Data Analytics
MRP and ERP Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LO 12.1 12-2 Material requirements planning (MRP): A computer-based information system that translates master schedule requirements for end items into timephased requirements for subassemblies, components, and raw materials. The MRP is designed to answer three questions: What is needed? 2. How much is needed? 3. When is it needed? 1. LO 12.2 12-3 LO 12.2 12-4 Primary Outputs Planned orders A schedule indicating the amount and timing of future orders Order releases Authorizing the execution of planned orders Changes Revisions of the dates or quantities, or the cancellation of orders LO 12.2 12-5 The MRP is based on the product structure tree diagram Requirements are determined level by level, beginning with the end item and working down the tree The timing and quantity of each “parent” becomes the basis for determining the timing and quantity of the “children” items directly below it. The “children” items then become the “parent” items for the next level, and so on LO 12.3 12-6 Back legs Front legs Back slats Seat cushion Leg supports Seat-frame boards A Ladder-back chair 12-7 A Ladder-back chair F (2) Back legs B (1) Ladder-back subassembly C (1) Seat subassembly D (2) Front legs G (4) Back slats H (1) Seat frame I (1) Seat cushion E (4) Leg supports J (4) Seat-frame boards 12-8 Finished Item C 1 2 3 4 5 6 7 8 MPS Start for Item A 150 0 0 120 0 150 120 0 MRP Gross Requirement for Item C 150 0 0 120 0 150 120 0 12-9 INVENTORY RECORD DATA Item Data Category Lot-sizing rule Lead time Scheduled receipts C FOQ = 230 units 2 week 230 (week 1) Beginning (on-hand) 37 inventory H FOQ = 300 units 1 week 300 (week 2) I Lot-forLot 1 weeks J FOQ = 1500 units 1 weeks None None 40 None 200 12-10 Scheduled receipts of each week and projected on-hand inventory in week 0 are given. Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week Gross requirements Scheduled receipts Projected on-hand 37 inventory Planned receipts Planned order releases 1 2 3 4 5 6 7 8 150 0 0 120 0 150 120 0 230 0 0 0 0 0 0 0 12-11 • Inventory record – A record that shows an item’s lot-size policy, lead time, and various time-phased data. 12-12 Planning lead time An estimate of the time between placing and order and receiving the item in inventory. Planning lead time consists of estimates for: Setup time Processing time Materials handling time between operations Waiting time 12-13 Lot-sizing rules Fixed order quantity (FOQ) Lot-for-lot (L4L) 12-14 Lot-sizing rules Fixed order quantity (FOQ) rule maintains the same order quantity each time an order is issued Could be determined by quantity discounts, truckload capacity, minimum purchases, or EOQ 12-15 Item: C Description: Seat subassembly Lot Size: 230 units Lead Time: 2 weeks Week Gross requirements Scheduled receipts Projected on-hand inventory 37 1 2 3 4 150 0 0 120 230 0 0 0 117 117 Planned receipts Planned order releases 117 227 5 0 Without a planned receipt in week 4, a shortage of 3 units will occur: 117 + 0 + 0 – 120 = –3 units. Adding the planned receipt brings the balance to 117 + 0 + 230 – 120 = 227 units. 150 0 0 227 77 7 8 120 0 0 0 187 187 230 230 230 6 230 The first planned receipt lasts until week 7, when projected inventory would drop to 77 + 0 + 0 – 120 = –43 units. Adding the second planned receipt brings the balance to 77 + 0 + 230 – 120 = 187 units. 12-16 • Lot-sizing rules – Lot-for-lot (L4L) rule where the lot size covers the gross requirements of a single week L4L lot size to arrive in week t (L4L lot size) = Gross requirements for week t – Projected on-hand inventory balance at end of week t–1 = Gross requirements in week 4 – Inventory balance at end of week 3 (L4L lot size) = 120 – 117 = 3 units 12-17 120-117 16- =3 18 12-18 • Translates the MPS and other sources of demand into the requirements needed for all of the subassemblies, components, and raw materials the firm needs to produce parent items. • An item’s gross requirements are derived from three sources: – The MPS for immediate parents that are end items – The planned order releases for parents below the MPS level – Any other requirements not originating in the MPS, such as the demand for replacement parts 12-19 C(1) Seat subassembly