CHAPTER 16: Material Requirement= s Planning

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Capacity Plan

Master Production Schedule

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Materi= als (Component) Planning =

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At one= time we managed dependent demand much like independent demand. Determine the opt= imum Q to order and order at a specified lend of ROP (RL) and use SS to avoid stockouts. =

EXPENSIVE! =

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A bett= er way!

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Plan components necessary to produce required quantities of Independent Demand items.

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Evaluate production schedule and determine what inputs are needed and when they are needed.

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Convert production requirements into requirements for components and raw materials using BOM.

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Consider what the company has (inventory levels)= and what is on order relative to what is needed for production.

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Taking lead time for production of components or= /and lead time for receipt of materials or components from suppliers =3D> det= ermine by scheduling backwards when to place orders so that final assembly is time= ly.

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Materials Requirements Planning:=

A syst= em for planning production and procurement of components and materials needed to produce items specified on a master production schedule.<= /p>

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Purpose of MRP:

1. Plan orders for components and mat= erials in terms of items, quantities and release dates.

2. Set and maintain priorities by ass= igning due dates to orders.

3. Provide the input to the capacity = requirements planning system to determine the resources that will be needed to produce t= he MPS.

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MRP's OBJECTIVES

Determ= ine: What to order, how much to order, = when to order, and when to schedule delivery.

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AND Ke= ep priorities current for: Inven= tory planning and control, capacity requirements planning, and shop floor contro= l.

REQUIREMENTS:<= span style=3D'font-family:"Arial","sans-serif"'>

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1. ACCURATE BILLS OF MATERIALS

2. ACCURATE INVENTORY RECORDS

3. REALISTIC MASTER SCHEDULE

4. USER UNDERSTANDING

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TYPES OF / APPROACHES TO MRP:

1. Net Change MRP: An app= roach where the material requirements plan is continually retained in the compute= r. (ON-LINE)

2. = Regeneration MRP: An approach where the master production schedule is totally re-exploded down through all bills of material, at least once a week, to maintain valid priorities. (BATCH SYSTEM)

MRP II: Materials Resource Planning/Manufacturing Resource Planning is a comprehensive "closed loop" C.B. System that integrates Financial, Accounting, Personnel, Engineering, and Marketing information, and the production planning and con= trol activities of the MRP System. It is basically an information system for a manufacturing organization.

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CRP: Capacity Requirements Planning is a technique for determining what personnel and equipment capacities are neede= d to meet the production objectives embodied in the MPS and the Materials Requirement plan.

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CLOSED LOOP MRP: Is a type fo MRP that uses information from customers, vendors, and from the shop floor (progress of w= ork etc.) to make adjustments in schedules, orders, promise dates (due dates) s= o it can be used more effectively for planning and control purposes.**

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**Simplified MRP LOGIC**<= o:p>

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Gross requirements (current period)

- Scheduled Receipts (current period)=

- On hand (previous period)<= o:p>

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NET REQUIREMENTS (current period)

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MRP (Enhancement)

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*It can handle Independent Demand for components which we sell outside organization we must forecast the Ind. Demand and it = uses the forecast as if it were a calculated demand. TPOP--Time phase order point blends Ind. D. with D.D.

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*It can make adjustments for scrap rate.

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*It can calculate safety stock level and allow t= he use of safety stock. Generally preferred to establish SS at MPS level, so all components are adjusted accordingly. May do other way= s, depends.

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*Can include lot sizing techniques (Like PPA) to reduce costs of inventory (generally not good at component level--more appropriate for high level items (materials))