The MRP Crusade
3.1 Material Requirements Panning
Principal production control paradigm in USA. Immediate successor: Manufacturing Resources Planning (MRP II), then, enterprise resources planning.
3.1.1 The key insight of MRP
Because components are used to produce final products, demand of components is a function of demand for final products. Treating the 2 types of demand equivalently,ignores the dependence of component demand on final product demand and therefore, leads to inefficiencies in scheduling production.
Independent demand: Any demand that originates outside the system.
Dependent demand: Is the demand of components that make up independent demand products.
Dependent demand is different from independent demand. Production to meet independed demand should be scheduledso as to explicitly recognize its linkage to production to meet independent demand.
3.1.2 Overview of MRP
Basic function: To plan material requirements. It is used to coordinate orders from within the plant and from outside.
Purchase orders: outside orders.
Jobs: Orders from within.
Main focus of MRP: Scheduling jobs and purchase orders to satisfied material requirements generated byexternal demand.
In many MRP systems, time is divided into buckets.
Bucket: interval that is used to break time and demand into discrete chunks.
MRP works with both, finished products (end items) and their constituent parts (lower-level items) .
Bill of material (BOM): Relationship end items and lower-level items.
To facilitate the MRP processing, each item of BOM is given a low-level code (LLC).This code indicates the lowest level in a bill of materials that a particular part is ever used.
End item 0
Subassembly item 1
Component used only by subassembly 2
Most commercial MRP packages include a BOM processor that is used to maintain the bills of material and automatically assign low-level codes.
Also, MRP requires information of independent demand; which comesfrom the master production schedule (MPS).
MPS: contains gross requirements, the current inventory status known as on-hand inventory and the status of outstanding orders known as scheduled receipts.
The basic MRP procedure is simple:
Netting: Determine net requirements by subtracting on-hand inventory and any scheduled receipts from the gross requirements.
Lot sizing: Divide the netted demandinto appropriate lot sizes to form jobs.
Time phasing: Offset the due dates of jobs with lead times to determine start times.
BOM explosion: Use the start times, the lot sizes and the BOM to generate gross requirements of any required component at the next level.
Iterate: Repeat these steps until all levels are processed.
3.1.3 MRP Inputs and Outputs
The basic inputs to MRP are a forecastof demand for end items, the associated bills of materials and the current inventory status, plus any data needed to specify production policies. These data come from 3 sources: the item master file, the master piece production schedule and the inventory status file.
The master production Schedule: Is the source of demand for MRP system. It gives the quantity and due dates for all parts thathave independent demand. This includes the demand for all end items and the external demand for lower-level parts.
The Item Master File: It is organized by part number and contains, at minimum, a description of the part, bill of material information, lot sizing information and planning lead times.
Two other pieces of information needed to perform MRP processing are:
Lot-sizing rule (LSR):determines how the jobs will be sized in order to balance the competing desires of reducing inventory.
Planning Lead Time (PLT): is used to determine job start times.
On- hand Inventory: On hand inventory data are stored by part number and contain information describing the part, where it is located and how many are currently on hand. It also may contain information about allocation (how many...
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