8/10/2019 Lecture05 MRP Indu6211
1/69
1
Materials Requirement Planning (MRP)
8/10/2019 Lecture05 MRP Indu6211
2/69
2
History
Begun around 1960 as computerized approach to purchasing and
production scheduling.
Joseph Orlicky, Oliver Wight, and others.
APICS launched MRP Crusade in 1972 to promote MRP.
8/10/2019 Lecture05 MRP Indu6211
3/69
3
Key Insight
Independent Demandfinished products
Dependent Demandcomponents
It makes no sense to independently forecast dependent demands.
8/10/2019 Lecture05 MRP Indu6211
4/69
4
Assumptions
1. Known deterministic demands.
2. Fixed, known production leadtimes.
3. Infinite capacity.
Idea is to back out demand for components by using leadtimes
and bills of material.
8/10/2019 Lecture05 MRP Indu6211
5/69
5
Terminology
Level Code:lowest level on any BOM on which part is found
Planning Horizon:should be longer than longest cumulativeleadtime for any product
Time Bucket:units planning horizon is divided into
Lot-for-Lot:batch sizes equal demands (other lot sizingtechniques, e.g., EOQ or Wagner-Whitin can be used)
Pegging:identify gross requirements with next level in BOM(single pegging) or customer order (full pegging) that
generated it. Single usually used because full is difficult due to
lot-sizing, yield loss, safety stocks, etc.
8/10/2019 Lecture05 MRP Indu6211
6/69
6
Schematic of MRP
Item Master(BOM)
On-handinventory
Scheduledreceipts
MasterProduction
schedule
MRP:
Netting
Lot sizing
Offsetting
BOM exploding
Planned
order
releases
Change
notices
Exception
notices
8/10/2019 Lecture05 MRP Indu6211
7/69
7
MRP Procedure
1. Netting: net requirements against projected inventory
2. Lot Sizing: planned order quantities
3. Time Phasing: planned orders backed out by leadtime
4. BOM Explosion: gross requirements for components
8/10/2019 Lecture05 MRP Indu6211
8/69
8
MRP Procedure
Dt = gross requirements (demand) for period t St = quantity currently scheduled to complete in
period t (a scheduled receipt)
It = projected on-hand inventory for end of period t,
where current onhand-inventory is given by I0 Nt = net requirements for period t
8/10/2019 Lecture05 MRP Indu6211
9/69
9
Inputs
Master Production Schedule (MPS): due dates and quantities for
all top level items
Bills of Material (BOM): for all parent items
Inventory Status: (on hand plus scheduled receipts) for all items
Planned Leadtimes: for all items
8/10/2019 Lecture05 MRP Indu6211
10/69
10
Example BOM
300 500
100
300 400
600
BA
100
(2 req) 200
400300
8/10/2019 Lecture05 MRP Indu6211
11/69
11
Example
Part A
Gross requirements 15 20 50 10 30 30 30 30
1 2 3 4 5 6 7 8
Part A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Projected on-hand (at the end of
period)30 15 -5 __ __ __ __ __ __
Net requirements 0 5 50 10 30 30 30 30
Inventory on hand It=It-1-Dt+St
NettingNt=min{max(-It, 0), Dt)
8/10/2019 Lecture05 MRP Indu6211
12/69
12
Example (cont.)
Part A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Projected on-hand 30 15 -5 __ __ __ __ __ __
Net requirements 0 5 50 10 30 30 30 30
Part A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Projected on-hand 30 15 -5 __ __ __ __ __ __
Net requirements 0 5 50 10 30 30 30 30
Planned order receipts 75 75 75
8/10/2019 Lecture05 MRP Indu6211
13/69
13
Example cont.
