Operations
11
473.31
Fall 2015
Bruce Duggan
Providence University College
Summary
Materials Requirement Planning ties together all the major functions of
a firm.
MRP system takes information from
• the master schedule
• bill of materials, and
• inventory records
and “explodes” the process into detailed schedules that show the
exact timing of needed parts in the future.
Learning Objectives Review
1.
2.
3.
4.
5.
What is MRP is and where is it best applied?
What is the source of the information used by the MRP system?
How do you do an MRP “explosion”?
How do you calculate order quantities in MRP systems?
What are the extensions of MRP?
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Material Requirements Planning
• Materials Requirements Planning (MRP) is a means for determining
the number of parts, components, and materials needed to produce
a product
• MRP provides time scheduling information specifying when each of
the materials, parts, and components should be ordered or
produced
• Dependent demand drives MRP
• MRP is a software system
Where MRP Can Be Used
MRP System Structure
MRP system has 3 sources of info:
1. Master Production Schedule (MPS)
2. Bill Of Materials (BOM)
3. Inventory Record File
MRP System Structure
Info sources:
1. Master production schedule states the number of items to be produced
during specific time periods.
o creates schedules identifying the specific parts and materials required to produce end
items
o determines exact unit numbers needed
o determines the dates when orders for those materials should be released, based on lead
times
MRP System Structure
Info sources:
2. Bill Of Materials (BOM) identifies the specific materials used to make each
item and the correct quantities of each.
o Materials, parts, components
o Production sequence
o Modular BOM is the term for a buildable item that can be produced and stocked as a
subassembly.
o Super BOM includes items with fractional options.
MRP System Structure
Info sources:
3. Inventory Record File
o contains data such as
 # of units on hand
 # of units on order
o cach inventory item carried as a separate file
 status according to “time buckets”
o pegging
 identify each parent item that created demand
MRP System Structure
MRP System Structure
MRP System Structure
MRP System Structure
MRP System Structure
An Example Using MRP
Copyright © 2013 McGraw-Hill Ryerson Limited
An Example Using MRP
An Example Using MRP
An Example Using MRP
An Example Using MRP
An Example Using MRP
An Example Using MRP
Lot Sizing in MRP Systems
Lot sizes are the part quantities issued in the planned order receipts
and planned order release sections of an MRP schedule.
• Lot-for-lot (L4L) sets the planned order to exactly match the net
requirements.
• Economic Order Quantity (EOQ) explicitly balances set-up and holding costs.
Lot Sizing: Lot-for-Lot
Lot Sizing: EOQ
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Extensions of MRP
Capacity Requirement Planning (CRP)
• revises the MRP schedule based on capacity requirements
Manufacturing Resource Planning (MRP)
• refers to an MRP system linked to the other functions in the firm
Distribution requirement planning (DRP)
• uses MRP logic in the planning of distribution inventories
LO5
Enterprise Resource Planning (ERP)
Copyright © 2013 McGraw-Hill Ryerson Limited
11-24
End of Chapter 11