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Planning (MRP)
Material Requirements Planning
(MRP)
Computer-based information system that schedules
and orders dependent-demand inventory components
Ex: demand for frames, pedals and rims dependent on
production of complete bicycle
R=500
3 5 8 10 Days
Dependent demand distribution
Though the demand for bicycle is roughly constant
but the demand for rim is lumpy and non-uniform
2000
Inventory
3 5 8 10
Days
Independent and Dependent Demand
Independent Demand
A Dependent Demand
B(4) C(2)
Example: Bicycle
Wheels/Rims (2)
Planning Horizon
Assembly
Subassembly
Fabrication
Procurement
1 2 3 4 5 6 7 8 9 10
Weeks
MRP Processing Logic:
Assembly Time Chart
Procurement of
raw material D Fabrication
of part E
Subassembly A
Procurement of Final assembly
raw material F and inspection
Procurement of
part C
Procurement of
part H
Subassembly B
Procurement of Fabrication
raw material I of part G
1 2 3 4 5 6 7 8 9 10 11
Weeks
MRP Terminology
Gross requirements
Scheduled receipts
Projected on hand
Net requirements
Planned-order receipts
Planned-order releases
MPR Terminology
Gross requirements
Total expected demand
Scheduled receipts
Open orders scheduled to arrive
Projected on hand
Expected inventory on hand at the beginning of each
time period
MRP Processing Terminology
Net requirements
Actual amount needed in each time period
Gross requirements available inventory
Planned-order receipts
Quantity expected to be received at the beginning of the period
Planned-order releases
Planned amount to be ordered in each time period
Lets look at an example BOM...
Question:
How many Ds we need in order
to produce 50 As?
B(2) C(1)
Question:
When do we start
producing/ordering each part?
(15)
(10) (15)
D(3) E(3) D(1)
Lets assume that we need 50 units of A
Delivery date
for final
product
5 days
Parts-Products
A
B
C
D
E
Lets assume that we need 50 units of A
Start
assembly for
50 units of A
Parts-Products
A
B
C
D
E
Lets assume that we need 50 units of A
Start
assembly for
100 units of B
Parts-Products
A
B
C
D
E
Lets assume that we need 50 units of A
Start
assembly for
50 units of C
Parts-Products
A
B
C
D
E
Lets assume that we need 50 units of A
Order 150
units of D for
Bs process
Parts-Products
A
B
C
D
E
Lets assume that we need 50 units of A
Order 50
units of D for
Cs assembly
Parts-Products
A
B
C
D
E
Lets assume that we need 50 units of A
Order 150
units of E for
Cs assembly
Parts-Products
A
B
C
D
E
Summary: How does MRP work?
Production
Assembly
Customer Production
Assembly
Production
Production
Assembly
Production Customer
Assembly
Production
Cheeseburger
Hamburger
Patties
Forecast Hamburger
Chicken
Patties Chicken
Sandwich