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Session 10Material Requirements Planning

http://www.pom.edu/mpc/lectures_in_manufacturing_planning.htmlecture session 10

• Material Requirements Planning: Role in the MPC System

• Evolution in Material Planning

• Basic MRP of Record Processing

• Information Timing

• Technical Issues

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Manufacturing Planning and Control System

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Evolution in Material Planning

• Independent vs. Dependent Demand Items

• MRP

• Closed loop MRP systems

• MRP II (Manufacturing Resource Planning)

• ERP

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Basic MRP Records and Record Processing: Example

Develop an MRP spreadsheet record for six periods using the following parameters for the item:

Period 1 2 3 4 5 6

Gross requirements 20 20 20 30 30 30Lead time 1 periodLot size 40 unitsSafety stock 0 unitsInventory 2 unitsScheduled receipt 40 units in period 1

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Basic MRP Records and Record Processing: Example (Continued)

a. In what periods are there planned order releases?b. What happens to the timing, number of planned

order releases, and average inventory (for periods l through 6) if 10 units of safety stock are required?

c. What happens to the timing, number of planned order releases, and average inventory (for periods 1 through 6) if a one-period safety lead time is used instead of the safety stock?

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Basic MRP Records and Record Processing

a. No safety stock

Three planned orders in periods 2, 3, and 5. Average projected inventory is 15.33 units.

1 2 3 4 5 620 20 20 30 30 3040

Projected Available Balance 2 22 2 22 32 2 1240 40 40

Q = 40, LT = 1, SS = 0

PeriodGross RequirementsScheduled Receipts

Planned Order Release

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Information Timing

Gross Requirements - Beginning of Period

Scheduled Receipts - Beginning of Period

Projected Available Balance - End of Period

Planned Order Release - Beginning of Period

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Basic MRP Records and Record Processing (Continued)

b. Safety stock of 10 units

Q = 40, LT = 1, SS = 10Three planned orders in periods 1, 3, and 4. Two planned orders were moved up because of the safety stock requirement. Average projected inventory is 28.67 units.

1 2 3 4 5 620 20 20 30 30 3040

Projected Available Balance 2 22 42 22 32 42 1240 40 40

PeriodGross RequirementsScheduled Receipts

Planned Order Release

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Basic MRP Records and Record Processing

a. No safety stock

Three planned orders in periods 2, 3, and 5. Average projected inventory is 15.33 units.

1 2 3 4 5 620 20 20 30 30 3040

Projected Available Balance 2 22 2 22 32 2 1240 40 40

Q = 40, LT = 1, SS = 0

PeriodGross RequirementsScheduled Receipts

Planned Order Release

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Basic MRP Records and Record Processing (Continued)

c. Safety Lead Time of 1 period

Three planned orders in periods 1, 2, and 4. All of the planned orders were moved up by 1 period to account for the safety lead time. Average projected inventory is 35.33 units.

Using safety stocks or safety lead time causes the system to hold more inventory and order earlier. The safety lead time causes all orders to be held an extra period in inventory

1 2 3 4 5 620 20 20 30 30 3040

Projected Available Balance 2 22 42 62 32 42 1240 40 40

Q = 40, LT = 1, SS = 0, SLT = 1 period

PeriodGross RequirementsScheduled Receipts

Planned Order Release

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Technical Issues

• Net Requirements• Lot Sizing

– Lot-For-Lot (L4L)– Fixed Order Quantities (Q)

• Safety Stock and Safety Lead Time• Incorporating Service Part Demand• Scheduled Receipts versus Planned Order

Releases• Firm Planned Orders