rel.

3 2008/01/24 Solving Efeso 1999

Material Requirements Planning
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Material flow management is based on a
predefined schedule which takes into
account demand and manufacturing lead
time
Component
manufacturing
Component
warehouse
Kit assembly
FP assembly
Kit warehouse
Finished product warehouse
T
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a
n
d

q
u
a
n
t
i
t
y
Order forecast
Orders
Material
Flows:
Material Requirements Planning - 'Push' systems (M.R.P.)
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Material Requirements Planning
It is based on the net requirements calculated by exploding, at
component level, certain predetermined finished product production
plans.
It requires each dependent-demand component or material (child) to
be ordered or manufactured based on the corresponding independent-
demand component/set (parent) requirement.
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Material Requirements Planning
What it is
An MRP system is a decision-making
support tool which - by processing data
reported in the Master Production
Schedule - provides a complete picture
of:
What (which sets/subsets/parts/raw
materials are needed to make
finished products)
How much
When to purchase/manufacture
Working principles
It explodes the production order
plan stemming from the MPS and it
suggests a time schedule for all bill-
of-material levels (semi-finished
products, components, external
materials)
It synchronises activities and
logistic flows inside and outside of
the production unit
It keeps semi-finished product
stock levels at a minimum (WIP)
It inputs Capacity Requirements
Planning
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Assemble to stock
Industry Type
MRP: Industry Application and Expected Benefits
Examples Expected Benefits
Combines multiple parts into a finished
product, which is then stocked in inventory to satisfy
customer demand. Examples: watches, tools, appliances.
High
Make to stock
Assemble to order
Make to order
Process
Low
High
High
Medium
Items are manufactured by machine rather than
assembled from parts. These are standard stock items
carried in anticipation of customer demand. Examples:
piston rings, electrical switches.
A final assembly is made from standard options that
the customer chooses. Examples: trucks, generators,
engines.
Items fabricated or assembled completely to customer
specification. Examples: turbine generators, heavy
machine tools.
Industries such as foundries, rubber and plastics,
speciality paper, chemicals, paint, drug, food
processor.
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Master Production Schedule
It indicates how much and when to produce:
finished products
spare parts
direct-sale materials and parts
Product structure (Bill of materials)
Multi-level
For each level of the bill of materials it defines:
links
utilisation coefficient
offset adjustment
Inventory level in warehouses and departments
Physical stock
Safety inventory
Running orders (released to production or to a
supplier)
Booked quantity
Reorder policy
Batch size
Manufacturing time schedule
External material and component
purchase order schedule
Customer order processability
Abnormality and problem
reporting:
expediting expired orders
anticipating a previously
released order
cancelling an order that has
already been sent to the
supplier
M.R.P.
Material Requirements Planning (M.R.P.)
Output
information
Input data
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The system generates so-called
'Order proposals (planned orders)'
- (status = P) -
These are subsequently analysed by the
programmer and turned into
'Confirmed orders'
- (status = F) -
which can no longer be automatically
modified by the system, but only directly by
the programmer.
Material Requirements Planning - M.R.P. order types
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Design and
technical
changes
Material
Requirements
Planning
Order
portfolio
Forecasts
Production
capacity
planning
Material
movements
Master
Production
Schedule
Bill of materials
Cycles
Lead times
...
Stock
Booked
Orders
...
Product
structure
Inventory
level
Order processability and
critical points
Staff
Means
Suppliers
Sales
New orders
Expediting
Delays
...
Supply Production
Order loading
Priorities
Expediting
Loads
...
Material Requirements Planning Structure
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Bill of
materials
Production schedule
(order plan)
Lead time
Batch
production
Stock
Usage
scraps
Manuf.
explosion
Launch
dates
Orders
Net
requirements
Gross
requirements
Production scraps
Master Production Schedule
A
B C
D E B D
D E
Starting from the independent-demand item production plan
(bottom-level codes), MRP calculates gross and net quantity
and schedule requirements for all necessary
materials/components by exploding each level of the bill of
materials
Material Requirements Planning: logical procedure
