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Dependent Demand Inventory ModelMaterial Requirements Planning (MRP)

Class Examples

1. Basic Example: A ompany t!at manu"aturers "urniture produes a partiular type o" o""ee

ta#le. As you mig!t guess$ ea! o""ee ta#le !as "our legs. %!e prodution lead time "or t!ese

legs is t&o &ee's. Inventory reords s!o& t!at $** o" t!ese legs &ill #e availa#le as on+!and

inventory at t!e #eginning o" &ee' ,. An order "or $** legs !as already #een released and is

s!eduled to arrive in &ee' ,,. %!ese legs may #e produed in any quantity (i.e.$ lot+"or+lot). -se

MRP to s!edule planned order releases.

Master Schedule Coffee Tables

Week

32 33 34 35 36 37

** ** * ,** * **

Week Number: 32 33 34 35 36 37

Item: Coffee Table

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases

Week Number: 32 33 34 35 36 37

Item: Legs LT!" #!L$L

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases

. Multiple Parents Example: Consider t!e "ollo&ing produt strutures/

A B

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C (2 per C

Determine t!e gross requirements "or item C$ given t!e master s!edule "or A and 0$ #elo&.

Master Schedule

(!ee"

# $ %

&tem:

A * ,* *

0 1* * *

Week Number: 1 2 3 4 5 6

Item:

Gross requirements

Scheduled receipts

Projected on hand

Net requirementsPlanned-order receipts

Planned-order releases

Week Number: 1 2 3 4 5 6

Item:

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receiptsPlanned-order releases

Week Number: 1 2 3 4 5 6

Item:

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases

,. Effects of 'rder PoliciesSafet) Stoc"s Example:

Week Number: 1 2 3 4 5 6

Item: % LT!"& Lot-for-lot& SS!' (' "' () "' *' *(

Gross requirements

Scheduled receipts

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Projected on hand *)

Net requirements

Planned-order receipts

Planned-order releases

Week Number: 1 2 3 4 5 6

Item: % LT!"& +ultiples of )'& SS!' (' "' () "' *' *(

Gross requirements

Scheduled receipts

Projected on hand *)

Net requirements

Planned-order receipts

Planned-order releases

Week Number: 1 2 3 4 5 6

Item: % LT!"& +IN#!()& SS!' (' "' () "' *' *(

Gross requirements

Scheduled receipts

Projected on hand *)Net requirements

Planned-order receipts

Planned-order releases

Week Number: 1 2 3 4 5 6

Item: % LT!"& Lot-for-lot& SS!) (' "' () "' *' *(

Gross requirements

Scheduled receipts

Projected on hand *)

Net requirements

Planned-order receipts

Planned-order releases

. Multiple Parents Example: A ompany ma'es an end produt$ A$ &!i! onsists o"

su#assem#ly 0 and omponent parts C and D$ as s!o&n in t!e "ollo&ing tree diagram. Ea! levelo" t!e diagram s!o&s t!e items$ and t!e num#er o" t!ose items$ needed "or t!e next !ig!er level.

%!e ompanys inventory reords indiate t!at * o" su#assem#ly 0 and 1$*** o" part C &ill #e on

!and at t!e #eginning o" &ee' 1. Prodution lead time "or su#assem#ly 0 is one &ee'$ and 1**

are s!eduled to arrive in &ee' 1. Part C is ordered "rom a supplier in lots o" 1$*** and !as a t&o+

&ee' lead time. Develop planned order releases "or part C$ #ased on a master s!edule "or A t!at

alls "or prodution o" *$ 2$ $ 3*$ 2$ and 4* units o" item A in &ee's 1 t!roug! 3$

respetively.

A

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0 () C(,)

C(1) D(1)

Week Number: 1 2 3 4 5 6

Item:

Gross requirements

Scheduled receiptsProjected on hand

Net requirements

Planned-order receipts

Planned-order releases

Week Number: 1 2 3 4 5 6

Item: ,

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receipts

Planned-order releases

Week Number: 1 2 3 4 5 6

Item:

Gross requirements

Scheduled receipts

Projected on hand

Net requirements

Planned-order receiptsPlanned-order releases