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© 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Chapter 13 Material Requirements Planning.

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Presentation on theme: "© 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Chapter 13 Material Requirements Planning."— Presentation transcript:

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2 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Chapter 13 Material Requirements Planning

3 Ch 13 - 2 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP Computerized inventory control & production planning system Schedules component items when they are needed - no earlier and no later

4 Ch 13 - 3 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e When to Use MRP Dependent and discrete items Complex products Job shop production Assemble-to-order environments

5 Ch 13 - 4 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP Inputs & Outputs Master Production Schedule Material Requirements Planning Planned Order Releases Work OrdersPurchase Orders Rescheduling Notices Product Structure File Inventory Master File

6 Ch 13 - 5 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP Inputs Master production schedule Product structure file Inventory master file

7 Ch 13 - 6 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Master Production Schedule Drives MRP process with a schedule of finished products Quantities represent production not demand Quantities may consist of a combination of customer orders & demand forecasts Quantities represent what needs to be produced, not what can be produced

8 Ch 13 - 7 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Master Production Schedule

9 Ch 13 - 8 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Clipboard Rivet (2) Iron Rod (3 in.) Spring (1) Spring Steel (10 in.) Level 0 Level 1 Level 2 Level 3 Bottom Clip (1) Top Clip (1) Pivot (1) Sheet Metal (8 in 2 ) Clip Assembly (10) Sheet Metal (8 in 2 ) Product Structure Tree Board (1) Pressboard (1) Finish (2oz.)

10 Ch 13 - 9 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Indented Bill of Material LEVELITEMUnit of MeasureQuantity 0 - - - -ClipboardEa1 - 1 - - -Clip AssemblyEa1 - - 2 - -Top ClipEa1 - - - 3 -Sheet MetalIn 2 8 - - 2 - -Bottom ClipEa1 - - - 3 -Sheet MetalIn 2 8 - - 2 - -PivotEa1 - - - 3 -Iron RodIn3 - - 2 - -SpringEa1 - - - 3 -Spring SteelIn10 - 1 - - -RivetEa2 - 1 - - - BoardEa1 - - 2 - - Press BoardEa1 - - 2 - - FinishOz2

11 Phantom bills –transient subassemblies –never stocked –immediately consumed in next stage K-bills –group small, loose parts under pseudoitem # –reduces paperwork Ch 13 - 10 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Specialized BOMS

12 Ch 13 - 11 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Specialized BOMS Modular bills – product assembled from major subassemblies & customer options – modular bill kept for each major subassembly – simplifies forecasting & planning – X10 Automobile example 3 x 8 x 3 x 8 x 4 = 2,304 configurations 3 + 8 + 3 + 8 + 4 = 26 modular bills

13 X10 Automobile EnginesExteriorInteriorInterior Body (1 of 3)Color (1 of 8)(1 of 3)Color (1 of 8) (1 of 4) 4-Cylinder (.40)Bright Red (.10) Leather (.20)Grey (.10)Sports Coupe (.20) 6-Cylinder (.50)White Linen (.10)Tweed (.40)Light Blue (.10)Two-Door (.20) 8-Cylinder (.10)Sulphur Yellow (.10)Plush (.40)Rose (.10)Four-Door (.30) Neon Orange (.10)Off-white (.20)Station Wagon (.30) Metallic Blue (.10)Cool Green (.10) Emerald Green (.10)Black (.20) Jet Black (.20)Brown (.10) Champagne (.20)B/W Checked (.10) Ch 13 - 12 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Modular Bill Of Material

14 Ch 13 - 13 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Inventory Master File DescriptionInventory Policy ItemBoardLead time2 Item no.7341Annual demand5,000 Item typeManuf.Holding cost1 Product/sales classAss’yOrdering/setup cost50 Value classBSafety stock 25 Buyer/plannerRSRReorder point39 Vendor/drawing07142EOQ316 Phantom codeNMinimum order qty100 Unit price/cost1.25Maximum order qty500 PeggingYMultiple order qty100 LLC3Policy code3

