CHAPTER 14 - Material Requirements Planning (MRP)

INPUTS to MRP :
1. Master Schedule
- what end items to produce
- when are they needed
- how many
2. Bill of materials
- contains the components of producing 1 unit of the finished product
3. Inventory Records
- contains gross requirements
- scheduled receipts
- items on hand

Levels:

Summary:
Level Item Quantity
0 Chair 1
1 Leg Assembly 1
Seat 1
 Back Assembly 1
2 Legs 2
Cross bar 2
Side rails 2
Back Support 3
Problem:
1. Determine the quantities of B,C,D,E and F needed to assemble one unit of X.

B(2) C

D(3) E E(2) F(2)

E(4)

Summary for 1 unit of X:

Level Item Quantity
0
1

2. Determine the quantities of these components that will be required to assemble

10 X's taking into account the quantities on hand (i.e. in inventory) of various components.
Component On Hand
B 4
C 10
D 8
E 60

B(2) C

D(3) E E(2) F(2)

E(4)

Summary for 10 unitS of X:

Level Item Quantity
0
1

3
Problem:
1. Determine the quantities of B,C,D,E and F needed to assemble one unit of X.

Summary for 1 unit of X:

Level Item Quantity
0
1

2. Determine the quantities of these components that will be required to assemble

10 X's taking into account the quantities on hand (i.e. in inventory) of various components.
Component On Hand
B 4
C 10
D 8
E 60

Summary for 10 unitS of X:

Level Item Quantity
0
1

2
3
PROBLEM:

The following product structure indicates the components needed to assemble

one unit of product W. Determine the quantities of each component needed to
assemble 100 units of W.

Summary for 100 unitS of W:

Level Item Quantity
0
1

2
Problem: End item E is composed of 2 subassemblies: 2Bs and 3Js. B is assembles
using 4Js and 2Fs. Eighty units of end item E are needed at the beginning of week 6.
Three cases (30 units per case) of J have been ordered and one case is scheduled to arrive
in week 3, one in week 4 and one in week 5. Note: J must be ordered by the case, and B
must be produced in multiples of 120 units. There are 60 units of B and 20 units of J now
on hand. Lead times are two weeks each for E and B, and one week for J.

PRODUCT TREE

MASTER SCHEDULE:
Weeks Beginning 1 2
Quantity

Item E Beginning 1 2

Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release

Item B Beginning 1 2
Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release

Item J Beginning 1 2

Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release
ed to arrive

its of J now

3 4 5 6

3 4 5 6

3 4 5 6
3 4 5 6
Problem: End item E is composed of 2 subassemblies: 2Bs and 3Js. B is assembles
using 4Js and 2Fs. Eighty units of end item E are needed at the beginning of week 6.
Three cases (30 units per case) of J have been ordered and one case is scheduled to arrive
in week 3, one in week 4 and one in week 5. Note: J must be ordered by the case, and B
must be produced in multiples of 120 units. There are 60 units of B and 20 units of J now
on hand. Lead times are two weeks each for E and B, and one week for J.

PRODUCT TREE
E

B(2)

J(4) F(2)

MASTER SCHEDULE:
Weeks Beginning 1 2 3
Quantity

Item E (LT=2 wks) Beginning 1 2 3

Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release

Item B(order by multiples of 120)LT=2 wks Beginning 1 2 3

Gross Reqmts.
Scheduled Receipts
Planned on hand 60 60 60 60
Net reqmts
Planned order receipt
Planned order release 120
4*

Item J(by cases@30units)LT=1wk Beginning 1 2 3

Gross Reqmts. 480

Scheduled Receipts 30
Planned on hand 20 20 20 20
Net reqmts 460
Planned order receipt 480
Planned order release 480 160
J(3)

4 5 6
80

4 5 6

80

80
80
80

2*

4 5 6
 160

60 20 20
100
120

3*

4 5 6

240
30 30
50 30
160
160
14-5
End item P is composed of three subassemblies: K, L, and W. K is assembled using 3 G's and 4 H's;
L is made of 2 M's and 2 N's; and W is made of 3 Zs. On-hand inventories are 20 Ls, 40 Gs, and 200 Hs.
Scheduled receipts are 10 Ks at the start of week 3, 30 Ks at the start of week 6, and 200 Ws at the start of week 3.
One hundred Ps will be shipped at the start of week 6, and another 100 at the start of week 7. Lead times are two weeks
for subassemblies and one week for components G, H, and M. Final assembly of P requires one week. Include an extra
10 percent scrap allowance in each planned order of G. The minimum order size for H is 200 units. Develop each of the follow
a. Product structure tree
b. Master schedule
d. MRP for K, G, and H using lot-for-lot ordering

G(3) H(4)