Part A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Projected on-hand 30 15 -5 __ __ __ __ __ __
Net requirements 0 5 50 10 30 30 30 30
Planned order receipts 75 75 75
Planned order releases 75 75 75
8/10/2019 Lecture05 MRP Indu6211
14/69
14
MRP Procedure
Part A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Scheduled receipts 10 10 100
Adjusted SRs
Projected on-hand 20
Net requirements
Planned order receipts
Planned order releases
Part A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Scheduled receipts 10 10 100
Adjusted SRs 20 100
Projected on-hand20 5 5 55 45 15 -15 __ __
Net requirements 15 30 30
Planned order receipts
Planned order releases
8/10/2019 Lecture05 MRP Indu6211
15/69
15
Part A Final
Part A 1 2 3 4 5 6 7 8
Gross requirements 15 20 50 10 30 30 30 30
Scheduled receipts 10 10 100
Adjusted SRs20 100
Projected on-hand20 5 5 55 45 15 -15 __ __
Net requirements 15 30 30
Planned order receipts 45 30
Planned order releases 45 30
8/10/2019 Lecture05 MRP Indu6211
16/69
16
Part B
t 1 2 3 4 5 6 7 8
Demand 10 15 10 20 20 15 15 15
Part
Number
Current
On-Hand
SRs Lot-Sizing
Rule Lead TimeDue Quantity
B 40 0 FOP, 2 weeks 2 weeks
100 40 0 Lot-for-lot 2 weeks
300 50 2 100Lot-for-lot
1 week
500 40 0Lot-for-lot
4 weeks
8/10/2019 Lecture05 MRP Indu6211
17/69
17
MRP Processing for Part B
Part B 1 2 3 4 5 6 7 8
Gross requirements 10 15 10 20 20 15 15 15
Scheduled receipts
Adjusted SRs
Projected on-hand40 30 15 5 -15 __ __ __ __
Net requirements 15 20 15 15 15
Planned order receipts 35 30 15
Planned order releases 35 30 15
8/10/2019 Lecture05 MRP Indu6211
18/69
18
Part 500
Part 500 1 2 3 4 5 6 7 8
Gross requirements 35 30 15
Scheduled receipts
Adjusted SRs
Projected on-hand
40 40 5 5 -25 __ __ __ __
Net requirements 25 15
Planned order receipts 25 15
Planned order releases 25* 15
8/10/2019 Lecture05 MRP Indu6211
19/69
19
Part 100
Part 100 1 2 3 4 5 6
Required from A 90 60
Required from 500 25 15
Gross requirements 25 15 90 60
Scheduled receipts
Adjusted SRs
Projected on-hand40 15 0 0 -90 __ __
Net requirements 90 60
Planned order receipts 90 60
Planned order releases 90 60
8/10/2019 Lecture05 MRP Indu6211
20/69
20
Part 300
Part 300 1 2 3 4 5 6 7 8
Required from B 35 30 15
Required from 100 90 60
Gross requirements 125 90 15
Scheduled receipts 100
Adjusted SRs 100
Projected on-hand 50 50 25 25 -65 __ __ __ __
Net requirements 65 15
Planned order receipts 65 15
Planned order releases 65 15
8/10/2019 Lecture05 MRP Indu6211
21/69
21
MRP Summary
Transaction Part
Number
Old Due Date
or Release Date
New Due Date Quantity Notice
Change Notice
Change Notice
Planned order release
Planned order release
Planned order release
Planned order release
Planned order release
Planned order release
Planned order release
Planned order release
Planned order release
Planned order release
Planned order release
A
A
A
A
B
B
B
100
100
300
300
500
500
1
4
4
6
2
4
6
2
4
3
5
1
2
2
3
6
8
4
6
8
4
6
4
6
4
6
10
100
45
30
35
30
15
90
60
65
15
25
15
Defer
Expedite
OK
OK
OK
OK
OK
OK
OK
OK
OK
Late
OK
8/10/2019 Lecture05 MRP Indu6211
22/69
22
Terminology
Level Code:lowest level on any BOM on which part is found
Planning Horizon:should be longer than longest cumulativeleadtime for any product
Time Bucket:units planning horizon is divided into
Lot-for-Lot:batch sizes equal demands (other lot sizingtechniques, e.g., EOQ or Wagner-Whitin can be used)
Pegging:identify gross requirements with next level in BOM
(single pegging) or customer order (full pegging) thatgenerated it. Single usually used because full is difficult due to
lot-sizing, yield loss, safety stocks, etc.
