MRP
Kritika Chaturvedi (62)
Kshitij Srivastava (63)
Malvika Kumar (68)
Poonam Chauhan (87)
Pramod P. K. (91)
MRP
MRP establishes a schedule (priority plan) showing
components required at each level of the assembly and
based on lead times , calculates the time when these
components will be needed
Can operate for 2 types of Demand
Dependent Demand
Independent Demand
Applicable to items
Purchasedfrom outside suppliers
Sub-assemblies, produced internally, that are components of
more complex items
MPS/ BOM/ Inventory
File
MRP
Detailed Schedule for
RM/Components
OBJECTIVES OF MRP
Determine Demand
To determine what components are needed to meet the MPS
and based on lead time, to calculate the periods when
components must be available
Keep Priorities Current
Customers change orders/Components may get used
up/suppliers are late with delivery/ scrap occurs, orders
completed, machines break down change in demand
EXPLODING & OFFSETTING
Exploding - Multiplying requirements by usage quantity
Offsetting - placing the exploded requirements in the
proper period according to the lead time
Planned order receipt - When the item is needed (Need)
Planned order release - When the order must be released
to meet the Planned order receipt dates (Start)
Lead Time - span of time needed to perform a process
EXAMPLE- PRODUCT TREE
LT : Lead Time
Week
Part Number
1 2 3 4 5 6
Planned Order Reciept 50 100
A
Planned Order Release 50 100
Planned Order Reciept 50 100
B
Planned Order Release 50 100
Planned Order Reciept 50 100
C
Planned Order Release 50 100
Planned Order Reciept 50 100
D
Planned Order Release 50 100
Planned Order Reciept 50 100
E
Planned Order Release 50 100
GROSS AND NET REQUIREMENTS
Gross requirement-demand for an item by time period.
Net requirement- number items to be provided and when.
Calculation:
Gross requirement = 50
Inventory available = 20
Net requirement = gross requirement - available inventory
= 50-20
= 30 units
Week
Part Number
1 2 3 4 5
Gross requirements 50
Projected available 20 20 20 20 20 0
A Net requirements 30
Planned Order receipt 30
Planned Order release 30
Gross requirements. 30
Projected available 10 10 10 10 0
B Net requirements 20
Planned Order receipt 20
Planned Order release 20
Gross requirements 30
Projected available 0 0
C Net req. 30
Planned Order receipt 30
Planned Order release 30
Gross requirements 20
Projected available 0 0
D Net requirements 20
Planned Order receipt 20
Planned Order release 20
Gross requirements 20
Projected available 0 0
E Net requirements 20
Planned Order receipt 20
Planned Order release 20
RELEASING ORDERS
Releasing an order : Authorization given to purchasing
to buy the necessary material or to manufacturing to
make the component.
When the authorization is released, the planned order
receipt is cancelled, and a scheduled receipt is created in
its place.
PART WEEK
NUMBER 1 2 3 4 5
D Gross 20
Requirements
Projected 0 0
Available
Net 20
Requirements
Planned Order 20
Receipt
Planned Order 20
Release
PART WEEK
NUMBER 1 2 3 4 5
D Gross 20
Requirements
Scheduled receipt 20
Projected Available 0 0
Net Requirements 0
Planned Order Receipt
Planned Order Release
Scheduled Receipts : Orders placed on manufacturing or on a
vendor; represent a commitment to buy or make.
Scheduled receipts row shows the quantities ordered and when
they are expected to be completed and available.
Open Orders : Scheduled receipts on MRP record are called
Open Orders on the factory or on a vendor and are
responsibility or purchasing and production activity control.
When order is received into inventory and available for use, the
order is closed out, and the scheduled receipt disappears to
become part of the on-hand inventory.
NET REQUIREMENTS
Net Requirement = Gross Requirements
+ Scheduled Receipts
– Available Inventory
Question :
Complete the following table. Lead time for the item is 2 weeks.
Order Quantity is 200. What action should be taken?
WEEK 1 2 3 4
Gross 50 250 100 50
Requirements
Scheduled 200
Receipts
Projected
Available 150
Net
Requirements
Planned Order
receipt
Planned Order
Release
ANSWER
WEEK 1 2 3 4
Gross 50 250 100 50
Requirements
Scheduled 200
Receipts
Projected 100 50 150 100
Available 150
Net 50
Requirements
Planned Order 200
receipt
Planned Order 200
Release
The order for 200 units should be released.
BASIC MRP RECORD
Current
Time Planning
time/action
bucket Horizon
Bucket
Part Week
Number 1 2 3 4 5
Gross 35
Requirements
Scheduled 20
Projected
Receipts
on-hand
balance at Projected 10 10 10 30
the end of Available 10
the period Net Requirement 5
Planned Order 5
Receipt
Planned Order 5
Release
CAPACITY REQUIREMENT PLANNING
MRP priority plan must be checked
against available capacity.
At the MRP planning level, the process is
called capacity requirement planning.
Ifcapacity is available, the plan can
proceed. If not, either capacity has to be
made available or priority plans changed.
LOW-LEVEL CODING AND NETTING
A component may reside on more than one
level in the bill of material.
Allgross requirements for that component
should be recorded before netting takes
place.
LOW-LEVEL CODING AND NETTING
Low level code: The lowest level on which a
part resides in all bills of material. Every part
has only one low-level code.
