• Lecture 13: MRP
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Production control for dependent demand items
• Dependent demand items:
• Example: Forklift:
– each order requires 4 wheels, 4 tires, 1 seat, 1 steering
wheel, etc.
• Methods:
– Push
– Pull
– OPT (drum-buffer-rope methods)
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Push System
• Customer orders and forecasts are fed into beginning of line
Forecasts
CUSTOMER
Raw
materials Manufacturing Facility Product
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Pull System
• A production system driven by actual consumption and
controlled by synchronized replenishment signals.
• Orders for product pulled from end of line, rest of line then
responds to replace removed product
Supplier CUSTOMER
order
Raw
materials Manufacturing Facility Product
187
Push System
• Customer orders and forecasts are fed into beginning of line
Forecasts
CUSTOMER
Raw
materials Manufacturing Facility Product
188
Pull System
• Orders for product pulled from end of line, rest of line then
responds to replace removed product
Supplier CUSTOMER
order
Raw
materials Manufacturing Facility Product
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MRP / MRPII
MRP: Material Requirements Planning
MRPII: Manufacturing Resource Planning
• Typical Push system:
– “explodes out” demand for final product into orders for
raw materials and subassemblies.
• began in 1960’s as computerized approach to materials
planning (MRP)
• Later expanded (MRPII), which included:
– master production scheduling
– capacity requirements planning
– purchasing
– forecasting
– financial modules
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Background
• Popularity stems to the “MRP crusade” in 70’s by APICS
(American Production and Inventory Control Society)
• Focus:
– convince industry that MRP was integrated decision
support system for management of the total manufacturing
business.
• Promoted by APICS, consultants, and computer industry
• Recently: MRP has come under fire:
– oversold and poorly implemented
– in practice, often leads to large WIP, large lead time
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Bill of Materials (BOM)
• MRP core based on processing of bill of materials
• Bill of materials is product structure: what is needed
• Example: 4-legged stool bill of materials
Stool
Seat
Leg (x4)
Frame Cushion
Cushion
Raw Frame Material
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• MRP Requires:
– Master Production Plan
• (orders for finished products with due dates)
– On-hand inventories
– Bill of materials
– Current Status of purchased and manufactured items
– Replenishment rules by item
• lead time
• order quantity
• safety stock
• scrap allowance, etc.
193
• MRP is calculating sizing and timing of net requirements for
components/subassemblies
• Time is divided into “time buckets”
Given gross requirements for top level:
• Projected Inventory = Previous Inventory
+ Scheduled Receipts
- Gross Requirements
• Determine net requirements based on projected inventory
• Shift back by lead time to determine when to order net reqmnts
• Determine Gross Requirement for components by BOM, then
repeat steps above for components
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Example:
• Bill of Materials for Stool A (4 legged) and Stool B (3 legged)
• Master Production Schedule:
• Other info: lead times (weeks) current inventory
– Stool A: 2 10
– Stool B: 2 30
– Leg: 2 40 (20 more due week 3)
– etc….. 195
MRP Example:
196
• Summary of basic method:
– take final orders (gross reqmnts)
– determine net requirements (after inventory, sched recpts)
– from lead time, determine when to begin order
– from bill of materials, determine gross reqmnts of
components
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What happens if the schedule changes?
• Two approaches:
– Regenerative
• redo everything over from scratch
• done infrequently
• Problems:
– Net Change MRP
• As changes occur, only recalculate modified parts
• done daily or on-line
• Problems:
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Other issues of MRP
• Time buckets:
– bucket is fixed time slot, and system has fixed # of buckets
(planning horizon)
– typically buckets are 1 week
• note that there is no explicit indication as to whether event
occurs at beginning or end of the bucket
• Safety Stocks:
– excess quantities of inventory maintained to cover
unexpected fluctuations in supply or demand.
– “Just-in-case” inventory
– 2 methods
• always order stock to keep inventory above minimum
• just hide safety stock from MRP system (don’t include in
inventory)
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Net change and regenerative are both “top-down” planning
“Bottom-up planning” is where human operator takes over
– rush orders, special exceptions, scheduling
• Firm-planned orders: allows over-ride of MRP rules
– override lot size or lead time
• Pegged Requirements: allows operator to see what final order
is associated with given component orders (retrace the MRP
steps)
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