The Evolution of MRP II

MRP II:Manufacturing Resource

Planning Systems
● 1960’s and 1970’s
➧ MRP: Material Requirement Planning
➔Assumed infinite capability
● 1980’s
IE 505: Production Planning Control ➧ MRP II : Manufacturing Resource Planning
Lecture Notes* ➔Assumed limited capability
© Rakesh Nagi ➔Closed loop system
University at Buffalo ● 1990’s
* Adapted in part from Lecture Notes of Dr. George Harhalakis, University of Maryland
➧ ERP: Enterprise Resource Planning
© Rakesh Nagi 1 © Rakesh Nagi 2

The Fundamental Logic of MRP System The Modules In MRP II System

● What are we going to make ? ● Master Production Scheduling

➧ The Master Production Schedule ● Inventory
● What do we (already) have ? ● Bill Of Materials (BOM)
➧ Inventory Record
● Material Requirements Planning (MRP)
● What is it made up of ?
● Purchasing
➧ The Bill Of Materials
● Receiving/ Quality Control
● How will it be made ?
● Shop Floor
➧ The Routings
© Rakesh Nagi 3 © Rakesh Nagi 4

Typical MRP II Architecture

Independent Demand Dependent vs Independent Demand
Strategic Modules

Master Production
Schedule

Inventory Bill of Material/

Routings Suppliers Market
Dependent Demand
Material
Dependent Independent
Requirement Demand Demand
Company
Execution Modules

Planning
Raw materials &
Finished
Purchasing Shop Floor Semi-finished
products
products

Capacity No
Receiving/Quality OK ?
Control
Yes

Delivery Manufacturing
© Rakesh Nagi 5 © Rakesh Nagi 6

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Material Requirements Planning (MRP) Master Production Schedule
Sales
Customer Order from
Inputs Outputs Forecasts
MRP Orders Dealers
Process

● Inputs ● Outputs
Independent
➧ Master Production ➧ Replenishment Demand
Schedule Orders Backlog
➧ Bill Of Materials ➧ Reschedule Notices
➧ Inventory Data.

© Rakesh Nagi 7 © Rakesh Nagi 8

Master Production Schedule Master Schedule

● Forward looking plan ● Inputs
● Objectives ➧ Sales forecasts
➧ To support sales ➧ Customer orders
➧ To run operations effectively ➧ Orders from dealers or other distribution centers
● Fundamental factors ➧ Inventory of finished products
➧ What we intend to make ➧ Currently produced and expected finished product
➧ How much we intend to make delivers
➧ When we intend to make
➧ Rough-cut routing
● Input : sale plan
➧ Must consider the capacities available by ‘rough cut’
● Outputs
routing ➧ Quantities, types and due dates of required products
© Rakesh Nagi 9 © Rakesh Nagi 10

Bill Of Material (BOM) A Sample BOM Structure

● The list of the end items A

● Characteristics
➧ Part Numbering Assy B Assy C Assy D

➧ Parents and Child Relationship

➧ Bill Of Material Levels E Subassy F G H I

➧ Explosions and Implosions

➧ Phantom Bills K L J

© Rakesh Nagi 11 © Rakesh Nagi 12

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 Part Numbering Example
● The unique identifier
Random Numbering
➧ Called a part number or item number Part Number: 37-7213
Type of Item: 37 = Ink Cartridges
● Three ways to define the number Four digit: 7213 = Random

➧ Random numbering Significant Numbering

➔is used as an identifier only, not as a descriptor Part Number: 37-1-3-16-432
Type of item: 37 = Ink Cartridges
➧ Significant numbering Type: 1 = Screw-in-type
Point type: 16 = Fine Line
➔describes specific information about the item, such as Color: 16 = Blue
source, material, shape, etc Length: 432 = 4.5 inches long

➧ Semi-significant numbering
© Rakesh Nagi 13 © Rakesh Nagi 14

Parents and Child Relationship BOM Levels

Level 0 A
Parent

Child Child Level 1 B (1) C (1) D (2)

Level 2 E F (2) E (2) G (1) H (1)

Children are the objects that are assembled
together to make a parent object

© Rakesh Nagi 15 © Rakesh Nagi 16

Explosions Examples of Explosion Types

● Two different way to display the BOM
➧ Explosion and implosion Single Level Indented Summarized
Explosion of D Explosion of A Explosion of A
● Explosions: going down the BOM Part # Qty Level Part # Qty Level Part # Qty
➧ Single level explosions E 2 1 B 1 1 B 1
G 1 2 E 1 1 C 1
➔Displays the immediate component parts (children) H 1 2 F 2 1 D 2
1 C 1 2 E 5
➧ Indented explosion 1 D 2 2 F 2
2 E 2 2 G 2
➔Parent on left-hand side and each additional level indented 2 G 1 2 H 2
farther to the right 2 H 1
(Ordered by Part #)
➧ Summarized explosion
➔Arranges an indented explosion into total quantity order or
part number order
➥Adds together the total ©requirement
Rakesh Nagi
for each part number 17 © Rakesh Nagi 18