MASTER SCHEDULE:
Weeks 1 2 3
Quantity

Item P (LT=1 wk) BEGINNING 1 2 3

Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release

Item K (LT = 2 wks) BEGINNING 1 2 3

Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release

Item G (LT = 1 wk)( + 10% scrap

allowance for orders)
Item G (LT = 1 wk)( + 10% scrap
BEGINNING 1 2 3
allowance for orders)
Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release

Item H (LT= 1 wk) (min. order

BEGINNING 1 2 3
size = 200 units)
Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release
t of week 3.
mes are two weeks
Include an extra
velop each of the following:

L W

M(2) N(2) Z(3)

4 5 6 7

4 5 6 7

4 5 6 7
4 5 6 7

4 5 6 7
14-5
End item P is composed of three subassemblies: K, L, and W. K is assembled using 3 G's and 4 H's;
L is made of 2 M's and 2 N's; and W is made of 3 Zs. On-hand inventories are 20 Ls, 40 Gs, and 200 Hs.
Scheduled receipts are 10 Ks at the start of week 3, 30 Ks at the start of week 6, and 200 Ws at the start of week 3.
One hundred Ps will be shipped at the start of week 6, and another 100 at the start of week 7. Lead times are two weeks
for subassemblies and one week for components G, H, and M. Final assembly of P requires one week. Include an extra
10 percent scrap allowance in each planned order of G. The minimum order size for H is 200 units. Develop each of the follow
a. Product structure tree
b. Master schedule
d. MRP for K, G, and H using lot-for-lot ordering
P

K L

G(3) H(4) M(2)

MASTER SCHEDULE:
Weeks 1 2 3 4
Quantity

Item P (LT=1 wk) 1 2 3 4

Gross Reqmts.
Scheduled Receipts
Planned on hand
Net reqmts
Planned order receipt
Planned order release

1*

Item K (LT = 2 wks) 1 2 3 4

Gross Reqmts.
Scheduled Receipts 10
Planned on hand 10
Net reqmts
Planned order receipt
Planned order release 90 70

3*

Item G (LT = 1 wk)( + 10% scrap

allowance for orders)
Item G (LT = 1 wk)( + 10% scrap
1 2 3 4
allowance for orders)
Gross Reqmts. 270 210
Scheduled Receipts
Planned on hand 40 40 40 23
Net reqmts 230 187
Planned order receipt 253 206
Planned order release 253 206

4*

Item H (LT= 1 wk) (min. order

1 2 3 4
size = 200 units)
Gross Reqmts. 360 280
Scheduled Receipts
Planned on hand 200 200 200 40
Net reqmts 160 240
Planned order receipt 200 240
Planned order release 200 240
 tart of week 3.
times are two weeks
ek. Include an extra
Develop each of the following:

L W

N(2) Z(3)

5 6 7
100 100

5 6 7

100 100

100 100
100 100
100 100

5 6 7

100 100
30
10
90 70
90 70
 5 6 7

19

5 6 7
 14-1
14-1
Given the following diagram for a product, determine the quantity of each
component required to assemble one unit of the finished product.

1 E

2*1=2 F(2) 1*1=1 G 1*1=1

2*2=4 J (2) 4*2=8 D(4) 2*1=2 L(2) 2*1=2 J(2) 4*1=4 A(4)

Summary for 1 unit of E:

Level Item Quantity
0E 1
1F 2
G 1
H 1
2J 6
D 10
L 2
A 4

B. Draw a tree diagram for the stapler:

Level 0 Stapler

Level 1 Top Assembly Base Assembly

Level 2 Cover Spring Slide Assembly Base Strike plate R.pad(2)

Level 3 Slide Spring

Page 24
 14-1

2*1=2 D(2)

Page 25
 14-2
14-2
The following table lists the components needed to assemble an end item,
lead times, and quantities on hand.

Item End B C D E F G H
LT(WEEK) 1 2 3 3 1 2 1 2
Amount on hand 0 10 10 25 12 30 5 0

20 End Item

2*20=40 B(2) 1*20=20 C

40-10=30 20-10=10
2*30=60 E(2) F(3) G(2) 2*10=20 E(2)

a. If 20 units of the end item are to be assembled, how many additional units of E are needed?
b. An order for the end item is scheduled to be shipped at the start of week 11. What is the latest
week that the order can be started and still be ready to ship on time?
Answer a> E = 60 +20+58=138
Answer b> Release Receipt
END-1 10 11
B-2 8 10
E-1 7 8
F-2 6 8
C-3 7 10
G-1 6 7
E-1 6 7
D-3 7 10
H-2 5 7
E-1 6 7
The order should be started not later than week 5 so that the scheduled shipment at week 11
can still be met.

