Material Requirements Planning Distribution Requirements Planning MRP DRP
Material Requirements Planning & Distribution Requirements Planning ( MRP & DRP ) MRP - 1
Supply Chain Revisited Manufacturer (Campbell’s ) Customer (Park’n Shop DC, Stores) Consumers Customer places an order n what happens in a supply chain? MRP - 2
Chain Reaction Customer order Campbell’s Soup Issuing orders + producing (1 wk) Can Chicken Order to farms wk ) (1. . . Orders to Metal Processor Order to Steel Maker . . . Chicken raising (30 wks) . . . Hatching eggs(4 wks) MRP - 3 Waiting hens to lay eggs ( 3 mos)
Material Requirements Planning (MRP) n Mfg. computer information system n Determines quantity & timing of dependent demand items MRP - 4
MRP Requirements n Computer system n Mainly discrete products n Accurate bill-of-material n Accurate inventory status l n 99% inventory accuracy Stable lead times MRP - 5
MRP & Production Planning Process Forecast & Firm Orders APP Material Requirements Planning Master Production Scheduling Resource Availability How many and When for FG? MRP - 6
MRP System Input & Output MRP - 7
MRP System Input & Output MRP - 8
Master Production Schedule MRP - 9
Master Production Schedule n Shows items to be produced l End item, customer order, module n Derived from aggregate plan n Example MRP - 10
Bill-of-Material MRP - 11
Bill-of-Material n List of components & quantities needed to make product n Provides product structure (tree) Parents: Items above given level l Children: Items below given level l n Shows low-level coding l MRP - 12 Top level is 0; next level is 1 etc.
Bill-of-Material Product Structure Tree MRP - 13
Bill of Material Example MRP - 14
DVD Players A CM/OED MRP - 15
About 10 pages MRP - 16
Product Structure Thinking Challenge The demand for product A is 50. How many of each component is needed to satisfy demand? MRP - 17
Product Structure Solution* 50 50 x 2 = 100 50 x 3 = 150 x 2 = 300 100 x 3 = 300 100 x 2 = 200 MRP - 18 150 x 1 = 150 Note: D: 200 + 600 = 800 E: 300 + 150 = 450 300 x 1 = 300 x 2 = 600
Item Master MRP - 19
Lead Time Input MRP - 20 Wait Time Move Time Queue Setup Run Time Output
Lead Times & Product Structure Handle Bars 2 wk. 1 wk. Frame 2 wk. 3 wk. Wheels MRP - 21 Lead time 1 wk. Bicycle Frame Assy Time (weeks)
Li Fung Trading 香港利丰贸易行 Inside fabrics: Taiwan Cover 外套: S. Korea Staffing Materials: China Label 标签, Deco. 装饰, Strings 带子, Buttons纽扣 等等: HK Zips拉链: Japan Assembly:China MRP - 22 Made-in-HK? Shipped thru HK => USA, EC
MRP Output MRP - 23
MRP Report (Week #, beg. of Nov. ) 20 MRP - 24 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Report Total quantity required 20 by all parents MRP - 25 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Report 20 Quantity & estimated completion date of in-process orders MRP - 26 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Report 20 Actual & projected inventory available for use (excludes safety stock ) MRP - 27 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Report ‘Gross Requirements’ less ‘Available’ inventory 20 MRP - 28 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Report 20 MRP - 29 Quantity & due date of orders should be received Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Report 20 MRP - 30 Quantity & planned start date of orders Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
n Someone once asked me if there was any real difference between engineers, scientists, and managers in today's high tech companies. n Although the differences are often subtle to an outsider, you can tell one from another simply by the questions they ask. l l l MRP - 31 Engineering: "How will this work? " Science: "Why will this work? " Management: "When will this work? "
MRP Program Logic Computing Gross Requirements MRP - 32
MRP Example Component B A master schedule calls for starting (planned order release) 2 units of product X in week 1, 20 in week 2, & 10 in week 4. The planned order releases for product Y are 15 in week 4, and 15 in week 5. Determine the gross requirements for component B. MRP - 33 X A(1) B(1) Y A(1) C(3)
Component B Solution Planned Order Releases X Planned Order Releases Y Gross Requirements B MRP - 34
