MRP - Operations Management Click to edit Master subtitle...

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Unformatted text preview: Operations Management Click to edit Master subtitle style Material Requirement Planning (MRP) Seidman College of Business Grand Valley State University Martial Requirement Planning (MRP) Dependent vs. Independent Demand Items Independent Demand Items All items whose demand is determined by independent sources, e.g., customers/market Click to edit Master subtitle style are called Independent demand items. Generally, these are the finished products sold in free market. Examples: Marker pens, automobiles, overhead projectors. Martial Requirement Planning (MRP)… Continued B. Dependent Demand Items Items whose demand depends on the demand of independent demand items are called dependent demand items. Example: Cap and body of a marker pen, Tire of a car, steering wheel of a car, mirror of an overhead projector. Generally, dependent demand items are parts or B. Why Dependent Demand Items Are Different Independent Demand Items Than The It is almost silly to forecast the demand of dependent demand items when a simple, known part/product ratio will provide the necessary information. Demand of dependent demand items is generally more lumpy and hence does not fit the assumptions of EOQ, P, and Q 100 400 Week 1 Week 2 Demand for Friday Friday Demand for Table legs C. MRP is a production planning and control tool used to determine time-phased requirements of each part/detail produced within or bought out by a company. Master D. MRP Inputs and Outputs Product Structure File (BOM) Production Schedule Material Requirement Planning Inventory Master File Planned Order Releases Work Orders Purchase Orders Rescheduling Notices 1. Master Production Schedule (MPS) Projection of Production Requirements of End­Items. (Typically Weekly or Monthly). Time­Phased Quantities indicate projected production levels, not demand forecasts. MPS is derived from aggregate plan and adjusted for 2. Bill of Material or Product Structure File Specifies the name, part number, and quantity of each part/component/sub­assembly/assembly needed to produce one unit of the next higher level item. Alternately, how many (children) items are needed to make one parent item. (In real world parent make the children!) 5 0 Frame Assy (1) 1 0 Chain (1) 2 0 Spokes (20) 50 0 Handle bar 2 0 Front Frame (1) 2 0 Mainframe (1) 4 0 Bik e 5 Brakes (2) 10 0 Rim(1) 0 Wheel Assy (2) 3 0 Hub (1) 2 5 Axle (1) 0 Hub Case (1) 2 0 Rear Frame (1) 30 Gross Requiremen t On hand Inventory Net Requiremen t Levels of BOM Finished Item is assigned a level 0. Then add levels in step of 1 at every successive stage of disassembly. Ex: 1. Multi­Level Complete BOM: Shows level of each item (called detail) Through a scheme of indentations. Displays explosion logic. Single Level BOM: Required at a given level of assembly Summarized BOM: Lists total quantity of each to make one unit of end item. component needed 2. 3. 4. Where­Used BOM: Identifies where a given item is used (backward tracing from items to its parent). This is also called “Pegging”. MRP INPUTS 3. Inventory Master File Contains: On­hand quantities On Order quantities Previously Scheduled Receipts Lot sizes Safety Stock Leadtime Past usage data Lot Sizing Policy Cost data(set up cost, inventory carrying cost) Development of MRP plans E. Methodology of MRP a. Multiply by parent-child ratio b. Adjust for available stock c. Offset by leadtime needed to manufacture. LOTSIZING RULES 1. Lot For Lot: Like JIT. Produce as much as needed (= Net requirement) in every period. Good if set up cost are low, inventory cost are high.Demand is lumpy. 2. EOQ: Produce Equal to EOQ in each period when needed. If net requirement in a period is higher than EOQ, produce the least multiple of EOQ that meets the net requirements. POQ (Period Order Quantity): Compute POQ= EOQ/D. Round off to an integer. Then produce POQ periods requirement in every batch. Skip production if requirement in every batch. Skip production if requirement the first period of the POQ interval is zero. Silver-Meal Heuristics Part Period Balancing Wagner Whitin 3. in 4. 5. 6. Review Frequency of MRP Plans 1. Regenerative: Updated Periodically. Net­Change: Updated Continuously or as a change occurs in the independent demand. MRP Nervousness: Too frequent changes and too infrequent changes both are source of worry to the shop managers and planners. Mangers are often nervous when and if the next change will come and whether they will have enough time to make the change. 2. 3. BENEFITS AND COSTS OF MRP Benefits 1. Choice of lot size allows control of inventory related costs in the context of leadtime. 2. Computerized systems allow quick regeneration of plans consistent with the change in demands of end­items. 3. Ability to keep track of material requirements. 4. A means of scheduling and allocating production time. Costs 1. Needs significant planning and computer acumen to install and monitor. Push type environment leads to significantly higher level of inventories as compared to JIT. Large batch sizes drive the company away from the benefits of lean manufacturing. Hence sometimes MRP systems are counter­strategic. But handled properly, they can be a good strategic tool. 2. 3. ...
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This note was uploaded on 04/11/2011 for the course FIN 322 taught by Professor Gillette during the Winter '07 term at Grand Valley State University.

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MRP - Operations Management Click to edit Master subtitle...

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