Chapter 14
DSC2344 – Operations Management

Defining MRP

MRP Inputs & Outputs

MRP Example

From MRP to ERP

MRP is a mean for determining the number of parts,
components, & materials needed to produce a
product

MRP provides time scheduling information
specifying when each of the material, part, &
components should be ordered or produced

Dependent demand drives MRP

MRP is a software system
Aggregate
product
plan
Firm orders
from known
customers
Engineering
design
changes
Bill of
Material
File (BOM)
Master production
Schedule (MPS)
Material
Requirement
planning
(MRP)
Forecasts
of demand
from random
customers
Inventory
transactions
Inventory
Record File
Secondary reports
Primary reports
Planned order schedule for
inventory and production
control
Exception reports
Planning reports
Reports for performance
control
Back slats
A
Ladder-back
chair
Leg supports
Back
legs
Front
legs
Seat cushion
Seat-frame
boards
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
J (4)
Seat-frame
boards
E (4)
Leg
supports
•BOM provides a
complete product
description including
materials,
parts,
components,
production sequence,
Modular BOM
(Subassemblies),
Super BOM
(Fractional options)

Record for
▪ Inventory at hand
▪ Committed (promised) to order
▪ History of recent transactions of each
inventory

Each inventory item is carried as a
separate file





Planned orders to be released at a future time
Order release notices to execute the planned
orders
Changes in due dates of open orders due to
rescheduling
Cancellations or suspensions of open orders
due to cancellation or suspension of orders on
the master production schedule
Inventory status data

Planning reports
▪ E.g. forecasting inventory requirements over a
period of time


Performance reports are used to determine
agreement between actual & programmed
usage & costs
Exception reports are used to point out serious
discrepancies, such as late or overdue orders
BOM
Inventory Record
X
A(2)
C(3)
Item
X
A
B
C
D
B(1)
C(2)
On-Hand Lead Time (Weeks)
50
2
75
3
25
1
10
2
20
2
D(5)
MPS
Requirements include 95 units of X in week 10
X
LT=2
X
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
X
A(2)
It takes
2 A’s for
each X
Onhand
50
A
LT=3
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
Onhand
50
A
LT=3
X
A(2)
B(1)
It takes
1 B for
each X
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
X
A(2)
C(3)
Onhand
50
A
LT=3
B(1)
Onhand
75
B
LT=1
C(2)
It takes 3
C’s for
each A
It takes 2
C’s for
each B
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20
X
LT=2
Onhand
50
A
LT=3
X
A(2)
C(3)
B(1)
C(2) D(5)
Onhand
75
B
LT=1
Onhand
25
C
LT=2
Onhand
10
D
LT=2
Onhand
20
Day:
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
Gross requirements
Scheduled receipts
Proj. avail. balance
Net requirements
Planned order receipt
Planner order release
1
2
3
4
5
6
7
8
9
10
95
50 50
50
50
50
50
50
50
50
50
45
45
45
90
75 75
75
75
75
75
75
75
15
15
15
45
25 25
25
25
25
25
20
40
45
10 10
10
10
35
25
10
35
35
40
40
40
100
20 20
20
20
20
80
20
20
80
80
25
20
20

Software that organizes & manages a
company’s business processes by;
▪ sharing information across functional areas
▪ integrating business processes
▪ facilitating customer interaction
▪ providing benefit to global companies
▪ E.g: SAP, Oracle, Microsoft Dynamics, Sage

Material Requirements Planning (MRP)

Inputs & Outputs of MRP

MRP Example

From MRP to ERP