Material Requirements Planning (MRP)

Material Requirements Planning (MRP)

• MRP is a system for planning and managing manufacturing processes
• Its goal is to ensure materials are available when needed

Introduction to MRP

• MRP involves the management of product lines, individual products, and components
• Manufacturing operations consist of processes involved in producing final products from components
• Disaggregation involves breaking down higher-level plans into more detailed plans

Demand-Based Planning

• Aggregate Production Plan sets output and inventory levels for product lines or families
• Ensures balance between market demand and manufacturing capacity
• Master Production Schedule (MPS) details the quantity and timing of each item to meet forecasts or orders
• Material Requirements Planning (MRP) calculates the materials and components needed and schedules their delivery
• Shop Floor Schedule plans and tracks daily manufacturing activities, ensuring alignment with MPS and MRP

Resource-Based Planning

• A key part of long-term capacity planning
• Resource Requirements Plan identifies the resources needed to execute the Aggregate Production Plan
• Rough-Cut Capacity Plan is a preliminary check of critical resource capacity against MPS demand
• Capacity Requirements Plan (CRP) is a detailed capacity verification at all work centers for planned production
• Input/Output Control monitors production output, adjusting schedules and resources as needed
• Plants refer to entire manufacturing facilities
• Critical Work Centers are areas crucial to production that often bottleneck
• All Work Centers include every production area in a plant
• Individual Machines are specific equipment with capacities considered in detail
• Aggregate Plan provides the framework for short-term production & capacity decisions

Material Requirements Planning (MRP)

• MRP revolutionized how manufacturers track and manage materials
• MRP determines what is required, how much is required and when it is required
• Dependent Demand Inventory includes parts, components, and raw materials needed for production

Inputs and Outputs of MRP - System Overview

• MRP connects the Business Plan, Aggregate Plan, Master Production Schedule (MPS), Inventory Master File, and Product Structured File
• There are 3 key inputs to MRP
• Master Production Schedule (MPS) specifies what finished products are needed, how much, and when
• The Inventory Master File contains a database that tracks all inventory details- quantities, locations, and costs
• The Product Structure File lists all parts and materials to build a product quantities and assembly details

Key Processes in MRP

• Explosion is the process of breaking down products into their individual components
• Netting calculates actual needs by subtracting what you have from what is already available.
• (Net requirements) = (Gross requirements) – (On-hand inventory) - (Quantity on order)
• Offsetting establishes when to place an order, considering production and delivery lead times
• Lot Sizing determines the batch size to be purchased or produced

Components

• Components refers to what is needed?
• How much of something is needed?
• When is a component needed?

Planned Order Releases

• Planned Order releases are instructions by the MRP system to initiate production or procurement
• There are 3 Key Outputs
• Work Orders direct manufacturing tasks, specifying what components to make, how much, and when
• Purchase Orders order materials from suppliers, specifying what to buy, how much, and when
• Action Notices adjust plans based on real-time needs, alerting the computer system to discrepancies

Master Production Schedule (MPS)

• MPS states requirements for individual end items by date and quantity
• MPS is an anticipated build schedule, plans when and how much to produce
• MPS should be realistic and achievable and aligns with resources and capacities
• Adjustments may be necessary based on production/supply chain constraints
• Aggregate Production Plan shows monthly production goals
• MPS breaks down weekly production targets for different products, showing quantities
• MPS doesn't predict customer demand
• MPS is based on realistic production capabilities
• MPS doesn't detail specific operations or assembly line tasks

Inventory Master File

• The Inventory Master File serves as a detailed record in an MRP system
• Tracks Item Details such as number, type, cost, and role in production to identifies each item
• Tracks Inventory levels as they monitor stock on hand, pending orders, and allocation
• Inventory Policies define rules for lead times, reorder points, safety stock, and order quantities
• Usage Tracking records how items are used or sold to aid in future planning

Product Structure File

• The Product Structure File defines every part, component and material to create a product
• Outlines the quantity of each item and how items are assembled (Bill of Materials - BOM)
• Used for planning production, managing inventory, and procuring materials effectively
• Major Components consists of the clip assembly, rivets, and board of a clipboard
• Clip Assembly Details lists top clip, bottom clip, pivot, and spring materials
• Materials Specified lists the exact dimensions or quantities
• Bill of material lists which & how many items go into a product
• Bill of materials is crucial for accurate production planning, procurement, and inventory control