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The route for the MRP procedure
1. Collect the current stocks, running
orders, booked stocks
2. Evaluate how much to order internally
and externally
1. Evaluate the stock during the previous
period
2. Collect the planned replenishments and
gross requirements
3. Calculate the stock for actual period
1. Define the order quantity and
the offset factor
2. Plan the reorder quantity
1. Anticipate the date order
2. Explode the gross requirement of high
level components
1. Collect the availability of bill of materials
and all management information (lead
time - order policy-provenance)
2. Explode the products bill of materials
and schedule it based on lead time
1. Choice the optimal batch production
(Fixed EOQ, L4L, Dynamic EOQ)
Assign the order issues
Assign the order issues
6
6
Net requirement
Net requirement
4
4
Gross requirement
Gross requirement
1
1
Plan replenishments
Plan replenishments
2
2
Evaluate the stock
Evaluate the stock
3
3
Set the batch production
Set the batch production
5
5
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Material Requirements Planning - Requirement explosion
X
C
Z Y
Item "A"
Stock:
Safety inventory:
% production scrap:
Supply time.:
Reorder policy
E.O.Q.:
10%
170 pcs
50 pcs
3 periods
Fixed E.O.Q.
150 pcs
Link Coeff. Offset factor
(at assembly)
A - B
A - C
2
1
+ 10%
-----
A
B
- - - 150 - - 150 - 150 - Order plan to be issued
77 33 33 77 88 40 - - - - Net requirements
150 - - 150 - 150 - - - - Lot-sized requirements
- - - 150 - - 150 - 150 - Gross requirements of C from A
- - - 330 - - 330 - 330 - Gross requirements of B from A
- - - - - - - 48 - - Orders in progress
77 33 33 77 88 55 22 11 - - Scrap adjusted requirements
70 30 30 70 80 50 20 10 - - Availability adjusted requirements
0 0 0 0 0 0 0 20 60 120 Initial availability
70 30 30 70 80 50 20 30 40 60 Gross Total Requirements
20 20 20 20 30 10 10 10 10 10 Gross External Requirements
50 10 10 50 50 40 10 20 30 50 Gross Internal Requirements
10 9 8 7 6 5 4 3 2 1
Item "A"
Periods
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Material Requirements Planning procedure
All the procedure's steps are
totally electronic.
A data processing of 100.000
codes lasts about 10 minutes
Dont assume that the first
data processing is
necessarily correct! Its very
important to run several
simulations to satisfy
yourself as well as the
Master Production Schedule
Exercises
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Requirement on top of available stock for period 1, given an ordered
quantity (for orders which have been already released) higher than zero
(orders to be processed now)
Requirement on top of available stock for periods prior to the processing
date, given an ordered quantity (for orders which have already been
released) higher than zero (orders which should have been processed
in the past)
Net current requirement for future period: PROCESSING DATE
+LEAD TIME (orders to be issued now)
Net current requirement for periods prior to PROCESSING DATE +
LEAD TIME (orders which should have been issued in the past)
No requirement on top of available stock up to PROCESSING DATE +
n PERIODS, given an ordered quantity higher than zero (over-ordering)
CHECK
REORDER
EXPEDITING
ALARM
DELAY
Material Requirements Planning - Reporting (a few examples)
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?
INPUT OUTPUT
Material Requirements Planning
Basic problem posed by MRP
Too complex (requires too much information)
It requires a lot of 'discipline'
It is not problem solving oriented
It is difficult to understand correlations
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Then (and only then) our M.R.P. is going to work perfectly.
What should be done?
Conditions for obtaining the minimum theoretical inventory
with MRP
If...
1. Forecasts are good...
2. and well 'mixed' with orders
3. The Bill of materials is updated
4. All production cycles are updated and
correct
5. Lead times do not change even in case
of absenteeism
6. Lead times are never forced out of the
system (the boss does not say 'I'll see
to it')
7. Orders leave on time
8. and we are sure they were received
9. and meanwhile the lead time has not
changed
10. and meanwhile the BOM has not
changed.
11. Warehouse data is reliable
12. Data on W.I.P. is reliable
13. Nobody 'steals' materials
14. 100% quality scraps are recorded
15. There is plenty of stock
16. Murphy is not holding it against us
17. .... (miscellaneous) ....
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Overall discipline!
MRP only when needed!
Streamline!
Reduce BOM levels.
Reduce number of
warehouses/buffers
Reduce Lead times
Reduce number of suppliers
JIT production islands
Avoid bottlenecks and manage 'on
site'
The information system may be one
of the bottlenecks!
C
A
B
B
C
Product A
A
B
C
A
B
C
the factory should not be a maze
but rather a highway
in other
words...
Material Requirements Planning - What should be done?