8/10/2019 Lecture05 MRP Indu6211
23/69
23
Special Topics
Firm Planned Orders (FPOs):planned order that theMRP system does notautomatically change when conditions
changecan stabilize system
Service Parts:parts used in service and maintenancemust
be included in gross requirements
Order Launching:process of releasing orders to shop orvendorsmay include inflation factor to compensate for
shrinkage
Exception Codes:codes to identify possible data inaccuracy(e.g., dates beyond planning horizon, exceptionally large or
small order quantities, invalid part numbers, etc.) or system
diagnostics (e.g., orders open past due, component delays, etc.)
8/10/2019 Lecture05 MRP Indu6211
24/69
24
Lot Sizing in MRP
Lot-for-lotchase demand
Fixed order quantity methodconstant lot sizes
EOQusing average demand
Fixed order period methoduse constant lot intervals
Part period balancingtry to make setup/ordering cost equal to
holding cost
Wagner-Whitinoptimal method
8/10/2019 Lecture05 MRP Indu6211
25/69
25
Fixed Ordering Quantity
Net requirements 15 15 60 65 55 15 20 10
Planned order receipts
30 60 65 55 45
8/10/2019 Lecture05 MRP Indu6211
26/69
26
Fixed Order Period
Period 1 2 3 4 5 6 7 8 9
Net requirements15 45 25 15 20 15
Planned order receipts60 60 15
8/10/2019 Lecture05 MRP Indu6211
27/69
27
Part-Period Balancing
Quantity for
Period 2
Setup Cost ($) Part-PeriodsInventory
Carrying Cost ($)
15 150 0 0
60 150 45 x 1 = 45 90
85 150 45 + 25 x 4 = 145 290
Quantity for
Period 6Setup Cost ($) Part-Periods
Inventory
Carrying Cost ($)
25 150 0 0
40 150 15 x 1 = 15 30
60 150 15 + 20 x 2 = 55 110
75 150 55 + 15 x 3 = 100 200
8/10/2019 Lecture05 MRP Indu6211
28/69
28
The Wagner-WhitinModel
Dynamic Lot Sizing
8/10/2019 Lecture05 MRP Indu6211
29/69
29
EOQ Assumptions
1. Instantaneous production.
2. Immediate delivery.
3. Deterministic demand.
4. Constant demand.
5. Known fixed setup costs.
6. Single product or separable products.
WW model relaxes this one
8/10/2019 Lecture05 MRP Indu6211
30/69
30
Dynamic Lot Sizing Notation
t a period (e.g., day, week, month); we will consider t = 1, ,T,
where Trepresents theplanning horizon.
Dt demand in period t(in units)
ct unit production cost (in dollars per unit), not counting setup or
inventory costs in period t
At fixed or setup cost (in dollars) to place an order in period t
ht holding cost (in dollars) to carry a unit of inventory from period tto period t +1
Qt the unknownsize of the order or lot size in period t decision var iables
8/10/2019 Lecture05 MRP Indu6211
31/69
31
Wagner-Whitin Example
Data
Lot-for-Lot Solution
t 1 2 3 4 5 6 7 8 9 10
Dt 20 50 10 50 50 10 20 40 20 30
ct 10 10 10 10 10 10 10 10 10 10
At 100 100 100 100 100 100 100 100 100 100
ht 1 1 1 1 1 1 1 1 1 1
t 1 2 3 4 5 6 7 8 9 10 Total
Dt 20 50 10 50 50 10 20 40 20 30 300
Qt 20 50 10 50 50 10 20 40 20 30 300It 0 0 0 0 0 0 0 0 0 0 0
Setup cost 100 100 100 100 100 100 100 100 100 100 1000
Holding cost 0 0 0 0 0 0 0 0 0 0 0
Total cost 100 100 100 100 100 100 100 100 100 100 1000
8/10/2019 Lecture05 MRP Indu6211
32/69
32
Wagner-Whitin Example (cont.)
