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Material Requirement Planning (MRP)

Material Requirement Planning (MRP). Contributors to MRP. Joseph Orlicky George Plossl Oliver Wight American Production and Inventory Control Society. What is MRP?. Computerized Inventory Control Production Planning System Management Information System Manufacturing Control System.

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Material Requirement Planning (MRP)

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  1. Material Requirement Planning (MRP)

  2. Contributors to MRP • Joseph Orlicky • George Plossl • Oliver Wight • American Production and Inventory Control Society

  3. What is MRP? • Computerized Inventory Control • Production Planning System • Management Information System • Manufacturing Control System

  4. When to use MRP • Job Shop Production • Complex Products • Assemble-to-Order Environments • Discrete and Dependent Demand Items

  5. Reduce Inventory Levels Reduce Component Shortages Improve Shipping Performance Improve Customer Service Improve Productivity Simplified and Accurate Scheduling Reduce Purchasing Cost Improve Production Schedules Reduce Manufacturing Cost Reduce Lead Times Less Scrap and Rework Higher Production Quality What can MRP do?

  6. Improve Communication Improve Plant Efficiency Reduce Freight Cost Reduction in Excess Inventory Reduce Overtime Improve Supply Schedules Improve Calculation of Material Requirements Improve Competitive Position What can MRP do?

  7. Three Basic Steps of MRP • Identifying Requirements • Running MRP – Creating the Suggestions • Firming the Suggestions

  8. Step 1: Identifying the Requirements • Quantity on Hand • Quantity on Open Purchase Order • Quantity in/or Planned for Manufacturing • Quantity Committed to Existing Orders • Quantity Forecasted

  9. Step 1: Important InformationMRP is….. • Company Sensitive • Location Sensitive • Date Sensitive

  10. Step 2: Running MRP – Creating the Suggestions • Critical Items • Expedite Items • Delay Items

  11. Step 3: Firming the Suggestions • Manufacturing Orders • Purchasing Orders • Various Reports

  12. Overview of the MRP System Product Structure File Master Production Schedule Inventory Master File Material Requirements Planning Manufacturing Orders Purchase Orders Various Reports

  13. MRP Inputs • Product Structure File • Master Production Schedule • Inventory Master File

  14. Product Structure File • Bill of Materials

  15. Master Production Schedule • Schedule of Finished Products • Represents Production, not Demand • Combination of Customer Orders and Demand Forecasts • What Needs to be Produced

  16. Inventory Master File • On-Hand Quantities • On-Order Quantities • Lot Sizes • Safety Stock • Lead Time • Past-Usage Figures

  17. MRP Process • Schedules the Production of all items using an MRP Matrix MRP Matrix

  18. Terms Defined • Item – name or number for the item being scheduled • Low-Level Code – the lowest level of the item on the product structure file • Lot Size – order multiples of quantity • Lead Time – the time from when an order is placed to when it is received • PD – Past Due Time Bucket, orders behind schedule

  19. Terms Defined • Gross Requirements – demand for an item by time period • Scheduled Receipts – material already ordered • Projected on Hand – expected ending inventory • Net Requirements – number of items to be provided and when • Planned Order Receipts – net requirements adjusted for lot size • Planned Order Releases – planned order receipts offset for lead times

  20. Example of the MRP Process

  21. Example of the MRP Process

  22. MRP Outputs • Manufacturing Orders • Purchasing Orders • Various Reports

  23. Hubbell Lighting Case • Manufactures Industrial Lighting Products • Good-Quality Products • Poor at Meeting Due Dates • Work is Specialized for Each Customer • Job Shop Environment • Complex Products

  24. Before MRP Implementation Less than 75% of orders completed on time After MRP Implementation 97% of orders completed on time 2% of orders completed with 1 to 2 days after due date Hubbell Lighting Case

  25. Summary of MRP MRP is a….. • Computerized Inventory Control • Production Planning System that….. • Schedules Component Items as Needed which will….. • Track Inventory and….. • Help you in many other aspects of business

  26. References Russell, Roberta S., and Bernard W. Taylor III. Operations Management. 3rd Edition: Prentice Hall, 2000 Grubbstrom, Robert W. Material Requirements Planning and Manufacturing Resource Planning. 03/12/2002. http://www.itbp.com/opsmanagement/iebm/material_requirements.htm. Vormittag Associates, Inc. System 2000 MRP. 03/12/2002. http://www.vaihome.com/s2000mrp.htm. Inventory Solutions. What is MRP?. 03/12/2002. http://www.inventorysolutions.org/def_mrp.htm.

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