H(1) Seat frame I(1) Seat cushion J(4) Seat-frame boards 12-20 Item: Seat subassembly (C) Lot size: 230 units Lead time: 2 weeks Week 1 2 3 4 5 6 7 8 Gross requirements 150 0 0 120 0 150 120 0 Scheduled receipts 230 0 0 0 0 0 0 0 117 117 117 227 227 77 187 187 Projected on-hand inventory 37 Planned receipts Planned order releases 230 230 230 230 12-21 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Gross requirements Week 1 2 3 4 5 6 7 8 150 0 0 120 0 150 120 0 Planned receipts Planned order releases 230 230 230 230 12-22 MRP Explosion Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Week Gross requirements 1 2 3 4 5 6 7 8 150 0 0 120 0 150 120 0 Planned receipts 230 Planned order releases 230 230 Item: Seat frames Lot size: 300 units Item: Seat cushion Lot size: L4L Week Lead time: 1 week 1 2 3 4 Lead time: 1 week 5 6 7 Week 8 Gross requirements Scheduled receipts 230 1 2 3 4 5 6 7 8 0 0 0 0 0 0 0 0 Gross requirements 0 300 0 0 0 0 0 0 Scheduled receipts Projected onhand 40 inventory Projected onhand inventory Planned receipts Planned receipts Planned order releases Planned order releases 0 12-23 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Week Gross requirements 1 2 3 4 5 6 7 8 150 0 0 120 0 150 120 0 Planned receipts 230 Planned order releases 230 230 230 Usage quantity: 1 Usage quantity: 1 Item: Seat frames Lot size: 300 units Item: Seat cushion Lot size: L4L Week Lead time: 1 week Gross requirements Scheduled receipts 1 2 0 230 0 300 3 4 Lead time: 1 week 5 6 7 Week 8 Gross requirements 0 0 0 0 0 0 Scheduled receipts Projected onhand 40 inventory Projected onhand inventory Planned receipts Planned receipts Planned order releases Planned order releases 1 2 0 230 0 0 3 4 5 6 7 8 0 0 0 0 0 0 0 16- 24 12-24 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Week Gross requirements 1 2 3 4 5 6 7 8 150 0 0 120 0 150 120 0 Planned receipts 230 Planned order releases 230 230 230 Usage quantity: 1 Usage quantity: 1 Item: Seat frames Lot size: 300 units Item: Seat cushion Lot size: L4L Week Lead time: 1 week Gross requirements Scheduled receipts Lead time: 1 week 1 2 3 4 5 0 230 0 0 230 0 300 0 0 0 6 7 Week 8 Gross requirements 0 0 0 Scheduled receipts Projected onhand 40 inventory Projected onhand inventory Planned receipts Planned receipts Planned order releases Planned order releases 1 2 3 4 5 0 230 0 0 230 0 0 0 0 0 6 7 8 0 0 0 0 12-25 Item: Seat subassembly Lot size: 230 units Lead time: 2 weeks Week Gross requirements 1 2 3 4 5 6 7 8 150 0 0 120 0 150 120 0 Planned receipts 230 Planned order releases 230 230 230 Item: Seat frames Lot size: 300 units Item: Seat cushion Lot size: L4L Lead time: 1 week Lead time: 1 week Week 1 2 3 4 5 6 7 8 0 230 0 0 230 0 0 0 Scheduled receipts 0 300 0 0 0 0 0 0 Scheduled receipts Projected onhand 40 inventory 40 110 110 110 180 180 180 180 Projected onhand inventory Gross requirements Planned receipts Planned order releases 300 300 Week Gross requirements 0 1 2 3 4 5 6 7 8 0 230 0 0 230 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Planned receipts Planned order releases 230 230 230 230 12-26 Item: Seat frames Lot size: 300 units Item: Seat cushion Lot size: L4L Lead time: 1 week Lead time: 1 week Week Gross requirements 1 2 3 4 5 6 7 8 0 230 0 0 230 0 0 0 Planned receipts 1 2 3 4 5 6 7 8 0 230 0 0 230 0 0 0 Planned receipts 300 Planned order releases Gross requirements Week Planned order releases 300 230 230 230 230 Item: Seat-frame boards Lot size: 1500 units Week Lead time: 1 week 1 2 3 4 5 6 7 8 0 0 0 0 0 0 0 0 Gross requirements Scheduled receipts Projected onhand 200 inventory Planned receipts Planned order releases 16- 27 12-27 Item: Seat frames Lot size: 300 units Item: Seat cushion Lot size: L4L Lead time: 1 week Gross requirements Lead time: 1 week Week 1 2 3 4 5 6 7 8 0 230 0 0 230 0 0 0 Planned receipts 1 2 3 4 5 6 7 8 0 230 0 0 230 0 0 0 Planned receipts 300 Planned order releases Gross requirements Week Planned order releases 300 230 230 230 230 Usage quantity: 4 Item: Seat-frame boards Lot size: 1500 units Week Lead time: 1 week 1 2 3 Gross requirements Scheduled receipts Projected onhand 200 inventory 5 6 7 8 1200 0 200 0 0 0 0 0 0 0 200 200 500 500 500 500 500 Planned receipts Planned order releases 4 1500 1500 12-28 The MPS start