2. 1 Example: MRP Schedule LocoMopeds is a manufacturer of off-road mopeds. The following product structure diagram represents the bill of materials for its dual-carburetor Model 442 moped. MOPEDMOPED ENGINEASSEMBLYENGINEASSEMBLY MOTORMOTORCARBURETOR(2)CARBURETOR(2) GASTANKGASTANKWHEELASSEMBLY(2)WHEELASSEMBLY(2) HUBASSEMBLYHUBASSEMBLYTIRETIRE FRAMEFRAME Level 0 Level 1 Level 2

3. 2 Example: MRP Schedule l Bill of Material ParentComponentLevelCompon. CodeCodeCodeDescriptionReq’d 4420#442 Moped 442EA1Engine Assem.1 GT1Gas Tank1 WA1Wheel Assem.2 F1Frame1 EAM2Motor1 C2Carburetor2 WAHA2Hub Assem.1 T2Tire1

4. 3 Example: MRP Schedule l Inventory Status Report ItemCodeOn-HandSafetyStockLotSizeLeadTime Sched. Receipts Qnty. Week 442500200LFL1---- EA3001005001100010 GT600200LFL290010 WA5004005001200010 F600020003200010 M2500LFL1---- C1501002000+2---- HA1000LFL1240011 T500500100033000,200011,12

5. 4 Example: MRP Schedule The company is currently planning production for weeks 10 through 16. Based on existing orders and demand forecasts, the master production schedule is as follows: Master Production Schedule: #442 Moped Determine the MRP schedule required to support the master production schedule for the Model 442 moped in weeks 10-16. 11 130080012001400 101615141312 010000 WEEK QUANTITY

6. 5 Example: MRP Schedule l MRP Schedule for #442 Mopeds for Weeks 10 - 16, considering that: l Gross Requirements come from the moped MPS l There is an On-Hand balance of 500 mopeds at the end of week 9 l There are no Scheduled Receipts for mopeds l A lot-for-lot rule is used for ordering mopeds l Safety stock of 200 mopeds is desired l Lead time for mopeds is one week

7. 6 Example: MRP Schedule l MRP Schedule for #442 Mopeds... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 500) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: 442 MOPED LT: 1 ITEM: 442 MOPED LT: 1 LOT SIZE: LFL SS: 200 LOT SIZE: LFL SS: 200 0 10 1000 0 111213 1300 800 1514 1400 1200 16 WEEK

8. 7 Example: MRP Schedule l MRP Schedule for #442 Mopeds... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 500) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: 442 MOPED LT: 1 ITEM: 442 MOPED LT: 1 LOT SIZE: LFL SS: 200 LOT SIZE: LFL SS: 200 0 300 1000 10 1000 1000 300 1300 1300 0 0 111213 1300 1200800 1200800 14001200 1300 1300 800 0000 1400 800 15 1400 14 1400 1200 16 WEEK

9. 8 Example: MRP Schedule l MRP Schedule for Gas Tanks for Weeks 10 - 16, considering that: l Gross Requirements come from moped Planned- Order-Releases l There is an On-Hand balance of 600 gas tanks at the end of week 9 l There is a Scheduled Receipt for 900 tanks in week 10 l A lot-for-lot rule is used for ordering gas tanks l Safety stock of 200 gas tanks is desired l Lead time for gas tanks is two weeks

10. 9 Example: MRP Schedule l MRP Schedule for Gas Tanks... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 600) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: GAS TANK LT: 2 ITEM: GAS TANK LT: 2 LOT SIZE: LFL SS: 200 LOT SIZE: LFL SS: 200 1000 900 10 0 1300 111213 800 1200 1514 0 1400 16 WEEK

11. 10 Example: MRP Schedule l MRP Schedule for Gas Tanks... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 600) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: GAS TANK LT: 2 ITEM: GAS TANK LT: 2 LOT SIZE: LFL SS: 200 LOT SIZE: LFL SS: 200 1000 900 1300 1000 10 800 0 1200 300 1300 111213 800 1200 1400 1200 1514 01400 16 WEEK 300000 1000 1000800 800 1400 14001200 0