Page 26
 14-2

3*20=60 D(3)
60-25=35
H(4) 2*35=70 E(2)
70-12=58

Page 27
 14-6
14-6
A table is assembled using three components, as shown in the accompanying product
structure tree. The company that makes the table wants to ship 100 units at the beginning
of day 4, 150 units at the beginning of day 5, and 200 units at the beginning of day 7.
Receipts of 100 wood sections are scheduled at the beginning of day 2. There are 120 legs\
on hand. An additional 10 percent of the order size on legs is added for safety stock.
There are 60 braces on hand with no safety stock requirement for braces. Lead times (in days)
for all items are shown in the following table. Prepare a material requirements plan using lot-for-lot
ordering.
Quantity Lead time
1-200 1 Table
201-550 2
551-999 3 Wood sections (2) Braces(3) Legs(4)

MASTER SCHEDULE:
Weeks 1 2 3 4 5 6 7
Quantity 100 150 200

Item
Table BEGINNIN
(LT=1 G 1 2 3 4 5 6 7
wk)
Gross
Reqmts. 100 150 200
Schedule
d
Receipts
Planned
on hand
Net
reqmts 100 150 200
Planned
order
receipt 100 150 200
Planned
order
release 100 150 200
Item 2*
Wood
section
(2) BEGINNIN
1 2 3 4 5 6 7
(LT=1 G
wk or 2
wks)

Page 28
 14-6
Gross
Reqmts. 200 300 400
Schedule
d
Receipts 100
Planned
on hand 100
Net
reqmts 100 300 400
Planned
order
receipt 100 300 400
Planned
order
release 100+300=400 400
3*
Item
Braces BEGINNIN
(3)(LT- G 1 2 3 4 5 6 7
varies)
Gross
Reqmts. 300 450 600
Schedule
d
Receipts
Planned
60
on hand 60 60 60
Net
reqmts 240 450 600
Planned
order
receipt 240 450 600
Planned
order
release 240 450 600
Item 4*
Legs (4)
(+10%
safety BEGINNIN
1 2 3 4 5 6 7
stock) G
(LT-
Gross
varies)
Reqmts. 400 600 800
Schedule
d
Receipts

Page 29
 14-6
Planned
120
on hand 120 120 120 28 58 58 75
Net
reqmts 280 572 742
Planned
order
receipt 308 630 817
Planned
order
release 308+630=938 817

Page 30
 14-6

Page 31
 14-6

817

308

630

Page 32
 sol'n14-6
14-6
A table is assembled using three components, as shown in the accompanying product
structure tree. The company that makes the table wants to ship 100 units at the beginning
of day 4, 150 units at the beginning of day 5, and 200 units at the beginning of day 7.
Receipts of 100 wood sections are scheduled at the beginning of day 2. There are 120 legs\
on hand. An additional 10 percent of the order size on legs is added for safety stock.
There are 60 braces on hand with no safety stock requirement for braces. Lead times (in days)
for all items are shown in the following table. Prepare a material requirements plan using lot-for-lot
ordering.
Quantity Lead time
1-200 1 Table
201-550 2
551-999 3 Wood sections (2) Braces(3) Legs(4)

MASTER SCHEDULE:
Weeks 1 2 3 4 5 6 7
Quantity 100 150 200

Item
Table BEGINNIN
(LT=1 G 1 2 3 4 5 6 7
wk)
Gross
Reqmts. 100 150 200
Schedule
d
Receipts
Planned
on hand
Net
reqmts 100 150 200
Planned
order
receipt 100 150 200
Planned
order
release 100 150 200
Item 2*
Wood
section
(2) BEGINNIN
1 2 3 4 5 6 7
(LT=1 G
wk or 2
wks)

Page 33
 sol'n14-6
Gross
Reqmts. 200 300 400
Schedule
d
Receipts 100
Planned
on hand 100
Net
reqmts 100 300 400
Planned
order
receipt 100 300 400
Planned
order
release 100+300=400 400
3*
Item
Braces BEGINNIN
(3)(LT- G 1 2 3 4 5 6 7
varies)
Gross
Reqmts. 300 450 600
Schedule
d
Receipts
Planned
60
on hand 60 60 60
Net
reqmts 240 450 600
Planned
order
receipt 240 450 600
Planned
order
release 240 450 600
Item 4*
Legs (4)
(+10%
safety BEGINNIN
1 2 3 4 5 6 7
stock) G
(LT-
Gross
varies)
Reqmts. 400 600 800
Schedule
d
Receipts

Page 34
 sol'n14-6
Planned
120
on hand 120 120 120 28 58 58 75
Net
reqmts 280 572 742
Planned
order
receipt 308 630 817
Planned
order
release 308+630=938 817

