Chapter 15
Resource Planning
Operations Management
Roberta Russell & Bernard W. Taylor, III
Copyright 2006 John Wiley & Sons, Inc.
Beni Asllani
University of Tennessee at Chattanooga
MRP Structure
Data Files
Output Reports
BOM
MRP by
period report
Master
production schedule
MRP by
date report
Lead times
Planned order
report
(Item master file)
Inventory data
Purchasing data
Material
requirement
planning
programs
(computer and
software)
Purchase advice
Exception reports
Order early or late
or not needed
Order quantity too
small or too large
Figure 15.5
Copyright 2006 John Wiley & Sons, Inc.
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Material Requirements
Planning (MRP)
 Computerized inventory control and
production planning system
 When to use MRP?
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Dependent demand items
Discrete demand items
Complex products
Job shop production
Assemble-to-order environments
Copyright 2006 John Wiley & Sons, Inc.
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Primary MRP Reports
 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.
Copyright 2006 John Wiley & Sons, Inc.
Secondary MRP Reports
 Planning reports, for example, forecasting
inventory requirements over a period of time.
 Performance reports used to determine
agreement between actual and programmed
usage and costs.
 Exception reports used to point out serious
discrepancies, such as late or overdue orders.
Copyright 2006 John Wiley & Sons, Inc.
Material
Requirements
Planning
Product
structure
file
Master
production
schedule
Material
requirements
planning
Item
master
file
Planned
order
releases
Work
orders
Copyright 2006 John Wiley & Sons, Inc.
Purchase
orders
Rescheduling
notices
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MRP Inputs and Outputs
 Inputs
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Master production schedule
Product structure file
Item master file
 Outputs
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Planned order releases
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Work orders
Purchase orders
Rescheduling notices
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Master Production Schedule
 Drives MRP process with a schedule of
finished products
 Quantities represent production not demand
 Quantities may consist of a combination of
customer orders and demand forecasts
 Quantities represent what needs to be
produced, not what can be produced
 Quantities represent end items that may or
may not be finished products
Copyright 2006 John Wiley & Sons, Inc.
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Product Structure Tree
Clipboard
Pressboard
(1)
Top Clip
(1)
Level 0
Clip Ass’y
(1)
Bottom Clip
(1)
Copyright 2006 John Wiley & Sons, Inc.
Rivets
(2)
Pivot
(1)
Level 1
Spring
(1)
Level 2
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MRP Processes
1. Exploding the bill of material
2. Netting out inventory
3. Lot sizing
4. Time-phasing requirements
Copyright 2006 John Wiley & Sons, Inc.
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CRP
MRP planned
order
releases
Routing
file
Capacity
requirements
planning
Open
orders
file
Load profile for
each machine center
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Leveling Under-load Conditions
1. Acquire more work
2. Pull work ahead that is scheduled
for later time periods
3. Reduce normal capacity
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Reducing Over-load Conditions
1. Eliminating unnecessary requirements
2. Rerouting jobs to alternative machines,
workers, or work centers
3. Splitting lots between two or more machines
4. Increasing normal capacity
5. Subcontracting
6. Increasing efficiency of the operation
7. Pushing work back to later time periods
8. Revising master schedule
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Relaxing MRP Assumptions
 Material is not always the most constraining
resource
 Lead times can vary
 Not every transaction needs to be recorded
 Shop floor may require a more sophisticated
scheduling system
 Scheduling in advance may not be appropriate
for on-demand production.
Copyright 2006 John Wiley & Sons, Inc.
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Enterprise Resource Planning
(ERP)
 Software that organizes and manages
a company’s business processes by
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sharing information across functional
areas
integrating business processes
facilitating customer interaction
providing benefit to global companies
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