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11Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
Materials Requirements Materials Requirements PlanningPlanning
Chapter 16Chapter 16
22Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
OutlineOutline
Definition of MRP SystemsDefinition of MRP Systems
MRP versus Order-Point SystemsMRP versus Order-Point Systems
MRP ExampleMRP Example
MRP ElementsMRP Elements
Operating an MRP SystemOperating an MRP System
The Successful MRP SystemThe Successful MRP System
33Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
Definitions of MRP SystemsDefinitions of MRP Systems
““Closed-loop” MRP System (See Figure 16.1)Closed-loop” MRP System (See Figure 16.1)
Three principal functions of MRP (Orlicky):Three principal functions of MRP (Orlicky):– InventoryInventory– PrioritiesPriorities– CapacityCapacity
Types of MRP:Types of MRP:– Type I. An inventory control systemType I. An inventory control system– Type II. A production and inventory control systemType II. A production and inventory control system– Type III. An Enterprise Resource Planning (ERP) systemType III. An Enterprise Resource Planning (ERP) system
44Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
Attribute MRP Order Point
Demand Dependent Independent
Order philosophy Requirements Replenishment
Forecast Based on master schedule Based on past demand
Control concept Control all items ABC
Objectives Meet manufacturing needs Meet customer needs
Lot sizing Discrete EOQ
Demand pattern Lumpy but predictable Random
Types of inventory Work in process and rawmaterials
Finished goods and spareparts
Attribute MRP Order Point
Demand Dependent Independent
Order philosophy Requirements Replenishment
Forecast Based on master schedule Based on past demand
Control concept Control all items ABC
Objectives Meet manufacturing needs Meet customer needs
Lot sizing Discrete EOQ
Demand pattern Lumpy but predictable Random
Types of inventory Work in process and rawmaterials
Finished goods and spareparts
MRP versus Order-Point Systems (Table 16.2)MRP versus Order-Point Systems (Table 16.2)
55Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
BOM (Table Example)BOM (Table Example)
Top
Leg
Long Rail
Short Rail
66Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
BOM (Product Structure)BOM (Product Structure)
Short Rails(2)
Table(End Item)
Long Rails(2)
Legs(4)
Top(1)
Leg Assembly(1)
77Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
Indented BOMIndented BOMLevel CodeLevel Code ComponentComponent
00 Table (end-item)Table (end-item)
11 Leg assembly (1)Leg assembly (1)
22 Short rails (2)Short rails (2)
22 Long rails (2)Long rails (2)
22 Legs (4)Legs (4)
11 Top(1)Top(1)
88Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
MRP ElementsMRP Elements
Bill of Materials (BOM)Bill of Materials (BOM)
Master SchedulingMaster Scheduling
Inventory RecordsInventory Records
Capacity PlanningCapacity Planning
PurchasingPurchasing
Shop Floor ControlShop Floor Control
99Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
Operating an MRP SystemOperating an MRP System
Should MRP carry “safety stock”?Should MRP carry “safety stock”?
How much “safety stock” should be carried?How much “safety stock” should be carried?
Issue of “safety lead time”Issue of “safety lead time”
Danger of “informal” system driving out the Danger of “informal” system driving out the “formal” system“formal” system
Expansion of MRP to other functions (finance, Expansion of MRP to other functions (finance, HRM, etc.) of businessHRM, etc.) of business
1010Irwin/McGraw-Hill The McGraw-Hill Companies,
Inc. 2004
Elements of Success in MRPElements of Success in MRP
Implementation planningImplementation planning
Adequate computer supportAdequate computer support
Accurate dataAccurate data
Management supportManagement support
User knowledgeUser knowledge
