The document discusses materials requirements planning (MRP), which coordinates the flow of components and inputs through the production process. MRP was developed after World War II to improve upon quarterly ordering systems as demand became more based on forecasts rather than confirmed orders. It takes production forecasts and breaks them down into weekly schedules using a bill of materials to determine dependent demand for components. MRP provides schedules and priorities to help manage inventory levels and avoid stockouts. It requires accurate data on master production schedules, bills of materials, inventory levels, and order status.

1. Materials Requirements Planning Fun stuff

2. 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

3. 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

4. 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

5. 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

7. 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

8. 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

9. 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

10. Plan showing availability Build schedule Stated in BoM terms What is the MPS?

11. 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

12. Capacity Maximum Effective Demonstrated Demand management Capacity management level chase mixed Requires coordination with marketing Issues Considered

13. 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) Level 0 Level 1 Level 2 Level 3

14. 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

15. 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

16. Brunswick Motors Applying MRP to Inventory Planning & Scheduling

18. MRP Elements Gross Requirements On-Hand Inventory Allocations Scheduled Receipts Net Requirements Planned Order Releases Time-phasing Parent/Component

19. MRP Elements Planning factors System nervousness Firm planning Explosion Time buckets Action bucket Rolling the Schedule Net Change vs. Regenerative MRP

20. 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

21. 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

22. 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

23. 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

24. MRP Closed Loop MRP MRP II Distribution Requirements Planning DRP II Enterprise Requirement Planning Types of MRP Systems

26. Reports Master Schedule Indented Bill of Materials BOM - Item Requirements Scheduled Receipts Planned Orders

28. 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

29. ABC Analysis Manage C items by: carrying inventories concentrating with a few suppliers stockless buying review infrequently