Lesson 18 – Materials Requirements PlanningCopyright – Harland E. Hodges, Ph.D 18-118 - 1MRP is a computer based information system for ordering, scheduling, and managing dependent demand inventory requirementsLesson 18Material Requirements Planning (MRP)End ProductE(1)18 - 2End ProductIndependent Versus Dependent DemandIndependent Demand - demand at the customer end product level Dependent Demand -demand for items that are subassemblies, component parts or raw materials to be used in the production of end productsE(1)18 - 3Independent DemandAB(4)C(2)D(2) E(1)D(3)F(2)Dependent DemandIndependent demand is uncertainDependent demand is certainIndependent Versus Dependent DemandLesson 18 – Materials Requirements PlanningCopyright – Harland E. Hodges, Ph.D 18-218 - 4“ I don’t know how we managed to get along without MRP for as long as wedid. Our scheduling has gone from a state of turmoil to relative calm. We have achieved a substantial reduction in inventory size and cost while increasing our customer service. We are more than satisfied with MRP; it allows to plan rather than spend all our time trying to meet one crisis after another. I would strongly recommend that all manufacturing firms adopt MRP or some similar approach”.Positive View Of MRP18 - 5“We had heard so many good things about MRP that we couldn’t wait to get started, but so far, it seems like we’ve just been spinning our wheels. We’re not even close to going online with it, and yet we’ve already exceeded our original time estimates and costs are out of sight. Everyone is discouraged, especially the brass. There is even some talk of just scrapping the whole idea”Negative View Of MRP18 - 6Materials Requirements Planning is a a computer based information system designed to handle ordering and scheduling of dependent demand inventory requirements . It . Takes into account lead times, and. Develops a production plan showing quantity and timing for materials, component parts and subassemblies from the first component to the lastMaterials Requirement Planning - MRPAs you have learned or will learn in your information systems class, information systems are only as good as the input data. Two of the most prevalent reasons for MRP failure are . Lack of planning for implementation. GIGOLesson 18 – Materials Requirements PlanningCopyright – Harland E. Hodges, Ph.D 18-318 - 7MRP SystemInventory TransactionsMRP Inputs & OutputsMaster ScheduleBill of MaterialsInventoryFileSecondaryreportsException reportsPlanning reportsPerformance-controlreportsPrimaryreportsChangesOrder releasesPlanned-orderschedules18 - 8Master Scheduling ProcessMasterschedulingBeginning InventoryForecastCustomer OrdersProjected InventoryMaster Production ScheduleAvailable To Promise (uncommitted inventory)Recall the Master Production Scheduling Process is a procedure for considering inventories, customer orders, & forecasts to produce a projected inventory, master production schedule & ATP. 18 - 9The Master Production Schedule (MPS) is a schedule of how much & whento produce independent (customer end product) demand. It shows when the end product is needed but does not show when raw materials, components, subassemblies or parts are needed.Master Production SchedulePlanning Period 12345678Forecast 30 30 30 30 40 40 40 40Customer Orders 33 20 10 4 2Projected Demand 33 30 30 30 40 40 40 40Projected On Hand Inventory 64 31 1 41 11 41 1 31 61Master Production Schedule (MPS) 70 70 70 70Lesson 18 – Materials Requirements PlanningCopyright – Harland E. Hodges, Ph.D 18-418 - 10Product Planning HorizonThe Product Planning Horizon shows the timing, lead times and steps in the manufacturing process to assure that the end item is manufactured correctly and on-time.12 34 5678910ProcurementFabricationSub-assemblyAssemblyCumulative Lead Time - the sum of the lead times that sequential phases of a process require.Procurement Lead TimeSub-assembly Lead TimeAssembly Lead Time18 - 11Assembly Time Charts show the material order points needed to meet scheduled availability of the end item12 34 567891011Procurement ofraw material DProcurement ofraw material FProcurement Of part CProcurement ofpart HProcurement ofraw material I Fabricationof part GFabricationof part ESubassembly ASubassembly BFinal assemblyand inspectionMaterial D, F and I must be ordered at the beginning of week 2 to meet a delivery at the beginning of week 12Assembly Time Chart18 - 12The Bill of Materials (BOM) is a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of an end product. The Bill of Materials File contains all Bill of Materials for each end product the company produces.A Product Structure Tree - a visual depiction of the requirements in a bill of materials, where all components are listed by levels.Bill Of MaterialsLesson 18 – Materials Requirements PlanningCopyright – Harland E. Hodges, Ph.D 18-518 - 13Cross BarLegsSeatBack SupportsCross BarSide RailsBill Of Materials – Chair Example18 - 14Cross BarLegs (2)SeatBack Supports (3)Cross BarSide Rails (2)ChairLeg AssemblyBack AssemblyProduct Structure Tree - Chair Example18 - 15Example 1: Use the information presented below to answer the following? Determine the quantities of B, C, D, E and F to complete one X. Determine the quantities of each of these components to produce 200 X’s.XD(3)EE(2)F(2)B(2)Level 0123CE(4)B - 2C - 1D - 3x2 = 6E - 4x3x2+1x2+2 = 28F - 2B - 400C - 200D - 1200E - 5600F - 400Product Structure Tree - ExampleLesson 18 – Materials Requirements PlanningCopyright – Harland E. Hodges, Ph.D 18-618 - 16Even though this template is provided, manual acuity will be necessary to solve some of the problems.18 - 17Bill of Material Menu18 - 18ED WorksheetSteps1. Enter products and components in the columns to the left – this builds the product structure to the right2. Enter quantities in the product structure tree in the bright green cells12Lesson 18 – Materials Requirements PlanningCopyright – Harland E. Hodges, Ph.D 18-718 - 19Steps1. Click the Explode BOM Components Macro2. Enter the end item quantity and click OKEXPLODE Worksheet1218 - 20EXPLODE WorksheetThe BOM explosion is automatically shown in the product structure tree and the total for all components and subcomponents are shown in the BOM Quantity to the left.18 - 21Here, the BOM explosion is shown for 200 X’sEXPLODE WorksheetLesson 18 – Materials Requirements