12. 11 Example: MRP Schedule l MRP Schedule for Frames for Weeks 10 - 16, considering that: l Gross Requirements come from moped Planned- Order-Releases l There is an On-Hand balance of 600 frames at the end of week 9 l There is a Scheduled Receipt for 2000 frames in week 10 l The firm uses a Lot Size (multiple) of 2000 for ordering frames l No safety stock of frames is desired l Lead time for frames is 3 weeks

13. 12 Example: MRP Schedule l MRP Schedule for Frames... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES PLANNED ORDER RELEASES ITEM: FRAME LT: 3 ITEM: FRAME LT: 3 LOT SIZE: 2000 SS: 0 LOT SIZE: 2000 SS: 0 1000 2000 10 01300 111213 8001200 1514 01400 16 WEEK 600

14. 13 Example: MRP Schedule l MRP Schedule for Frames... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 600) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: FRAME LT: 3 ITEM: FRAME LT: 3 LOT SIZE: 2000 SS: 0 LOT SIZE: 2000 SS: 0 1000 2000 1600 0 2000 10 1600 0 2000 1600 1300 111213 800 2000 500 2000 300300900 0 1200 1514 01400 16 WEEK 00 1500 01100

15. 14 Example: MRP Schedule l MRP Schedule for Engine Assemblies for Weeks 10 - 16, considering that: l Gross Requirements come from moped Planned- Order-Releases l There is an On-Hand balance of 300 engine assemblies at the end of week 9 l There is a Scheduled Receipt for 1000 engine assemblies in week 10 l The firm uses a Lot Size (multiple) of 500 for ordering engine assemblies l Safety Stock of 100 engine assemblies is desired l Lead time for engine assemblies is 1 week

16. 15 Example: MRP Schedule l MRP Schedule for Engine Assemblies... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 300) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: ENGINE ASSEM. LT: 1 ITEM: ENGINE ASSEM. LT: 1 LOT SIZE: 500 SS: 100 LOT SIZE: 500 SS: 100 1000 1000 10 0 1300 111213 800 1200 1514 0 1400 16 WEEK

17. 16 Example: MRP Schedule l MRP Schedule for Engine Assemblies... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 300) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: ENGINE ASSEM. LT: 1 ITEM: ENGINE ASSEM. LT: 1 LOT SIZE: 500 SS: 100 LOT SIZE: 500 SS: 100 1000 1000 200 200 10 1500 200 0 500 1500 1100 200 1300 111213 800 10001100 10001500 1000 400 500 1500 4001004000 1200 1514 0 1400 16 WEEK

18. 17 Example: MRP Schedule l MRP Schedule for Motors for Weeks 10 - 16, considering that: l Gross Requirements come from engine assembly Planned-Order-Releases l There is an On-Hand balance of 250 motors at the end of week 9 l There are no Scheduled Receipts for motors l A lot-for-lot rule is used for ordering motors l No Safety Stock of motors is desired l Lead time for motors is 1 week

19. 18 Example: MRP Schedule l MRP Schedule for Motors... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 250) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: MOTOR LT: 1 ITEM: MOTOR LT: 1 LOT SIZE: LFL SS: 0 LOT SIZE: LFL SS: 0 10 1500 500 111213 1500 1000 151416 WEEK

20. 19 Example: MRP Schedule l MRP Schedule for Motors... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 250) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: MOTOR LT: 1 ITEM: MOTOR LT: 1 LOT SIZE: LFL SS: 0 LOT SIZE: LFL SS: 0 250 1250 10 1250 500 1250 250 1500 1500 500 500 0 500 111213 1500 1000 1000 1500 1500 1000 0000 1000 151416 WEEK

21. 20 Example: MRP Schedule l MRP Schedule for Carburetors for Weeks 10 - 16, considering that: l Gross Requirements come from engine assembly Planned-Order-Releases (times 2) l There is an On-Hand balance of 150 carburetors at the end of week 9 l There are no Scheduled Receipts for carburetors l A Lot Size of 200+ is used for ordering carburetors l Safety Stock of 100 carburetors is desired l Lead time for carburetors is 2 weeks

22. 21 Example: MRP Schedule l MRP Schedule for Carburetors... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 150) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: CARBURETOR LT: 2 ITEM: CARBURETOR LT: 2 LOT SIZE: 2000+ SS: 100 LOT SIZE: 2000+ SS: 100 10 3000 1000 111213 3000 2000 151416 WEEK