quantities for product A calls for the assembly department to begin final assembly according to the following schedule: • Develop a material requirements plan for the next 8 weeks for items B, C, and D. A LT = 2 B (1) C (2) LT = 2 LT = 1 D (2) LT = 1 Finished Item A 1 2 3 4 5 6 7 8 9 10 MPS Start for Item A 0 100 0 200 0 120 180 60 0 0 12-29 INVENTORY RECORD DATA Data Category Item C B D Lot-sizing rule FOQ = 50 units L4L FOQ = 500 units Lead time 1 week 2 weeks 1 weeks Scheduled receipts None 200 (week 1) None Beginning (on-hand) inventory 20 0 425 12-30 Item: B Lot Size: FOQ=50 Lead Time: 1 week Week 1 2 3 4 5 6 7 8 9 10 Gross requirements Scheduled receipts Projected on-hand 20 inventory Planned receipts Planned order releases 12-31 Item: C Lot Size: L4L Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 9 10 Gross requirements Scheduled receipts Projected on-hand inventory 200 0 Planned receipts Planned order releases 12-32 Item: D Lot Size: FOQ =500 units Lead Time: 1 week Week 1 2 3 4 5 6 7 8 9 10 Gross requirements Scheduled receipts Projected on-hand 425 inventory Planned receipts Planned order releases 12-33 Item: B Lot Size: FOQ=50 units Lead Time: 1 week Week 1 Gross requirements 2 3 100 4 5 200 6 7 8 120 180 60 0 20 10 100 200 50 200 50 9 10 10 10 Scheduled receipts Projected on-hand 20 inventory 20 Planned receipts Planned order releases 20 20 100 100 20 20 200 200 100 12-34 Item: C Lot Size: L4L Lead Time: 2 weeks Week 1 Gross requirements Scheduled receipts Projected on-hand inventory 2 3 200 4 5 400 6 7 8 240 360 120 0 0 0 240 360 120 9 10 0 0 200 0 200 0 Planned receipts Planned order releases 0 0 0 400 400 240 360 120 12-35 Item: D Lot Size: FOQ =500 units Lead Time: 1 week Week 1 Gross requirements 2 3 800 4 5 6 480 720 240 145 425 185 500 1000 7 8 9 10 185 185 185 185 Scheduled receipts Projected on-hand 425 inventory 425 Planned receipts Planned order releases 125 125 500 500 500 1000 12-36 Before 1970s: MPS (Master Production Schedule) MPS generally indicates when and how much of each product will be demanded 12-37 1970s: MRP (Material Requirements Planning) Initial MRP focused on material only, produced a schedule of shop order manufacturing dates (and purchase order release dates). Based on production planning and inventory control system, MRP is used to manage manufacturing processes. No constraints on shop manufacturing capacity (labor and machines) 12-38 1980s: MRP to MRPII (Manufacturing Resource Planning) Infinite capacity manufacturing schedules are not realistic, because MRP ignored resource capacity. MRP scope was expanded to address machine and labor resources. MRP evolved into MRPII (Manufacturing Resource Planning) which includes capacity requirements planning to produce feasible schedules. 12-39 Unconstrained storage, and transportation capacity Not optimized No capacity decision support Not cover outbound logistics 12-40 1990s: ERP (Enterprise Resource Planning) Coordinates firm’s entire business activities from suppliers through customers Centralized data base to facility flows across functional areas 12-41 The MPS start quantities for product A calls for the assembly department to begin final assembly according to the following schedule: Finished Item A 1 2 3 4 5 6 7 8 9 10 MPS Start for Item A 20 0 40 30 0 20 0 40 0 0 Item A uses 2 units of component B and 1 unit of component C. Subassembly B uses 2 units of component D. 12-42 INVENTORY RECORD DATA Data Category B Item C D Lot-sizing rule L4L FOQ=50 FOQ = 250 Lead time 1 week 2 weeks 1 week Scheduled receipts 40 (week 1) None None Beginning (on-hand) inventory 0 40 100 12-43 Item: B Lot Size: L4L Lead Time: 1 week Week 1 2 3 4 5 6 7 8 9 10 Gross requirements Scheduled receipts Projected on-hand inventory Net Requirement Planned receipts Planned order releases 12-44 Item: C Lot Size: FOQ = 50 Lead Time: 2 weeks Week 1 2 3 4 5 6 7 8 9 10 Gross requirements Scheduled receipts Projected on-hand inventory Net Requirement Planned receipts Planned order releases 12-45 Item: D Lot Size: FOQ = 250 Lead Time: 1 week Week 1 2 3 4 5 6 7 8 9 10 Gross requirements Scheduled receipts Projected on-hand inventory Net Requirement Planned receipts Planned order releases 12-46
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