Thinking Challenge Component C A master schedule calls for starting (planned order release) 2 units of product X in week 1, 20 in week 2, & 10 in week 4. The planned order releases for product Y are 15 in week 4, and 15 in week 5. Determine the gross requirements for component C. MRP - 35 X A(1) B(1) Y A(1) C(3)
Component C Solution* Planned Order Releases X Planned Order Releases Y Gross Requirements C MRP - 36
Thinking Challenge Component A A master schedule calls for starting (planned order release) 2 units of product X in week 1, 20 in week 2, & 10 in week 4. The planned order releases for product Y are 15 in week 4, and 15 in week 5. Determine the gross requirements for component A. MRP - 37 X A(1) B(1) Y A(1) C(3)
Component A Solution* Planned Order Releases X Planned Order Releases Y Gross Requirements A MRP - 38
MRP Program Logic Computing Planned Orders MRP - 39
MRP Example Prepare a net requirements plan: 20 MRP - 40 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Solution 20 MRP - 41 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Formulas n Available Inv. = On-hand - Safety stock -Allocated On-hand is inventory physically present l Allocated is inventory reserved for special orders l n On-hand = Prior period's on-hand + Scheduled receipts Net requirement = Gross requirement - Available MRP - 42 n
MRP Solution 20 23 = (20 ‘Available’) + (5 ‘Scheduled Receipts’ to be completed in week 1) - (2 ‘Requirement for 2 in week 1’). MRP - 43 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Solution 20 3 = (23 ‘Available Inv. ’) - ( 20 ‘Gross requirements’ in week 2) MRP - 44 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Solution 20 33 = (3 ‘Available Inv. ’) + (30 ‘Scheduled Receipts’ to be completed in week 3) MRP - 45 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Solution 20 8 = (33 ‘Available Inv. ’) (25 Gross Requirements in week 4). MRP - 46 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Solution 20 All 8 units Available Inv. are used up to satisfy the 15 units gross requirements in Lead time = 3; lotweek policy 5. = lot-for-lot (LFL); MRP - 47 on-hand = 20 units; safety stock = 0 units.
MRP Solution 20 15 required but only 8 ‘Available’. ‘Net Requirement’ is 15 - 8 lot=policy 7. Lead time = 3; = lot-for-lot (LFL); MRP - 48 on-hand = 20 units; safety stock = 0 units.
MRP Solution 7 must be completed in week 5 20 (i. e. , received into inventory). MRP - 49 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Solution An order of 7 must be 202. started in week Lead time is 3 weeks. MRP - 50 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 0 units.
MRP Problem 2 A master schedule calls for 50 units of F in week 6, & 60 in week 8. On-hand levels are F = 0, G = 20, & H = 60. Another 20 units of G are scheduled to be received in week 4. Order quantities are lot-for-lot except for H, which has a lot size of 50 or multiples of 50. MRP - 51
Product F Solution* 1 Gross Req. Net Requirements Planned Ord. Rec. Planned Ord. Rel. MRP - 52 3 4 5 6 50 Scheduled Rec. Available Inv. 2 0 7 8 60
Product F Solution* 0 MRP - 53
Component G Solution* 1 2 3 4 Gross Req. Scheduled Rec. Available Inv. 20 20 Net Requirements Planned Ord. Rec. Planned Ord. Rel. MRP - 54 5 6 7 8
Component G Solution* 1 2 3 4 Gross Req. 50 Scheduled Rec. 20 Available Inv. 20 Net Requirements Planned Ord. Rec. Planned Ord. Rel. MRP - 55 5 6 60 7 8
Component G Solution* 20 MRP - 56
Component H Solution* 1 Gross Req. Scheduled Rec. Available Inv. 60 Net Requirements Planned Ord. Rec. Planned Ord. Rel. MRP - 57 2 3 4 5 6 7 8
Component H Solution* MRP - 58
Component H Solution* 1 2 3 4 5 6 40 50 240 60 Gross Req. (G) (F) Scheduled Rec. Available Inv. 60 Net Requirements Planned Ord. Rec. Planned Ord. Rel. MRP - 59 7 8
Component H Solution* 60 MRP - 60
Summary of MRP n Some important terms Bill of materials l Leadtimes l Master production schedule (MPS: over a planning horizon) l Inventory status l Scheduled deliveries l MRP - 61
Summary of MRP An “Explosion” Part A 1 ……. Part A 6 Component A Part B 1 Component B Product XX MRP - 62 Part B 2