23. 22 Example: MRP Schedule l MRP Schedule for Carburetors... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 150) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: CARBURETOR LT: 2 ITEM: CARBURETOR LT: 2 LOT SIZE: 2500+ SS: 100 LOT SIZE: 2500+ SS: 100 50 2500 10 2500 3050 3000 3000 2500 2500 950 50 1000 111213 3000 950 2500 1450 2500 1550105015501550 2000 151416 WEEK

24. 23 Example: MRP Schedule l MRP Schedule for Wheel Assemblies for Weeks 10 - 16, considering that: l Gross Requirements come from moped Planned- Order-Releases (times 2) l There is an On-Hand balance of 500 wheel assemblies at the end of week 9 l There is a Scheduled Receipt for 2000 wheel assemblies in week 10 l A Lot Size (multiple) of 500 is used for ordering wheel assemblies l Safety Stock of 400 wheel assemblies is desired l Lead time for wheel assemblies is 1 week

25. 24 Example: MRP Schedule l MRP Schedule for Wheel Assemblies... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 500) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: WHEEL ASSEM. LT: 1 ITEM: WHEEL ASSEM. LT: 1 LOT SIZE: 500 SS: 400 LOT SIZE: 500 SS: 400 2000 2000 10 0 2600 111213 1600 2400 1514 0 2800 16 WEEK

26. 25 Example: MRP Schedule l MRP Schedule for Wheel Assemblies... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 500) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: WHEEL ASSEM. LT: 1 ITEM: WHEEL ASSEM. LT: 1 LOT SIZE: 500 SS: 400 LOT SIZE: 500 SS: 400 2000 2000 2100 2100 10 2500 100 100 0 2000 2500 2500 2600 111213 1600 28002000 30002000 3000 1600 2000 2000 04000200 2400 1514 0 2800 16 WEEK

27. 26 Example: MRP Schedule l MRP Schedule for Hub Assemblies for Weeks 10 - 16, considering that: l Gross Requirements come from wheel assembly Planned-Order-Releases l There is an On-Hand balance of 100 hub assemblies at the end of week 9 l There is a Scheduled Receipt of 2400 hub assemblies in week 11 l A lot-for-lot rule is used for ordering hub assemblies l No Safety Stock of hub assemblies is desired l Lead time for hub assemblies is 1 week

28. 27 Example: MRP Schedule l MRP Schedule for Hub Assemblies... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 100) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: HUB ASSEM. LT: 1 ITEM: HUB ASSEM. LT: 1 LOT SIZE: LFL SS: 0 LOT SIZE: LFL SS: 0 0 10 2400 2500 2000 111213 2000 3000 1514 0 0 16 WEEK

29. 28 Example: MRP Schedule l MRP Schedule for Hub Assemblies... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 100) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: HUB ASSEM. LT: 1 ITEM: HUB ASSEM. LT: 1 LOT SIZE: LFL SS: 0 LOT SIZE: LFL SS: 0 0 100 100 10 2000 2500 2500 2400 2500 2000 2000 2000 0 2000 111213 2000 3000 3000 2000 2000 3000 0000 3000 1514 0 0 16 WEEK

30. 29 Example: MRP Schedule l MRP Schedule for Tires for Weeks 10 - 16, considering that: l Gross Requirements come from wheel assembly Planned-Order-Releases l There is an On-Hand balance of 500 tires at the end of week 9 l There are Scheduled Receipts for 3000 and 2000 tires weeks 11 and 12, respectively l A Lot Size (multiple) of 1000 is used for ordering tires l Safety Stock of 500 tires is desired l Lead time for tires is 3 weeks

31. 30 Example: MRP Schedule l MRP Schedule for Tires... Initially GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 500) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: TIRE LT: 3 ITEM: TIRE LT: 3 LOT SIZE: 1000 SS: 500 LOT SIZE: 1000 SS: 500 0 10 3000 2500 2000 2000 111213 2000 3000 1514 0 0 16 WEEK