Example of Production Structure

• An example is provided to illustrate how spring steel is calculated to fill an order of 500 clipboards given a 0 on-hand inventory
• Another example assesses sheet metal needed to fill an order of 1000 clipboards, 7000 on-hand inventory
• Another example determine when an order for sheet metal if 1000 units are needed by April 11 with a 5 day lead time
• The order size is assessed if the order lot is 2000,

Scheduling Basics - MRP as an Analysis Tool

• MRP input quantities are production quantities
• MRP uses figures set by higher-level production planning
• MRP is not a demand planning tool
• A production plan is derived from aggregate production planning
• The production plan follows a higher-level plan that outlines overall production goals
• MRP focuses on resource allocation and scheduling
• MRP assumes complete knowledge of materials, workforce, and production capacity
• MRP is deterministic
• MRP problems show up as action notices
• Action notices are Alerts/notifications that signal discrepancies or shortages
• The main MRP Problem is shortage of components or finished goods
• MRP identifies risks of running out of materials or products
• MRP is a simulation tool
• MRP can estimate the production outcome
• Identify potential shortages before they occur
• MRP can help predict shortages occur and when shortages potentially occur
• MRP does not solve problems alone, it requires human input
• Solutions: purchase or produce more, expedite jobs, or de-expedite jobs
• Potential change in input affects MRP output by showing whether or not the solution would work
• Helps decision-makers to choose the most effective response

Scheduling Sequencing Rules - Production Scheduling

• The Allocation of resources is used to accomplish specific tasks
• Scheduling is the final planning phase for efficient resource use
• Scheduling Objectives help to meet customer due dates
• Processes should be streamlined to reduce delays inefficiencies
• Optimize the use of available resources
• Scheduling Performance Measures
• Job flow time is the time a job spends in the shop, including waiting and setup times
• Makespan is the total time to finish jobs, from start to end
• Average number of jobs in the system shows workload handled by the system
• Jobe lateness measures completion relative to the scheduled completion date
• Job tardiness indicates how late a job is completed

High Volume Production

• High Volume Production is used where large quantities of a single product are produced
• High volume uses automation and standardized production techniques
• Production achieves economies of scale, which reduces cost per unit
• A bottleneck in production has the lowest effective capacity
• Bottlenecks can limit overall output and efficiency
• Optimized Production Technology (OPT) is used to schedule bottleneck systems
• Theory of Constraints (TOC) includes identifying and addressing limiting factors
• TOC Systematically improves production systems by identifying and addressing the most significant limiting factors (constraints)

Low Volume Production

• Low Volume is to produce smaller quantities of products, customized or specialized, it requires more flexibility
• Coordination is difficult because of variety orders, tasks and process requirements.
• Assign jobs to work centres according to performance efficiency, skill requirements, and job priority
• Sequencing is what determines the sequence in which jobs assigned to a work centre are to be processed
• Routing assigns which machine parts go to & when and decides which machine to use

Sequencing Rules

• First come first served (FCFS) jobs regardless of complexity or urgency
• Last come first served (LCFS) processes most recent job to arrive
• Earliest due date first (EDD) prioritizes jobs based on due dates
• Shortest processing time first (SPT) processes the least amount of time first
• Longest processing time first (LPT) processes jobs that take the longest first

Scheduling Performance Measures & Formulas

• Job flow time = (waiting time) + (processing time)
• Makespan = finish time for the last job
• Average # of jobs in the system = (∑all jobs job flow time) / (makespan)
• Job lateness = ∑all jobs (finish time – due time)
• Job tardiness = ∑only late jobs (finish time – due time)

Other Types of Operations Scheduling

• Scheduling in Services is complicated because demand varies and is difficult to forecast
• Service scheduling manages appointments, reservations, and posted schedules
• Staff scheduling ensures the accommodation of peak demand periods
• Maintenance Scheduling includes repair scheduling and preventative maintenance