Fixed Order Quantity Solution
t 1 2 3 4 5 6 7 8 9 10 Total
Dt 20 50 10 50 50 10 20 40 20 30 300
Qt 100 0 0 100 0 0 100 0 0 0 300
It 80 30 20 70 20 10 90 50 30 0 0
Setup cost 100 0 0 100 0 0 100 0 0 0 300
Holding cost 80 30 20 70 20 10 90 50 30 0 400
Total cost 180 30 20 170 20 10 190 50 30 0 700
8/10/2019 Lecture05 MRP Indu6211
33/69
33
Wagner-Whitin Property
Under an optimal lot-sizing policy either the inventory
carried to period t+1 from a previous period will be zero or
the production quantity in period t+1 will be zero.
8/10/2019 Lecture05 MRP Indu6211
34/69
34
Basic Idea of Wagner-Whitin Algorithm
By WW Property I, either Qt=0or Qt=D1++Dkfor some k. If
jk*= last period of production in a kperiod
problem
then we will produce exactlyDk+DTin periodjk*.
We can then consider periods 1, , jk*-1as if they are an
independentjk*-1period problem.
8/10/2019 Lecture05 MRP Indu6211
35/69
35
Wagner-Whitin Example
Step 1: Obviously, just satisfyD1(note we are neglectingproduction cost, since it is fixed).
Step 2: Two choices, eitherj2* = 1 orj2
*= 2.
1
100
*
1
1
*
1
j
AZ
1
150
200100100
150)50(1100
min
2inproduce,Z
1inproduce,min
*
2
2
*
1
211*
2
j
A
DhAZ
8/10/2019 Lecture05 MRP Indu6211
36/69
36
Wagner-Whitin Example (cont.)
Step3: Three choices,j3* = 1, 2, 3.
1
170
250100150
21010)1(100100
17010)11()50(1100
min
3inproduce,Z
2inproduce,Z
1inproduce,)(
min
*
3
3*2
322
*
1
321211*
3
j
A
DhA
DhhDhA
Z
8/10/2019 Lecture05 MRP Indu6211
37/69
37
Wagner-Whitin Example (cont.)
Step 4: Four choices,j4* = 1, 2, 3, 4.
4
270
270100170
30050)1(100150
31050)11(10)1(100100
32050)111(10)11()50(1100
min
4inproduce,Z
3inproduce,Z
2inproduce,)(Z
1inproduce,)()(
min
*
4
4
*
3
433
*
2
432322
*
1
4321321211
*
4
j
A
DhA
DhhDhA
DhhhDhhDhA
Z
8/10/2019 Lecture05 MRP Indu6211
38/69
38
Planning Horizon Property
If jt*=t, then the last period in which production occurs in an
optimal t+1 period policy must be in the set t, t+1,t+1.
In the Example:
We produce in period 4 for period 4 of a 4 periodproblem.
We would never produce in period 3 for period 5 in a 5
period problem.
8/10/2019 Lecture05 MRP Indu6211
39/69
39
Wagner-Whitin Example (cont.)
Step 5: Only two choices,j5* = 4, 5.
Step 6: Three choices,j6*
= 4, 5, 6.
And so on.
4
320
370100270
320)50(1100170min
5inproduce,Z
4inproduce,min
*
5
5
*
4
544
*
3*
5
j
A
DhAZZ
8/10/2019 Lecture05 MRP Indu6211
40/69
40
Wagner-Whitin Example Solution
Planning Horizon (t)Last Periodwith Production 1 2 3 4 5 6 7 8 9 10
1 100 150 170 320
2 200 210 310
3 250 300
4 270 320 340 400 5605 370 380 420 540
6 420 440 520
7 440 480 520 610
8 500 520 580
9 580 610
10 620Zt 100 150 170 270 320 340 400 480 520 580
jt 1 1 1 4 4 4 4 7 7 or 8 8
Produce in period 8
for 8, 9, 10 (40 + 20
+ 30 = 90 units
Produce in period 4
for 4, 5, 6, 7 (50 + 50
+ 10 + 20 = 130
units)
Produce in period 1
for 1, 2, 3 (20 + 50 +
10 = 80 units)
8/10/2019 Lecture05 MRP Indu6211
41/69
41
Wagner-Whitin Example Solution (cont.)
