=2 On-Hand=50
Net Requirements
Planned Order Receipt
Planner Order Release
A Gross Requirements
LT=3 On-Hand=75
Net Requirements
Planned Order Receipt
Planner Order Release
B Gross Requirements
LT=1 On-Hand=25
Net Requirements
Planned Order Receipt
Planner Order Release
C Gross Requirements
LT=2 On-Hand=10
Net Requirements
Planned Order Receipt
Planner Order Release
D Gross Requirements
LT=2 On-Hand=20
Net Requirements
Planned Order Receipt
Planner Order Release

C(3)

B(1)
4

C(2)

D(5)
45
90
75
15
15
15

36

45
10
35
35
54

10
95
50
45
45

12
12
12

12
7
7

35

36
36
36
10
15
15

45
18
27
27

27
54

10

54
54

10
10

135
5
130
130

130

MRP
Purpose of MRP
Planning of purchase/production orders to support MPS

System Design Features

Items to include
Planning horizon
Time buckets
Planned and firm planned orders
Orders
Safety stock and safety lead time

Types of Time Fences

Frozen

No schedule changes allowed within this window.

Moderately Firm

Specific changes allowed within product groups as

long as parts are available.

Flexible

Significant variation allowed as long as overall

capacity requirements remain at the same levels.

Example of Time
Fences
Moderately
Firm

Frozen

Flexible

Capacity

Forecast and available

capacity
Firm Customer Orders

15

26

Weeks

MRP

Benefits
Greater inventory turnover
Shorter delivery lead time
prompt deliveries
Fewer reschedules
Fewer material expediters