15 Ch 13 - 14 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Inventory Master File, Con’t. Physical InventoryUsage/Sales On hand100YTD usage/sales1,100 LocationW142MTD usage/sales75 On order50YTD receipts1,200 Allocated75MTD receipts0 Cycle3Last receipt8/25 Difference-2Last issue10/5 Codes Cost acct.00754 Routing00326 Engr07142

16 Ch 13 - 15 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Inventory Accuracy 1. Maintain orderly stockrooms 2. Control access to stockrooms 3. Establish & enforce procedures for inventory withdrawal 4. Ensure prompt and accurate entry of inventory transactions 5. Take physical inventory count on a regular basis 6. Reconcile inventory discrepancies in a timely manner (use cycle counting)

17 Ch 13 - 16 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e The MRP Matrix Item –name or number identifying scheduled item LLC –low-level-code; lowest level at which item appears in a product structure

18 Ch 13 - 17 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Parts Of MRP Matrix Lot size –order multiples of this qty; can be min/max qty LT ( lead time) –time from order placement to receipt PD ( past-due) –orders behind schedule Gross requirements –demand for item by time period

19 Ch 13 - 18 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Scheduled receipts –quantity already on order & receipt date –released orders become scheduled receipts Projected on hand –expected on-hand inventory at end of period Net requirements –net amount needed after on-hand adjustments Planned order receipts –net requirements adjusted for lot-sizing Planned order releases –planned order receipts offset by lead time

20 Ch 13 - 19 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e The Alpha Beta Company ItemOn HandScheduled Receipts Lot SizeMPS A 1001100, period 8 B 5 01200, period 6 C 1400150- - - D200250, period 2250- - - A LT=3 C(3) LT=4 D(2) LT=2 D(3) LT=2 B LT=2

21 Ch 13 - 20 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP Matrices For A & B

22 Ch 13 - 21 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP Matrices For C & D

23 Ch 13 - 22 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Alpha Beta Planned Order Report PeriodItemQuantity 1C150 2D250 3D250 4B195 5A 90

24 Ch 13 - 23 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Item#2740Date9-25-02 On hand100Lead Time 2 weeks On order200Lot size200 Allocated50Safety Stock 50 50 9-26AL 44162525 9-30AL 417425 0 10-01GR 647050-50 10-08SR 7542200150Expedite SR 10-1 10-10CO 44717575 10-15GR 64715025 10-23GR 6471250 10-27GR 647350-50Release PO 10-13 Date Order No. Gross Reqs. Scheduled Receipts Projected On Hand Action Key:AL = allocatedCO = customer order PO = purchase orderWO = work order SR = scheduled receiptGR = gross requirements Planned Order Report

25 Ch 13 - 24 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP Action Report Current date: 9-25-02 #274010-087542200ExpediteSR 10-1 #361610-09Move forwardPO 10-7 #241210-10Move forwardPO 10-5 #342710-15Move backwardPO 10-25 #251610-207648100De-expediteSR 10-30 #274010-27200ReleasePO 10-13 #366610-3150ReleaseWO 10-24 DateItemOrder No.Qty.Action

26 Ch 13 - 25 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Capacity Requirements Planning (CRP) Computerized system that projects load from material plan Creates load profile Identifies underloads and overloads

27 Ch 13 - 26 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Capacity Terms Load profile –compares released and planned orders with work center capacity Capacity –productive capability; includes utilization and efficiency Utilization –% of available working time spent working

28 Ch 13 - 27 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e More Capacity Terms Efficiency Load –the standard hours of work assigned to a facility Load percent –the ratio of load to capacity

29 Ch 13 - 28 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Capacity Requirements Planning MRP planned order releases Routing file Capacity requirements planning Open orders file Load profile for each machine center

30 Ch 13 - 29 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Calculating Capacity 2 copiers, 2 operators 5 days/wk, 8 hr/day 1/2 hr meals, 1/2 hr maintenance per day Efficiency = 100% Utilization = 7/9 = 87.5% Daily capacity = 2 machines x 2 shifts x 8 hours/shift x 100% efficiency x 87.5% utilization = 28 hours or 1,680 minutes

