The document provides an overview of material requirements planning (MRP). It defines key concepts in MRP including the master production schedule, bill of materials, lead times, lot sizing, scheduled receipts, on-hand inventory, planned order receipts and releases. It also presents an example bill of materials for an "Blast 'em, dude" audio kit and demonstrates how to create a time-phased product structure and calculate gross material requirements based on production needs over time.

1. 4/4: Material Requirements Planning
• Dependent inventory model
• For in-house inventory planning

2. Requirements of MRP
• Master production schedule
– when to make what
• Bill of Materials: how to make the product
• Lead times
– how long it takes to get various components
• Inventory availability
• Scheduled receipts & on-hand inventory

3. Master Production Schedule
• Tells us what is required to meet the production
plan.
• Statement of what is to be produced, NOT a
forecast of demand.
Gross requirements per day
4 5 6 7 8
100 150 100 180

4. Bill of Materials
• A list of quantities of components, ingredients,
or materials to make a final product.
• Provides the product structure.
EX: A “Blast ‘em, dude” audio kit (A) is made of 2
small tweeter boxes (B) and 3 large woofer boxes (C).
Each tweeter is made of two speakers (D) and two
shipping boxes (E). Each woofer consists of two
boosters (F) and two shipping boxes (E). Each booster is
made of a circuit board (G) and a speaker (D).

5. EX: A “Blast ‘em, dude” audio kit (A) is made of 2 small
tweeter boxes (B) and 3 large woofer boxes (C). Each
tweeter is made of two speakers (D) and two shipping
boxes (E). Each woofer consists of two boosters (F) and
two shipping boxes (E). Each booster is made of a circuit
board (G) and a speaker (D).
A
2B 3C

6. EX: A “Blast ‘em, dude” audio kit (A) is made of 2 small
tweeter boxes (B) and 3 large woofer boxes (C). Each
tweeter is made of two speakers (D) and two shipping
boxes (E). Each woofer consists of two boosters (F) and
two shipping boxes (E). Each booster is made of a circuit
board (G) and a speaker (D).
A
2B 3C
2D 2E

7. EX: A “Blast ‘em, dude” audio kit (A) is made of 2 small
tweeter boxes (B) and 3 large woofer boxes (C). Each
tweeter is made of two speakers (D) and two shipping
boxes (E). Each woofer consists of two boosters (F) and
two shipping boxes (E). Each booster is made of a circuit
board (G) and a speaker (D).
A
2B 3C
2D 2E 2F 2E

8. EX: A “Blast ‘em, dude” audio kit (A) is made of 2 small
tweeter boxes (B) and 3 large woofer boxes (C). Each
tweeter is made of two speakers (D) and two shipping
boxes (E). Each woofer consists of two boosters (F) and
two shipping boxes (E). Each booster is made of one
circuit board (G) and one speaker (D).
A
2B 3C
2D 2E 2F 2E
G D

9. EX: A “Blast ‘em, dude” audio kit (A) is made of 2 small
tweeter boxes (B) and 3 large woofer boxes (C). Each
tweeter is made of two speakers (D) and two shipping
boxes (E). Each woofer consists of two boosters (F) and
two shipping boxes (E). Each booster is made of one circuit
board (G) and one speaker (D).
A
2B 3C
2D 2E 2F 2E
G D
Note that the numbers
here are only relevant
to the level above them!

10. A
2B 3C
2D 2E 2F 2E
G D
“Exploded” Product Structure
• Items above a level are PARENTS;
• Items below a level are COMPONENTS or
CHILDREN.

11. A
2B 3C
2D 2E 2F 2E
G D
Level 0
level 1
level 2
level 3
Exploded Product Structure: 4 levels.

12. Lead times
• Time required to acquire (purchase, produce, or
assemble) an item.
• Manufactured part: lead time made of move,
setup, and assembly or run times for each
component.
• Purchased part: lead time made of difference
between when part is ordered and when it is
received.

13. A
2B 3C
2D 2E 2F 2E
G D
Lead times
A 1 wk.
B 2
C 1
D 1
E 2
F 3
G 2
Time-Phased Product Structure
• Rotate BOM below and reflect
lead times with time as the X axis.

14. A
2B
3C
2D
2E
2F
2E
G
D
Lead times
A 1 wk.
B 2
C 1
D 1
E 2
F 3
G 2
8 7 6 5 4 3 2 1 0
Time-Phased Product Structure
• Rotate BOM
and reflect lead
times on X axis.

15. Gross Material Requirements
• Assume we need 50 “Blast ‘em, dude” speaker
kits in eight weeks.
• We need to calculate when and how many of
each component we need to start making.
Go to spreadsheet

16. Lot sizing
• lot-for-lot (L4L): order exactly the amount you
want.
• Lot size required: order in certain amounts (ex. a
dozen eggs).

17. Scheduled Receipts &
On-Hand Inventory
• Scheduled Receipts:
– Units (of any component) that you have
already scheduled to come in at a particular
time.
• On-Hand Inventory
– Units (of any component) that you already
have in stock (at the beginning).

18. Gross Req. vs. Net Req.
• Gross required is the total amount of a
component you need.
• Net required is (Gross)
- (On-hand inventory)
- (Scheduled receipts)

19. Planned Order Receipts & Releases
• Planned Order Receipts:
–When you PLAN to RECEIVE what you
ORDERED.
• Planned Order Releases:
–When you PLAN to RELEASE what in
an ORDER.

20. MRP: What you need to know
• Master Schedule
• Bill of Materials
• Lead times
• Lot sizes
• Scheduled receipts & on-hand inventory

21. Group Exercise:Create an MRP
• You make the PalmPointer, a handy PDA. You have received an
order for 200 units to be shipped in 12 hours. A PalmPointer is
made of a LCD screen, 4 buttons, 1 toggle button, and a
motherboard. The motherboard is made of 3 processors, 2 clock
batteries, and a circuit board. Assembly time for the assemblies
are as follows: All parts are L4L except the batteries, which must
be ordered in packs of 40. You already have 50 motherboards and
100 processors.
– PalmPointer 2 hours LCD screen 1
– buttons 2 toggle button 3
– motherboard 6 processors 2
– batteries 1 circuit board 3
• Create an MRP schedule to determine when to begin
assembling each component. Go back to spreadsheet

22. Homework due 4/11
• Download handout at
http://adbook.net/teach022/305/hmwk4-4.xls
• There are two problems to be answered.
• Print out problems and turn in ON PAPER – no
email submissions.