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 Implosions Phantom BOM
● Implosions: going up the BOM
Hair Dryer
➧ Single level implosion Phantom Phantom Phantom
➔Displays the immediate parent of a given component
Plastic Heating
➔Called ‘where used’ list or ‘goes into’ Motor Element
Housing
➔Useful when a design change for the ‘imploded’ part is under
discussion
220V 110 V Green Red Yellow 400 W 600 W
➧ Indented implosion
➔Displays all of the parent of a given component, all the way up to
the top level part ● The items ‘Motor’, ‘Housing’, and ‘Heating Element’ are
➔Used for the two main reasons Phantoms
➥To detect commonality of parts in different assemblies ● To create individual Bills of Materials we would need 12
➥Ro assess the impact of a design change made to a part on different product structures
various assemblies that make use of it ➧ 2 motor types * 3 plastic housing types * 2 heating element types = 12
➧ Summarized implosion ● Phantoms cost and lead time are always zero
© Rakesh Nagi 19 © Rakesh Nagi 20

The Difference Between An Engineering

Product Planning BOM
BOM and Manufacturing BOM
Hair Dryer
Phantom Phantom Phantom
A

Plastic Heating An Engineering

Motor Housing Element BOM B (1) C (1) D (2)

E (1) F (2) E (2) G (1) H (1)

220V 110 V Green Red Yellow 400 W 600 W
20 % 80 % 34 % 45 % 20 % 30 % 70 %
A
● Phantom items are transparent to MRP. They are completely ignored
An Manufacturing B (1) C (1) D (2)
● Based on the percentage figures associated with each option (from statistical
BOM
data from past sales). MRP will generate the appropriate gross
requirements E (1) F (2) E (2) I (1)
● For example. For 500 ‘Master Schedule’ hair dryers MRP will generate a
requirement for 100 200V motors and 400 110 V motors etc G (1) H (1)
© Rakesh Nagi 21 © Rakesh Nagi 22

BOM Interfaces With Typical Characteristics Of A Routing

● Inventory Control ● Note that only manufacturing items may have a routing
➧ Uses part master data to identify inventory items ● Each routing is identified by a unique routing number
● Material Requirements Planning (MRP) ● Necessary records for a routing
➧ Uses product structure to translate independent into ➧ Manufacturing division
dependent demand ➧ Work station
➔Group of machines or subdivision
● Purchasing and Receiving ➧ Work center
➧ Use part master records to identify items on order, ➔Machine or assembly facility
inspection and receipts ➧ Description of operation
● Shop Floor ➧ Tooling
➧ Labor craft code
➧ Uses part master records and product structure to
➧ Standard labor hours
monitor progress and completion of fabrication and
➧ Labor rates per hour by craft code
assembly operations© Rakesh Nagi 23 © Rakesh Nagi 24

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 Routing Basic Transactions in Inventory Control
● Used for rough cut capacity planning ● Receipts
➧ Identified by part numbers
● Incorporates with master schedule for forecasting ➧ Purchased items, Manufacturing items, etc
rough capacity requirement ➧ Tow types:
● Detail routings (setup time, moving time, etc) are used ➔Planned receipts: purchasing, manufacturing, subcontracting orders
with vendors or subcontractors
for shop floor capacity ➔Unplanned receipts:
•Assembly line: #123 ● Issues
•Setup time: 5 hours ➧ Related to raw materials, component parts and assemblies
•List of tools and fixtures: ➔Individual or sets of components for manufacturing or to the
•Tool --- customer (finished goods) including shortages
•Fixture --- ➧ Subtracted from on hand quantity
.
. ● Transfers
•Production rate: 42 assemblies/hr ➧ From one stores location to another or between warehouse

© Rakesh Nagi 25 © Rakesh Nagi 26

Basic Transactions in Inventory Control (2) Impact of Inventory Volume

➣ A. High Inventories
● Scrapping
➧ Disposal of scrap purchased or manufactured items
● Adjustments
➧ For quantities on hand after physical counts
● Reports Rocks
➧ ABC class reports with quantities and/or dollar value, rate
of consumption per item etc. ➣ B. Low Inventories

Rocks

© Rakesh Nagi 27 © Rakesh Nagi 28

Inventory Control Interfaces Material Requirements Planning (MRP)