31 Ch 13 - 30 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Determining Load & Load % 105005.20.08 5.2+ (500 x 0.08)=45.2 201,00010.60.10 10.6+(1,000 x 0.10) =110.6 305,0003.40.12 3.4+(5,000 x 0.12)=603.4 4010,00011.20.14 11.2+(10,000 x 0.14)=1,411.2 502,00015.30.10 15.3+(2,000 x 0.10) =215.3 2385.7 min Load percent = 2,385.7 / 1,680 = 1.42 x 100% = 142% Add another shift: Daily capacity = 2 machines x 3 shifts x 8 hours/shift x 100% efficiency x 87.5% utilization = 42 hours or 2,520 minutes Revised load percent = 2,385.7 / 2,520 = 0.9467 x 100% = 94.67% Job SetupRun time Total #Copiestime (min)(min/unit) TimeLoad

32 Ch 13 - 31 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Initial Load Profile 1 2 3 4 5 6 Time (weeks) Normal capacity Hours of capacity

33 Ch 13 - 32 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Adjusted Load Profile 1 2 3 4 5 6 Time (weeks) Work an extra shift Push back Pull ahead Overtime Hours of capacity

34 Ch 13 - 33 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Remedies for Underloads 1. Acquire more work 2. Pull work ahead that is scheduled for later time periods 3. Reduce normal capacity

35 Ch 13 - 34 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Remedies for Overloads 1. Eliminate unnecessary requirements 2. Reroute jobs to alternative machines or work centers 3. Split lots between two or more machines 4. Increase normal capacity 5. Subcontract 6. Increase the efficiency of the operation 7. Push work back to later time periods 8. Revise master schedule

36 Ch 13 - 35 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Splitting Orders Lathes overloaded, shift work to milling MachineSetup timeRun time Lathe 30 min5 min Mill 45 min10 min Three options for producing parts 1. Produce 100 units on lathe 2. Split 50:50 between lathe & mill 3. Optimal split between lathe & mill

37 Ch 13 - 36 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Options 1 And 2 1. Produce 100 units on lathe 30 + 5(100) = 530 min 2. Split 50:50 between lathe & mill 30 + 5(50) = 280 min on lathe 45 + 10(50) = 545 min on mill Job completion time = 545 minutes

38 Ch 13 - 37 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Option 3 3. Optimal split: x on lathe, 100-x on mill 30 + 5x = 45 + 10(100-x) 5x = 15 + 1000 - 10x 15x = 1015 x = 67.66 or 68 units on lathe,(100-x) = 32 units on mill 30 + 5(68) = 370 min on lathe 45 + 10(32) = 365 min on mill Job completion time = 370 minutes

39 Ch 13 - 38 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Manufacturing Resource Planning (MRP II) Extension of MRP Plans all resources needed for running a business Variations include –Service Requirements Planning (SRP) –Business Requirements Planning (BRP) –Distribution Requirements Planning (DRP)

40 Ch 13 - 39 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP II Modules Forecasting Customer order entry Production planning / master production scheduling Product structure / bill-of- material processor Inventory control Material requirements planning Capacity planning Shop floor control Purchasing Accounting Financial analysis

41 Ch 13 - 40 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e MRP II Flowchart Feasible? Marketing Plan Financial Plan Business Plan Production Plan No more Yes

42 Ch 13 - 41 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Master production schedule Material requirements planning Capacity requirements planning Manufacture Inventory Shop floor control Purchase orders Work orders Feasible? No Yes Feedback

43 Ch 13 - 43 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Problems with MRP Material requirements plan is first; capacity is an afterthought MRP assumes fixed lead times Excessive reporting requirements

44 Ch 13 - 44 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e Prospects for MRP/MRP II Coordinates company strategy among different functional areas Responds quickly to what-if? questions at various levels of detail BOM processors, purchase modules, & customer order entry are standard requirements for Manufacturing Information Systems Monitors design & vendor quality, & customer service Builds trust, teamwork, & better decisions Cash-flow planning & profit/cost projections

45 Ch 13 - 42 © 2000 by Prentice-Hall Inc Russell/Taylor Oper Mgt 3/e SAP’s ERP Modules

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