Optimal Policy:
Produce in period 8 for 8, 9, 10 (40 + 20 + 30 = 90units)
Produce in period 4 for 4, 5, 6, 7 (50 + 50 + 10 + 20 =
130 units)
Produce in period 1 for 1, 2, 3 (20 + 50 + 10 = 80 units)t 1 2 3 4 5 6 7 8 9 10 Total
Dt 20 50 10 50 50 10 20 40 20 30 300
Qt 80 0 0 130 0 0 0 90 0 0 300
It 60 10 0 80 30 20 0 50 30 0 0
Setup cost 100 0 0 100 0 0 0 100 0 0 300Holding cost 60 10 0 80 30 20 0 50 30 0 280
Total cost 160 10 0 180 30 20 0 150 30 0 580
8/10/2019 Lecture05 MRP Indu6211
42/69
42
Problems with Wagner-Whitin
1. Fixed setup costs.
2. Deterministic demand and production (no uncertainty)
3. Never produce when there is inventory (WW Property
I).
safety stock (don't let inventory fall to zero)
random yields (can't produce for exact no. periods)
8/10/2019 Lecture05 MRP Indu6211
43/69
43
Safety Stocks and Safety Leadtimes
Safety Stocks:
generate net requirements to ensure min level of inventory at all
times
used as hedge against quantity uncertainties (e.g., yield loss)
Safety Leadtimes: inflate production leadtimes in part record
used as hedge against time uncertainty (e.g., delivery delays)
8/10/2019 Lecture05 MRP Indu6211
44/69
44
Safety Stock and Safety Lead Times
Part B 1 2 3 4 5 6 7 8
Gross requirements 10 15 10 20 20 15 15 15
Scheduled receipts
Adjusted SRs
Projected on-hand 40 30 15 5 __ __ __ __ __
Projected on-hand - SS 30 20 5 -5 __ __ __ __ __
Net requirements 5 20 20 15 15 15
Planned order receipts 25 35 30
Planned order releases 25 35 30
8/10/2019 Lecture05 MRP Indu6211
45/69
45
Lead Times
Part B 1 2 3 4 5 6 7 8
Gross requirements 10 15 10 20 20 15 15 15
Scheduled receipts
Adjusted SRs
Projected on-hand 40 30 15 5 -15 __ __ __ __
Net requirements 15 20 15 15 15
Planned order receipts 35 30 15
Adjusted planned order receipts 35 30 15
Planned order releases 35 30 15
8/10/2019 Lecture05 MRP Indu6211
46/69
46
Problems with MRP
1. Capacity infeasibility
2. Long planned lead times
3. System nervousness
8/10/2019 Lecture05 MRP Indu6211
47/69
47
Nervousness
Small change in master production schedule results inlarge change in planned orders
Note: we are using FOP lot-sizing rule.
Item A (Leadtime = 2 weeks, Order Interval = 5 weeks)
Week 0 1 2 3 4 5 6 7 8
Gross Reqs 2 24 3 5 1 3 4 50
Sched Receipts
Proj Inventory 28 26 2 -1 -6 -7 -10 -14 -64Net Reqs 1 5 1 3 4 50
Planned Orders 14 50
Component B (Leadtime = 4 weeks, Order Interval = 5 weeks)
Week 0 1 2 3 4 5 6 7 8
Gross Reqs 14 50Sched Receipts 14
Proj Inventory 2 2 2 2 2 2 -48
Net Reqs 48
Planned Orders 48
8/10/2019 Lecture05 MRP Indu6211
48/69
48
Nervousness Example (cont.)
* Past Due
Note:Small reduction in requirements caused largechange in orders and made schedule infeasible.
Item A (Leadtime = 2 weeks, Order Interval = 5 weeks)Week 0 1 2 3 4 5 6 7 8
Gross Reqs 2 23 3 5 1 3 4 50
Sched Receipts
Proj Inventory 28 26 3 0 -5 -6 -9 -13 -63
Net Reqs 5 1 3 4 50
Planned Orders 63Component B (Leadtime = 4 weeks, Order Interval = 5 weeks)
Week 0 1 2 3 4 5 6 7 8
Gross Reqs 63
Sched Receipts 14
Proj Inventory 2 16 -47
Net Reqs 47Planned Orders 47*
8/10/2019 Lecture05 MRP Indu6211
49/69
49
Nervousness Example (cont.)
