Material Requirements Planning
MRP
MRP Scheduling Terminology
• Gross Requirements: needed during each period.
• Scheduled Receipts: Existing orders that arrive at beginning of period.
• On-hand or available balance:
• (depending on software convention, could be at the beginning of each
period or end):
• Book: Inventory balance at end of each period.
• Net requirements: What is need to meet requirements and safety
stock.
• Planned order receipt: arrives at beginning of period.
• Planned order release: Addresses lead time.
MRP Table – determine the Project Available
Balance (Inventory)
1
Gross Requirements
10
Scheduled receipts (begin)
Projected Available
Balance (ending)
Net Requirements
Planned Order Receipts
Planned Order Releases
2
3
4
5
40 10
50
4 54 44 44 4
6
MRP Table – determine the Project Available
Balance (Inventory)
1
Gross Requirements
3
10
Scheduled receipts (begin)
Projected Available
Balance (ending)
2
4
5
40 10
50
4 54 44 44 4
Net Requirements
6
Planned Order Receipts
Planned Order Releases
6 units short
MRP Table – determine the Project Available
Balance (Inventory)
In week 5,
The project available balance (inventory) SMALLER THAN the
Gross Requirement.
Therefore,
Net requirement = the shortage quantity
= 4 (inventory) – 10 (Gross requirement)
=6
MRP Table – determine the Ending Inventory in
period 5.
If given a Standard Lot Size,
The Plan Order Receipts = the Standard Lot Size
(e.g. lot size = 50)
Thus in week 5,
The Ending Inventory = Plan Order Receipts – Net requirement
= 50 – 6
= 44
MRP Table – determine the Ending Inventory in
period 5.
1
Gross Requirements
10
Scheduled receipts (begin)
Projected Available
Balance (ending)
2
3
4
5
40 10
50
4 54 44 44 4 44
Net Requirements
6
Planned Order Receipts
Planned Order Releases
Ending inventory
50
50
MRP Table – determine the Plan Order
Receipts and Plan Order Release
REMARKS:
The quantity of Plan Order Receipts always equal to Net
Requirement if there is no restriction on Standard Lot Size.
The quantity of Plan Order Release always similar to Plan
Order Receipt. But, the allocation of the order has referred to
Lead Time (LT).
MRP Table – determine the Plan Order
Receipts and Plan Order Release
Example:
Given a standard lot size = 50
Lead Time (LT) = 1 week
Therefore,
Plan Order Receipts for week 5 = 50
Plan Order Release = 50 that allocate at week 4
MRP Table – determine the Plan Order Receipt
and Plan Order Release.
1
Gross Requirements
10
Scheduled receipts (begin)
Projected Available
Balance (ending)
2
3
4
40 10
50
4 54 44 44 4 44
Net Requirements
6
Planned Order Receipts
Planned Order Releases
5
50
50
Example of MRP Logic and Product Structure
Tree
Given the product structure tree for “A” and the lead time and demand
information below, provide a materials requirements plan that defines
the number of units of each component and when they will be needed.
Product Structure Tree for Assembly A
A
B(4)
D(2)
C(2)
E(1)
D(3)
F(2)
Lead Times
A
1 day
B
2 days
C
1 day
D
3 days
E
4 days
F
1 day
Demand
Day 10 50 A
Day 8
20 B (Spares)
Day 6
15 D (Spares)
First, the number of units of “A” are scheduled backwards to
allow for their lead time. So, in the materials requirement plan
below, we have to place an order for 50 units of “A” in the 9th
week to receive them in the 10th week.
Day:
A Required
Order Placement
1
2
3
4
5
6
7
8
9
50
LT = 1 day
10
50
Next, we need to start scheduling the components that make up “A”. In
the case of component “B” we need 4 B’s for each A. Since we need 50
A’s, that means 200 B’s. And again, we back the schedule up for the
necessary 2 days of lead time.
Day:
A
1
2
3
4
5
6
7
8
R e q u ire d
50
R e q u ire d
20
O rd e r P la c e m e n t
20
LT = 2
A
B(4)
D(2)
10
50
O rd e r P la c e m e n t
B
9
D(3)
200
Spares
4x50=200
C(2)
E(1)
200
F(2)
Finally, repeating the process for all components, we have the
final materials requirements plan:
Day:
A
LT=1
B
LT=2
C
LT=1
D
LT=3
E
LT=4
F
LT=1
1
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
Required
Order Placement
2
3
4
5
6
20
7
8
9
20
50
200
10
50
200
100
55
20
400
55
400
20
200
100
300
300
200
200
200
A
Part D: Day 6
40 + 15 spares
B(4)
D(2)
C(2)
E(1)
D(3)
F(2)
14
MRP for Level 0
- the BOM structure -
Example of the MRP for Level 0
The Master Production Schedule shows we have to make 400
scissors (SC) during the 3rd week, in the 4th week 600, in the 6th
week 800, and in the 7th week 300 scissors.
This is called as Gross Requirements, GR to the demand of
fabrication of the products.
.
.
Example of MRP Explosion
150
0
EPO is the Plan Order Release