Chapter 18.

Materials Requirements Planning

Outline:
 Material Requirements Planning (MRP)
 Master Production Schedule (MPS)
 Bill of Materials (BOM)
 Time Fences
 MRP Logic and Product Structure Trees
 MRP Examples
 MRP and Lot Sizing
 MRP & Capacity Requirements Planning (CRP)
Materials Requirements Planning
 Materials requirements planning (MRP) is a
means for determining the number of parts,
components, and materials needed to produce a
product (end item)
 Dependent vs. independent demand
 MRP provides time scheduling information
specifying when each of the subassemblies, parts,
and components should be ordered or produced
 What, when, how many?
 Dependent demand drives MRP
 MRP is an information system
Materials Requirements Planning

 Critical input and data requirements:

 Master Production Schedule (MPS)
 Bill of Materials (BOM)
 Inventory database
 Many outputs – primary ones are:
 Planned orders to be released at a future time.
 Order release notices to execute the planned orders.
 Changes in due dates of open orders due to rescheduling.
 Cancellations or suspensions of open orders due to
cancellation or suspension of orders on the master
production schedule.
 Inventory status data. Planned order releases
 Master Production Schedule (MPS)
 MPS:
MPS One of three primary
inputs in MRP Aggregate
AggregatePlan
Plan
 Time-phased plan specifying (Product
(ProductGroups)
Groups)
how many and when the firm
plans to build each end item
 Developed by disaggregating
the “aggregate plan” MPS
(Specific End Items)

Week
Bill of Materials (BOM)

 BOM: a listing of all of the raw materials,

parts, subassemblies, and assemblies
needed to produce one unit of a product.
 Product structure tree: Visual depiction of
the requirements in a bill of materials,
where all components are listed by levels.
 A simple question: For 100 “M”s how many…
BOM - tree format and low level coding
Low-level coding requires that when an identical item occur on
multiple levels, then it should be “lowered” to its lowest level for
computational reasons. The software will complete all level 0 items
first, then all level 1 items, etc.

In the original diagram (a) since N appears on levels 1 & 2

In the final diagram (b) (after re-classification) it is lowered to level 2.
Also, note that S under P was on level 3, which needed to be
lowered to level 4
 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
MRP – The System
MRP Example
 Solved problem 1.
 MPS: 100 units of X for week 10
 Lead times are on the Excel sheet (given in the
book)
 Excel time!
X

Y (2 ) Z (3 )

A (1 ) B (2 ) A (2 ) C (4 )
Lot Sizing in MRP Programs
 The default order size is Lot-for-lot (L4L)
 However, for purchased items or for technical reasons,
there may be minimum or maximum order sizes
 Purchased items/subassemblies may require
multiples of predetermined amounts (e.g., multiples of
50)
 An example: Problem 5. Excel time.
 Common lot-sizing methods are:
 Economic order quantity (EOQ)
 Least total cost (LTC)
 Least unit cost (LUC)
 Which one to use?
 The one that is least costly!
 MRP, Capacity Requirements Planning, and MRP II
 Consider the expanded logic flow of MRP II.
Forecast
 When utilized cleverly:
 It can be used to lower levels of in-process Aggregate
inventories (Lot-sizing?) Plan

 Ability to track material requirements Rough-cut

 Ability to evaluate capacity requirements capacity plan

 The basic functions of the capacity requirements

planning (CRP) system are: adjust
OK ?

 To calculate the capacity needs based on the

planned orders from MRP schedules MPS

 To compare the capacity required to the capacity

MRP
available
 Routing charts show the specific departments that CRP
each part goes through as well as setup and process
times in those departments OK ?
 Means of allocating production time
 Ability to Simulate the manufacturing system Release orders
 Capacity Requirements Planning (CRP)
 A small scale CRP example.
 MPS for item A is:
A
 30, 24, 37 units for weeks 7, 8, and 10
 Lead times for A, …, D are:
 1, 2, 3, and 1 week, respectively. B(2) C(4)

 Routing chart for item A is:

 Dept 4 (only)
 Setup time is 2.0 hours C(2) D(5)

 Processing time is 0.25 hours/unit.

 The complete routing chart is available on the Excel
file.
 Group exercise: Complete the MRP schedules and compute
work center load profiles
 Excel time!