MRP II n MRP II is the extension of MRP to include other resources such as labour hrs, costs, m/c capacities, and other information, not just material quantity n MRP is the core part of MRP II n Additional inputs to MRPII: standard hrs, process “routes”, cost inform. , etc. n MRP II can be used to perform short term cap. Planning and cost evaluation MRP - 63
Application: a Distribution Network Central DC Region A DC DC A 1 MRP - 64 ……. DC A 10 “Implosion” Region B DC DC B 1 DC Bx
A Distribution Network Central DC LTa LTb Region A DC LTa 1 Region B DC LTa 10 LTb 1 DC A 1 MRP - 65 ……. DC A 10 DC B 1 LTbx DC Bx
Local DC Demand Forecasts WK 5 6 7 8 9 10 DC a 1 10 12 0 20 30 15 DC a 2 5 15 5 10 20 12 15 20 25 30 . . . DC bx MRP - 66
Translating into Regional DC n Lead-time information WK 5 6 7 8 9 10 DC a 1 10 12 0 20 30 15 DC a 2 5 15 5 10 20 10 Should be available no later than 5 - LTa 1 MRP - 67
Distribution Resource Planning (DRP) Central DC LTa LTb Region A DC LTa 1 Region B DC LTa 10 LTb 1 DC A 1 MRP - 68 ……. DC A 10 DC B 1 An “implosion” LTbx DC Bx
Backorder(s) or on-hand inventory at t=0; +: onhand, --: shortage Forecast = gross req. In Transit= scheduled receipt End-of-the-period inventory (on-hand) MRP - 69 Beginning-of-theperiod order
MRP - 70
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MRP & DRP P#1 LT 1 P#2 Model 1 LT 2 Prod Plan CDC Only a few firms can do so! MRP - 74 MRP: what, when, how much to make or order DRP: what, when & how much needed at CDC
End n No beyond this slide MRP - 75
MRP Program Logic Safety Stock MRP - 76
Using Safety Stock 18 2 units Safety stock decreases ‘Available’ inventory to 18. The amount physically on-hand is still the same (20). MRP - 77 Lead time = 3; lot policy = lot-for-lot (LFL); on-hand = 20 units; safety stock = 2 units.
MRP Program Logic Lot Sizing MRP - 78
Lot Size n Lot: Batch of material that moves & gets processed together n Reduces setup & handling time & cost n Techniques Lot-for-lot (LFL) l Economic order quantity (EOQ) l Part period balancing l MRP - 79
Lot Size Effects Lot size is 5 or multiples (5, 10, 15 etc. ). The quantities started (i. e. , released) & completed are 20 increased. Lead Time = 3; Lot Size= 5 units (or Multiples); On-Hand = 20 Units; Safety Stock = 0 Units. MRP - 80
MRP Thinking Challenges MRP - 81
MRP Thinking Challenge 1 A master schedule calls for 200 units of product A in period 5. No stock of any components is on -hand or on order. All order sizes are lot-forlot. Determine the amount & timing of all planned order releases. MRP - 82
Product A Solution* 1 2 3 4 Gross Requirements 5 200 Scheduled Receipts Available Inventory Net Requirements Planned Order Receipts Planned Order Releases MRP - 83 0 0 0
Product A Solution* 0 MRP - 84
Component B Solution* 1 Gross Requirements Scheduled Receipts Available Inventory Net Requirements Planned Order Receipts Planned Order Releases MRP - 85 0 2 3 4 5
Component B Solution* (2 B’s per A)(200 A’s) Gross Requirements 1 2 3 4 5 400 Scheduled Receipts Available Inventory Net Requirements 0 A’s are released in week 4 Planned Order Receipts so B’s are due then. Planned Order Releases MRP - 86
Component B Solution* 1 2 3 Gross Requirements 4 5 400 Scheduled Receipts Available Inventory 0 0 0 Net Requirements 400 Planned Order Receipts 400 Planned Order Releases MRP - 87 400 Lead time is 2 weeks.
Component B Solution* 0 MRP - 88
Component C Solution* 1 Gross Requirements Scheduled Receipts Available Inventory Net Requirements Planned Order Receipts Planned Order Releases MRP - 89 0 2 3 4 5
Component C Solution* (4 C’s per A)(200 A’s) Gross Requirements Net Requirements Planned Order Receipts Planned Order Releases MRP - 90 2 3 4 800 Scheduled Receipts Available Inventory 1 0 5
Component C Solution* 1 2 3 Gross Requirements 4 5 800 Scheduled Receipts Available Inventory 0 0 0 Net Requirements 800 Planned Order Receipts 800 Planned Order Releases MRP - 91 800 Lead time is 3 weeks.
Component C Solution* 0 MRP - 92
Other Applications and MRP Extension n Restaurant - Read pp 359 -360 of Render’s book n ERP - enterprise resource planning systems MRP: a tool for production l ERP: “under which the entire firm operates from the same data” l MRP - 93
Relationships of Aggregate Schedule MRP - 94 MRP II
ERP MRP - 95 + DRP + …. . . MRP II
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