ch17 mrp
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Materials Requirements Planning
Fun stuff
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Materials Management
A plant organizing function that assures a predictable flow of components and other inputs through a transformation process.
It coordinates the activities of both the internal and external factory
What is needed When i.e. Inventory micro issues
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Development of MRP
After WWII - D>>S Companies use quarterly ordering systems based on
confirmed orders WWII boom settles down D = S
backlog of orders decreases quarterly systems become more based on forecasts In move from confirmed orders to forecasts, quarterly
systems become less and less accurate Wight, others develop MRP
takes forecasts, breaks them down via dependent demand into weekly schedules
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Up to 1970s, extensive use of Q and P models why? Simple to use, limited information
requirements, “optional” Why move to MRP?
problems with Q and P models high levels of inventory high stockouts poor customer services
“Order launch & Expedite”
Prior to MRP
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Major changes high cost of inventory increased availability of more
powerful computers decreasing cost of computers
MRP now supported by extensive body of software
Other Factors
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Dependent Demand
Demand for components driven by the production schedule
It is derived - not forecasted Consists of WIP and raw materials Lumpy- discrete, irregular quantities Concept of Parent/Component Time Bucket
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MRP and Dependent Demand Independent Demand
Finished Goods independent demand in MPS
Problem with Dependent Demand information generated challenge - generating 100% CSL past approach – Q, P new approach - MRP
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Remember This?? MPS Principles The MPS must be in concert with the
production plan The MPS must drive the entire
materials management system Include all known requirements in the
preparation of the MPS and the FAS Minimize the number of items needed
to adequately express the MPS and the FAS
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Plan showing availability Build schedule Stated in BoM terms
What is the MPS?
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A complete, current and accurate database one set of records high emphasis on data accuracy quick correction of error in db accessible to all who need data
Remember this?
Keys to MPC
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Capacity Maximum Effective Demonstrated
Demand management Capacity management
level chase mixed
Requires coordination with marketing
Issues Considered
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Nature of MRP
Use forecast to predict required amount of level 0 (end product) Use this number to determine number of lower level
components needed (dependent demand)
Frame Seat Brake Kit
Hoop
Rim
Wire
Spokes
Front Wheel Rear Wheel
Bike Level 0
Level 1
Level 2
Level 3
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Implementation of MRP
Forecast becomes gross requirements for MRP system
Break down gross requirements into time buckets
Calculate net requirements - difference between units required (i.e. gross requirements or derivation plus orders for that period) and units expected to be available in inventory
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Key inputs to MRP
MPS - merges forecasts and production capacity BOM - gives components needed for each end
product in terms of part numbers Inventory Records - must be accurate, as MRP uses
this information as the basis of its calculations; should design inventory system to ensure accuracy
Order Status - use scheduled receipts to distinguish those orders that have actually been released
Planned Lead Times - gives the when information
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Brunswick Motors
Applying MRP to InventoryPlanning & Scheduling
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MRP Elements Gross Requirements On-Hand Inventory
Allocations Scheduled Receipts Net Requirements Planned Order Releases Time-phasing Parent/Component
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MRP Elements Planning factors System nervousness Firm planning Explosion Time buckets
Action bucket Rolling the Schedule Net Change vs. Regenerative MRP
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Advantages of MRP Forward looking when planning (visibility) Useful simulator Provides valid, credible priorities
priorities reflect actual needs, not implied needs.
Provides mangers with control over the execution system
Forms basis for building credible, valid formal system
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MRP Works Best When...
End Products are Standardized Batch Production End product is moderately
complex The end product is assembled from
a set of components and raw materials
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Limitations of MRP only looks at materials, ignores
capacity, shop floor conditions requires user discipline requires accurate information/data requires valid MPS not appropriate for all areas
high volume production projects
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Capacity Requirements Planning
Wait a second - just because MRP says produce X, are we able to produce X? Need to evaluate the capacity to see if it
can meet plan Need all of MRP information plus:
1. How much capacity a process requires to make 1 unit of a product
2. When does the process need the hours (time) of capacity
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MRP Closed Loop MRP MRP II Distribution Requirements Planning DRP II Enterprise Requirement Planning
Types of MRP Systems
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Reports
Master Schedule Indented Bill of Materials BOM - Item Requirements Scheduled Receipts Planned Orders
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ABC Analysis
Which items are C items? B items? Which item should we order ahead
furthest? Which should we spend the most
time on? Spend time and effort on A + B
items carry small quantities review frequently
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ABC Analysis
Manage C items by: carrying inventories concentrating with a few suppliers stockless buying review infrequently