2. MRP Dynamics
The inputs to MRP (the master schedule.
BOM, lead times, purchasing, and inventory)
frequently change. Conveniently, a central
strength of MRP system is timely and accurate
re-planning. These occur in two ways: by re
computing (also known as regenerating) the
requirement and schedule periodically, often
weekly or a net change calculation. Net change
in the MRP system means the MRP system
creates new requirements in response to
transactions.
3. System Nervousness
Frequent Changes in an MRP system
Two tools are particularly helpful when trying to
reduce MRP system nervousness.
1. Time Fences- allow a segment of the
master schedule to be designated as not to
re-scheduled
2. Pegging- means tracing upward in the
BOM from the component to the parent item
4. MRP and JIT
MRP does not do detailed scheduling it plans.
MRP will tell you that a job needs to be
completed on a certain week or day
MRP is also a planning technique with fixed
lead times.
MRP provides a plan and an accurate picture
of requirements
JIT rapidly move material in small
batches, reducing work in process inventory.
5. FOUR APPROACHES ININTEGRATING MRP AND JIT
1. Finite Capacity Scheduling
2. Small Buckets
3. Balance Flow
4. Supermarkets
6. 1.Finite Capacity Scheduling
(FCS)
Provides the precise scheduling
needed for rapid material
movement and also considers
departments and machine
capacity
7. 2.Small Buckets-Units in a
material requirements system
MRP can be integrated with JIT through the
following steps.
Step 1: Reduce MRP buckets from weekly to daily
to perhaps hourly.
Step 2: The planned receipts that are part of a firms
planned orders in MRP system are
communicated to the work areas for production
purposes and use to sequence production.
8. Step 3: Inventory is moved through the plant on
a JIT basis.
Step 4: As products are completed, they are
moved into inventory(typically finish goods
inventory) in the normal way
Step 5: A system known as back flush is used
to reduce inventory balances.
9. Back flushing uses the bill of material to
deduct component quantities from inventory
as each unit is completed.
3. Balance Flow Approach
supports the planning and scheduling necessary
for repetitive operations, such as the assembly
line.
Supermarket
An inventory area that holds common items that
are replenish by a kanban system.
10. Lot-for lot
A lot sizing technique that generates exactly
what is required to meet the plan.
*With lot-for-lot, we order material only as it
needed. Once we have the ordering (setting up)
the cost of holding each unit for a given time
period, and the production schedule, we can
assign orders to our net requirements plan.
*When supply is reliable and frequent orders
are inexpensive, but holding cost or
obsolescence is high, lot- for-lot ordering can
be very efficient.
11. Economic Order Quantity
Statistical technique using averages(such
as average demand for a year)
Part Period Balancing (PPB)
Is a more dynamic approach to balance set
up and holding cost. PPB uses additional
information by changing the lot size to reflect
the requirements of the next lot size in the
future.
12. Material Requirements Planning II
*A system that allows with MRP in
place, inventory data to be augmented by other
resources variables.
*Most are tied into other computer software
that provide data to the MRP system or receive
data from the MRP system.
*Purchasing, production scheduling, capacity
planning, inventory, and warehouse
management are few examples of this data.
13. Capacity Planning
• is the process of determining the production
capacity needed by an organization to meet
changing demands for its products.
• is the maximum amount of work that an
organization is capable of completing in a
given period.
14. Example
Kevin Watson, the production planner at
Wiz Products, needs to develop a capacity plan
for a work center. He has the production orders
shown below for the next 5 days. There are 12
hours available in the work cell each day. The
parts being produced require 1 hour each.
15. Day 1 2 3 4 5
Orders 10 14 13 10 14
Approach- Compute the time available in the
work center and the time necessary to
complete the production requirements.
16. Capacity Capacity Utilization:
Units Required Available Over/(Under) Production
New
Day Ordered (hours) (hours) (hours) Planners Action Production
Schedule
1 10 10 12 (2)
12
2 14 14 12 (2) Split order: move 1
unit to day 1
12
3 13 13 12 (1) Split order: move 1
unit to day 6
13
or request overtime
4 10 10 12 (2)
12
5 14 14 12 2 Split order: move 2
units to day 4 12
61
17. Insight- By moving orders, the production
planner is able to utilize capacity more
effectively and still meet the order
requirements, with only 1 order produced on
overtime in day 3.
18. 16
14
12
10
Series 3
8
Series 2
Series 1
6
4
2
0
1 2 3 4 5
19. 14
12
10
8
Series 3
Series 2
6 Series 1
4
2
0
1 2 3 4 5
20. Tactics for smoothing the load and minimizing the
impact of change lead time included the following:
1. Overlapping- which reduces the lead
time, sends pieces to the second operation
before the entire lot is completed on the first
operation.
2. Operation Splitting sends the lot to different
machines for the same operation. This involves
an additional setup, but results in shorter
throughput times, because only the part of the
lot is processed on each machine.
3. Order or, lot splitting, involves breaking up
the order and running part of it earlier (or later)
in the schedule.
21. Summary
MRP schedules production and inventory
when demand is dependent. For MRP to
work, management must have a master
schedule, precise requirements for all
components, accurate inventory and purchasing
record, and accurate lead time. Production should
often be lot-for-lot in MRP system. When properly
implemented, MRP can contribute in a major way
to reduction in inventory while improving customer
service level levels. MRP techniques allow
operation manager to schedule and replenish stock
on a need to order basis rather than simply a time-
to-order basis.
