13-1
MRP and ERP
MRP and ERP
13-2
MRP and ERP

MRP
Material requirements planning (MRP):
Computer-based information system that
translates master schedule requirements for
end items into time-phased requirements for
subassemblies, components, and raw
materials.
13-3
MRP and ERP
Figure 13.2
MRP Inputs
MRP Processing
MRP Outputs
Changes
Order releases
Master
schedule
Planned-order
schedules
Primary
reports
Bill of
materials
Inventory
records
MRP computer
programs
Exception reports
Planning reports
Secondary
reports
Performancecontrol
reports
Inventory
transaction
13-4
MRP and ERP

MPR Inputs
Master Production Schedule
 Time-phased plan specifying timing and
quantity of production for each end item.
 Material Requirement Planning Process
13-5
MRP and ERP
Master Schedule
Master schedule: One of three primary
inputs in MRP; states which end items are
to be produced, when these are needed,
and in what quantities.
Cumulative lead time: The sum of the lead
times that sequential phases of a process
require, from ordering of parts or raw
materials to completion of final assembly.
13-6
MRP and ERP
Bill-of-Materials
Bill of materials (BOM): One of the three primary
inputs of MRP; a listing of all of the raw materials,
parts, subassemblies, and assemblies needed to produce
one unit of a product.
Product structure tree: Visual depiction of the
requirements in a bill of materials, where all
components are listed by levels.
13-7
MRP and ERP
Product Structure Tree
Figure 13.5
Level
0
1
Chair
Leg
Assembly
2 Legs (2)
3
Cross
bar
Seat
Back
Assembly
Side Cross
Back
Rails (2) bar Supports (3)
13-8
MRP and ERP
Inventory Records

One of the three primary inputs in MRP
 Includes information on the status of each
item by time period

Gross requirements
 Scheduled receipts
 Amount on hand
 Lead times
 Lot sizes
 And more …
13-9
MRP and ERP
Assembly Time Chart
Figure 13.7
Procurement of
raw material D Fabrication
of part E
Subassembly A
Procurement of
raw material F
Procurement of
part C
Final assembly
and inspection
Procurement of
part H
Fabrication
of part G
Procurement of
raw material I
1
2
3
Subassembly B
4
5
6
7
8
9
10
11
13-10 MRP and ERP
MRP Processing

Gross requirements

Schedule receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases
13-11 MRP and ERP

Gross requirements


Total expected demand
Scheduled receipts


MPR Processing
Open orders scheduled to arrive
Planned on hand

Expected inventory on hand at the
beginning of each time period
13-12 MRP and ERP

Net requirements



MPR Processing
Actual amount needed in each time period
Planned-order receipts

Quantity expected to received at the
beginning of the period

Offset by lead time
Planned-order releases

Planned amount to order in each time period
13-13 MRP and ERP

Regenerative system


Updating the System
Updates MRP records periodically
Net-change system

Updates MPR records continuously
13-14 MRP and ERP
MRP Outputs

Planned orders - schedule indicating the
amount and timing of future orders.

Order releases - Authorization for the
execution of planned orders.

Changes - revisions of due dates or order
quantities, or cancellations of orders.
13-15 MRP and ERP
MRP Secondary Reports

Performance-control reports

Planning reports

Exception reports
13-16 MRP and ERP
Other Considerations

Safety Stock
 Lot sizing

Lot-for-lot ordering
 Economic order quantity
 Fixed-period ordering
13-17 MRP and ERP
Benefits of MRP

Low levels of in-process inventories

Ability to track material requirements

Ability to evaluate capacity requirements

Means of allocating production time
13-18 MRP and ERP

MRP II
Expanded MRP with emphasis placed
on integration

Financial planning

Marketing

Engineering

Purchasing

Manufacturing
13-19 MRP and ERP
MRP II
Figure 13.14
Manufacturing
Master
production schedule
Marketing
Production
plan
MRP
Rough-cut
capacity planning
Capacity
planning
Adjust
production plan
Yes
Problems?
No
Requirements
schedules
No
Problems?
Adjust master schedule
Market
Demand
Finance
Yes
13-20 MRP and ERP

ERP
Enterprise resource planning (ERP):

Next step in an evolution that began with
MPR and evolved into MRPII
 Integration of financial, manufacturing, and
human resources on a single computer
system.