Low-level codes are determined by starting at
the lowest level of the bill of material and
working up, recording the level against the
part. If a part occurs on a higher level, its
existence on the lower level has already
been recorded.
LOW-LEVEL CODING AND NETTING
A Level 0
Level 1
B C
C D Level 2
LOW-LEVEL CODING AND NETTING
Part Low-Level
Code
A 0
B 1
C 2
D 2
There is a gross requirement for part A of 50 in week 5;
all lead times are one week; and the following amounts
are in inventory:
A – 20 units
B – 10 units
C – 10 units
LOW-LEVEL CODING AND NETTING
PROCEDURE
(Step 1) Start at level zero of the tree,
check if any parts on level zero has a low-
level code of zero. If so those parts occur at
no lower level, and all the gross
requirements have been recorded. These
parts can be netted and exploded to the
next level, i.e., into its components.
LOW-LEVEL CODING AND NETTING
PROCEDURE
(Step 1) Start at level zero of the tree,
check if any parts on level zero has a low-
level code of zero. If so those parts occur at
no lower level, and all the gross
requirements have been recorded. These
parts can be netted and exploded to the
next level, i.e., into its components.
NETTING AND EXPLODING ZERO-
LEVEL PARTS
Week
Low-level
Part Number
code 1 2 3 4 5
Gross Requirements 50
Scheduled Receipts
Projected Available 20 20 20 20 20 0
0 A
Net Requirements 30
Planned Order Receipts 30
Planned Order Release 30
Gross Requirements 30
Scheduled Receipts
Projected Available 10
1 B
Net Requirements
Planned Order Receipts
Planned Order Release
Gross Requirements 30
Scheduled Receipts
Projected Available 10
2 C
Net Requirements
Planned Order Receipts
Planned Order Release
LOW LEVEL CODING AND NETTING
(Step 2) Move down to level 1 on the
product tree and repeat step 1. Since B
has a low-level code of 1, all requirements
for B are recorded, and it can be netted and
exploded. The BOM for B shows that is
made from a C and a D. Part C has a low-
level code of 2, which tells us there are
further requirements for Cs and at this stage
they are not netted.
NETTING AND EXPLODING LEVEL ONE
PARTS
Week
Low-level
Part Number
code 1 2 3 4 5
Gross Requirements 30
Scheduled Receipts
Projected Available 10 10 10 10 0
1 B
Net Requirements 20
Planned Order Receipts 20
Planned Order Release 20
Gross Requirements 20 30
Scheduled Receipts
Projected Available 10
2 C
Net Requirements
Planned Order Receipts
Planned Order Release
Gross Requirements 20
Scheduled Receipts
Projected Available 10
2 D
Net Requirements
Planned Order Receipts
Planned Order Release
LOW LEVEL CODING AND NETTING
(Step 3) Move down to level 2 on the
product tree, we find that product C has a
low-level code of 2. This tells us that all
gross requirements for Cs are accounted
for and that we can proceed and determine
its net requirements. Notice there is a
requirement for 30 Cs in week 4 to be used
on the A and a requirement of 20 Cs in week
3 to be used on the Bs. Looking at the
BOM, we see that it is a purchased part and
no explosion is needed.
w-level
Part Number
code 1 2 3 4 5
COMPLETED MATERIAL REQUIREMENT PLAN
Gross Requirements
Scheduled Receipts
50
Projected Available 20 20 20 20 20 0
0 A
Net Requirements 30
Planned Order Receipts 30
Planned Order Release 30
Gross Requirements 30
Scheduled Receipts
Projected Available 10 10 10 10 0
1 B
Net Requirements 20
Planned Order Receipts 20
Planned Order Release 20
Gross Requirements 20 30
Scheduled Receipts
Projected Available 10 10 10 0 0
2 C
Net Requirements 10 30
Planned Order Receipts 10 30
Planned Order Release 10 30
Gross Requirements 20
Scheduled Receipts
Projected Available 0 0 0
2 D
Net Requirements 20
Planned Order Receipts 20
Planned Order Release 20
LOW LEVEL CODING AND NETTING
Thelow-level codes are used to determine
when a part is eligible for netting and
exploding.
Eachpart is netted and exploded only once.
There is no time-consuming re-netting and
re-exploding each time a new requirement is
met.
MULTIPLE BILLS OF MATERIAL
Most companies make more than one product and often
use the same components in many of their products. The
MRP system gathers the planned orders from all the
parents and creates a schedule of gross requirement for
the components.
B C
F (1) G (1) F (2) E (2)
Part B Part C
Week 1 2 3 Week 1 2 3
Planned order 20 20 Planned order 20 20
release release
Part F
Week 1 2 3
Gross 20 80 60
Requirement
USING MATERIAL REQUIREMENT PLAN
Planner are people who manage MRP system
The responsibilities of a planner are:
1. Launch order of purchase or manufactring
2. Reschedule due dates of open order
3. Reconcile errors
4. Solve critical material shortages by expediting or
planning.
USING MATERIAL REQUIREMENT PLAN
(CONT)
Planner works with three types of order:
Planned order
Released order
Firm planned order
Exception Message
Some situations…
Components in action bucket
Situation in which standard lead time will result in late
delivery
Transaction message
MANAGING THE MRP
Sources of feedback for planner
Supplier’saction through purchasing.
Changes to open order in the factory.
The planner must consider 3 imp. Factors
Priority
Bottom up replanning
Reducing system nervousness