32. 31 Example: MRP Schedule l MRP Schedule for Tires... Completed GROSS REQUIREMENTS SCHEDULED RECEIPTS AVAILABLE (ON-HAND = 500) NET REQUIREMENTS PLANNED ORDER RECEIPTS PLANNED ORDER RELEASES ITEM: TIRE LT: 3 ITEM: TIRE LT: 3 LOT SIZE: 1000 SS: 500 LOT SIZE: 1000 SS: 500 0 0 2000 10 3000 3000 3000 2500 2500 2000 2000 111213 2000 2500 3000 1500 2000 500 500 500500 3000 1514 0 0 16 WEEK

33. 32 Issues in MRP l Management Commitment l User involvement l Education and training l Selection of S/W packages l Data accuracy l Realistic MPS l Realistic lead times l Maintaining accurate BOM files

34. 33 Lot-Sizing in MRP l Lot-size is the quantity ordered/produced at one time l Large lots are preferred because: l Changeovers cost less and capacity greater l Annual cost of purchase orders less l Price breaks and transportation breaks can be utilized l Small lots are preferred because: l Lower inventory carrying cost l Reduced risk of obsolescence l Shorter cycle time to produce customer order

35. 34 Lot-Sizing Methods in MRP l Economic Order Quantity (EOQ) l does not consider quantity discounts l does not always provide the most economical approach with lumpy demands l Lot-for-Lot (LFL) l accommodates lumpy demand l Period Order Quantity (POQ) l Many others

36. 35 Lot-Sizing Methods in MRP The best lot-sizing method, resulting in least cost, depends on cost and demand patterns

37. 36 Lot-Sizing in MRP l Lot-size is the quantity ordered/produced at one time l Large lots are preferred because: l Changeovers cost less and capacity greater l Annual cost of purchase orders less l Price breaks and transportation breaks can be utilized l Small lots are preferred because: l Lower inventory carrying cost l Reduced risk of obsolescence l Shorter cycle time to produce customer order

38. 37 The best method, resulting in least cost, depends on cost and demand patterns. Lot-Sizing Methods l Economic Order Quantity (EOQ) l does not consider quantity discounts l does not always provide the most economical approach with lumpy demand l Lot-for-Lot (LFL) l accommodates lumpy demand l Period Order Quantity (POQ)

39. 38 Evaluation of MRP l Most beneficial to process-focused systems that have long processing times and complex multistage production steps l Lead times must be reliable l Must freeze MPS for some time before actual production... certain demand l Difficult to implement

40. 39 Closed Loop MRP Production Planning Master Production Scheduling Material Requirements Planning Capacity Requirements Planning Realistic? No Feedback Execute: Capacity Plans Material Plans Yes Feedback

41. 40 Closed Loop MRP Materials Management at Washburn Guitar, Inc.

42. 41 Manufacturing Resource Planning (MRP II) l Goal: Plan and monitor all resources of a manufacturing firm (closed loop): l Manufacturing l Marketing l Finance l Engineering l Shop-floor control l Simulation capability of the manufacturing system

43. 42 Enterprise Resource Planning (ERP) l ERP systems available today integrate manufacturing with other functional areas in an organization l ERP systems make it easier for management to obtain local information about performance of specific processes, bottlenecks resources, and products (or product groups), etc. l Class I ERP software packages (for large companies) include BAAN, SAP, and Oracle

44. 43 MRP II System

45. 44 MRP I to MRP II l MRP I simply exploded demand (MPS) into required materials l MRP II became Manufacturing Resource Planning which provides a closed-loop business management system l Financial management l Shop floor control l Operations management l Simulation capability

46. 45 Capacity Requirements Planning (CRP)

47. 46 Capacity Requirements Planning (CRP) l Tests MPS for feasibility l Utilizes routings to determine labor/machine loads l If schedule feasible, recommends freezing l If schedule overloads resources, points out processes that are overscheduled

48. 47 Load Schedules l Compares actual labor and machine hours against available hours l Offsets schedules between successive stages of production by lead times l Provides feasible MPS and economically loaded work centers l Promotes system operating efficiency... lowers costs!

49. 48 World-Class Practice l Lead times respond to conditions l Product development as levels of product structure tree l Lead times that adjust to load l MRP reports shared with customers and suppliers