Page 35
sol'n14-6

Page 36
 sol'n14-6

817

308

630

Page 37
Problem:
The demand for subassembly S is 100 units in week 7. Each unit of S
Requires 1 unit of T and 2 units of U. Each unit of T requires 1 unit of V,
2 units of W and 1 unit of X. Finally, each unit of U requires 2 units of Y and
3 units of Z. One firm manufactures all items. It takes 2 weeks to make S,
1 week to make T, 2 weeks to make U, 2 weeks to make V, 3 weeks to make W,
1 week to make X, 2 weeks to make Y, and 1 week to make Z.
a. Construct the product structure tree.
b. Additional information is given below. Compute the MRP for each item.
Item On-hand inventory
S 20
T 20
U 40
V 30
W 30
X 25
Y 240
Z 40

MASTER SCHEDULE:
Weeks 1 2 3 4 5 6 7
Quantity

Item
(LT= BEGIN
NING 1 2 3 4 5 6 7
wk)
Gross
Reqmts.
Schedule
d
Receipts
Planned
on hand
Net
reqmts
Planned
order
receipt
Planned
order
release

Item (LT
= wks)
Item (LT BEGIN
= wks) NING 1 2 3 4 5 6 7

Gross
Reqmts.
Schedule
d
Receipts
Planned
on hand
Net
reqmts
Planned
order
receipt
Planned
order
release

Item (LT BEGIN

= wks) NING 1 2 3 4 5 6 7

Gross
Reqmts.
Schedule
d
Receipts
Planned
on hand
Net
reqmts
Planned
order
receipt
Planned
order
release

Item (LT BEGIN

= wks) NING 1 2 3 4 5 6 7

Gross
Reqmts.
Schedule
d
Receipts
Planned
on hand
Net
reqmts
Planned
order
receipt
Planned
order
release
Problem:
The demand for subassembly S is 100 units in week 7. Each unit of S
Requires 1 unit of T and 2 units of U. Each unit of T requires 1 unit of V,
2 units of W and 1 unit of X. Finally, each unit of U requires 2 units of Y and
3 units of Z. One firm manufactures all items. It takes 2 weeks to make S,
1 week to make T, 2 weeks to make U, 2 weeks to make V, 3 weeks to make W,
1 week to make X, 2 weeks to make Y, and 1 week to make Z.
a. Construct the product structure tree.
b. Additional information is given below. Compute the MRP for each item.
Item On-hand inventory
S 20 S
T 20
U 40 T U(2)
V 30
W 30 V W(2) X Y(2) Z(3)
X 25
Y 240
Z 40

MASTER SCHEDULE:
Weeks 1 2 3 4 5 6 7
Quantity 100

Item S
BEGIN
(LT=
NING 1 2 3 4 5 6 7
2wk)

Gross
Reqmts. 100
Schedule
d
Receipts
Planned
20
on hand 20 20 20 20 20 20 20
Net
reqmts 80
Planned
order
receipt 80
Planned
order
release 80

Item T
(LT = 1
wks)
Item T
(LT = 1 BEGIN
NING 1 2 3 4 5 6 7
wks)

Gross
Reqmts. 80
Schedule
d
Receipts
Planned
20
on hand 20 20 20 20 20
Net
reqmts 60
Planned
order
receipt 60
Planned
order
release 60

2*

(2)Item
U (LT BEGIN
=2 wks) NING 1 2 3 4 5 6 7

Gross
Reqmts. 160
Schedule
d
Receipts
Planned
40
on hand 40 40 40 40 40
Net
reqmts 120
Planned
order
receipt 120
Planned
order
release 120

Item V
(LT = 2 BEGIN
NING 1 2 3 4 5 6 7
wks)

Gross
Reqmts. 60
Schedule
d
Receipts
Planned
30
on hand 30 30 30 30
Net
reqmts 30
Planned
order
receipt 30
Planned
order
release 30
2*

(2)Item
BEGIN
W (LT
NING 1 2 3 4 5 6 7
=3 wks)

Gross
Reqmts. 120
Schedule
d
Receipts
Planned
30
on hand 30 30 30 30
Net
reqmts 90
Planned
order
receipt 90
Planned
order
release 90

Item X
BEGIN
(LT =1
NING 1 2 3 4 5 6 7
wks)

Gross
Reqmts. 60
Schedule
d
Receipts
Planned
25
on hand 25 25 25 25
Net
reqmts 35
Planned
order
receipt 35
Planned
order
release 35
2*

(2)Item
BEGIN
Y (LT =
NING 1 2 3 4 5 6 7
2wks)

Gross
Reqmts. 240
Schedule
d
Receipts
Planned
240
on hand 240 240 240
Net
reqmts 0
Planned
order
receipt
Planned
order
release
3*

(3)Item
BEGIN
Z (LT =
NING 1 2 3 4 5 6 7
1wks)

Gross
Reqmts. 360
Schedule
d
Receipts
Planned
40
on hand 40 40 40
Net
reqmts 320
Planned
order
receipt 320
Planned
order
release 320