● Provides MRP with on-hand balances to enable the
computation of net requirement ● Basic Functions
● Obtains product structures from BOM to prepare ➧ The right parts
kitting list ➔Identified in the BOM module
● Standard costs are furnished from purchasing and ➧ The right quantities
routings to evaluate stock holding ➔Identified in the BOM module, an then compares to
● Purchasing and manufacturing orders are signaled the on-hand quantities held in inventory control
from MRP to prepare for upcoming receipts and ➧ The right timing
issues respectively
➔Calculated within MRP, based on purchasing and
● Completed manufacturing orders from Shop Floor manufacturing lead times held in the BOM/Routings
Control module are received and closed module
© Rakesh Nagi 29 © Rakesh Nagi 30

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 Material Requirements Planning Material Requirements Planning (MRP)

BOM’s Inventory
MRP Quantity
Netting Available Example of MRP page 76, 77, and 78
Net = Gross- Available

Manufacturing Orders
Purchasing Orders

© Rakesh Nagi 31 © Rakesh Nagi 32

Regenerative MRP Net Change MRP

● Regenerates all requirements ● A Transaction Driven System

➧ All material requirements are regenerated once ➧ Updates the changed data
every planning period (usually a week) ➧ Only those parts needing re-planning are
➧ All previous plans are erased and replaced by affected
new one ➧ Computer processing time is significantly
➧ Several parts are planned although there has not reduced
been changed in their plans ➧ More frequent run is required

© Rakesh Nagi 33 © Rakesh Nagi 34

Selection Criteria for Net Change and

Regenerative MRP
● A Net Change System is best for:
➧ Complicated product designs
➧ Short production runs for many products
➧ Frequent design changes
➧ Unstable purchased part supplies
● A Regenerative System is best for:
➧ Simple product designs
➧ Long and stable production runs
➧ few design changes
➧ Stable purchased item supplies
© Rakesh Nagi
Key Points In MRP
● Maintain accurate data input
➧ Forecasts, orders, on hand balances, and routing
● Proper treatment of expedited orders
➧ e.g., the addition of extra resources
● Close collaboration between marketing and
manufacturing
● Proper shop floor feed back and tracking
● Early notification of changes
35 © Rakesh Nagi 36

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 Fundamental Requirements To Purchasing
Successful Run MRP
● Vendor information management
● Absolute accuracy in Bill of Materials ➧ Retrieval by vendor number or name
➧ Should get vendor record to evaluate
● Design changes timely recorded together
● Vendor/item cross reference
with their effectively start dates ➧ Price quotations, discounts and lead times should be available
● Accurate inventory records ➧ Used by the receiving module for part recognition

● Accurate routings and purchasing records ● Purchase orders management

➧ Vendor selection, order release, purchase order history, etc
● Full understanding of the system’s ● Vendor performance
algorithms and logic ➧ Basic criteria
➔Quality of products supplied, On-time deliveries, price competitiveness,
etc.
© Rakesh Nagi 37 © Rakesh Nagi 38

Purchasing Module Receiving

Items Current Quotes & ● Material Receipts
Vendors
Supplied by Vendors Lead Times ➧ Material recognition and count for purchase receipts
Expected Receipts
➧ Matching with purchase or manufacturing orders

Open Purchase
by Part or Vendors ● Material transfers
Orders ● Order Closing and Interfaces
Overdue Purchase
Orders by Part or Vendor ➧ MRP, Purchasing and Shop Floor Control are notified and
the appropriate records are updated
Quality
➧ Updates stock quantities
Vendor
On Time ● Updates MRP, Shop floor control, inventory control,
Performance
Deliveries
etc
Price
© Rakesh Nagi 39 © Rakesh Nagi 40

Receiving Module Shop Floor Control

● Fundamental Functions
Receipts ➧ Input of manufacturing orders from MRP and
execution
➧ Maintenance of work-center and labor data
Stock ➧ Capacity planning and control
Inspection
Receipts ➧ Capacity over/under loading detection and
reporting back to MS and MRP for rescheduling
Update ➧ Manufacturing order status reporting
Rejects Inventory
➧ Manufacturing order closing and reporting to
Records
MRP
© Rakesh Nagi 41 © Rakesh Nagi 42

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Shop Floor Control Module MRP II /CAD/CAPP/CAM Integration
Work Orders
Master
Schedule
CAD
Accounts Bill of Materials
Load Master Schedule & Routings
to reschedule

Capacity CAPP
Shop Floor Data Inventory
Available CAM Control Base Control

Receiving Material
Requirement
Time Planning
Purchasing

Delivers Rejects
© Rakesh Nagi 43 © Rakesh Nagi 44