Note:Small reduction in requi rements caused large change inorders and made schedule infeasible.
Component B 1 2 3 4 5 6 7 8
Gross requirements 63
Scheduled receipts 14
Adjusted SRs 14
Projected on-hand 2 2 -47 __ __ __ __ __ __
Net requirements 47 48
Planned order receipts 47
Planned order releases 47*
* Indicates a late start
8/10/2019 Lecture05 MRP Indu6211
50/69
50
Reducing Nervousness
Reduce Causes of Plan Changes:
Stabilize MPS (e.g., frozen zones and time fences) Reduce unplanned demands by incorporating spare parts forecasts
into gross requirements
Use discipline in following MRP plan for releases
Control changes in safety stocks or leadtimes
Alter Lot-Sizing Procedures: Fixed order quantities at top level
Lot for lot at intermediate levels
Fixed order intervals at bottom level
Use Firm Planned Orders: Planned orders that do not automatically change when conditionschange
Managerial action required to change a FPO
8/10/2019 Lecture05 MRP Indu6211
51/69
51
Item A 1 2 3 4 5 6 7 8
Gross requirements 2 23 3 5 1 3 4 50
Scheduled receipts
Firm planned orders 14
Projected on-hand 28 26 3 14 9 8 5 1 -49
Net requirements 49
Planned order receipts [14] 49
Planned order releases [14] 49
TABLE 3.15, Firm Planned Orders
8/10/2019 Lecture05 MRP Indu6211
52/69
52
Component B 1 2 3 4 5 6 7 8
Gross requirements 14 49
Scheduled receipts 14
Adjusted SRs
Projected on-hand 2 2 2 2 2 2 -47 __ __
Net requirements 47
Planned order receipts 47
Planned order releases 47
TABLE 3.16
H dli Ch
8/10/2019 Lecture05 MRP Indu6211
53/69
53
Handling Change
Causes of Change:
New order in MPS
Order completed late
Scrap loss
Engineering changes in BOM
Responses to Change: Regenerati ve MRP:completely re-do MRP calculations starting with
MPS and exploding through BOMs.
Net Change MRP:store material requirements plan and alter only
those parts affected by change (continuously on-line or batched daily).
Comparison:
Regenerative fixes errors.
Net change responds faster but must be regenerated periodically.
R h d li
8/10/2019 Lecture05 MRP Indu6211
54/69
54
Rescheduling
Top Down Planning:use MRP system with changes (e.g.,
altered MPS or scheduled receipts) to recompute plan
can lead to infeasibilities (exception codes)
Orlicky suggested using minimum leadtimes
bottom line is that MPS may be infeasible
Bottom Up Replanning:use pegging and firm plannedorders to guide rescheduling process
pegging allows tracing of release to sources in MPS
FPOs allow fixing of releases necessary for firm customer orders compressed leadtimes (expediting) are often used to justify using
FPOs to override system leadtimes
M f t i R Pl i (MRP II)
8/10/2019 Lecture05 MRP Indu6211
55/69
55
Manufacturing Resource Planning (MRP II)
Sometime called MRP, in contrast with mrp (little mrp); more
recent implementations are called ERP (Enterprise ResourcePlanning).
Extended MRP into:
Master Production Scheduling (MPS)
Rough Cut Capacity Planning (RCCP)
Capacity Requirements Planning (CRP)
Short Term Control
MRP II Pl i Hi h
8/10/2019 Lecture05 MRP Indu6211
56/69
56
MRP II Planning Hierarchy
Aggregate
Production
planning
Resource
planning
Master
Production
scheduling
Material
requirements
planning
Jobpool
Job
release
Job
dispatchingI/O control
Long-term
forecast
Rough-cut
capacity
planning
Bills of
material
On-hand &
Scheduled
receipts
Firm
orders
Short-term
forecast
Demand
management
Capacity
requirementsplanning
Routing
data
Long-range
planning
Intermediate-range
planning
Short-term
control
L R Pl i
8/10/2019 Lecture05 MRP Indu6211
57/69
57
Long Range Planning
Time horizon 6 months to 5 years
Forecasting
Long range forecast for part families
Short term forecasts of individual items
Resource planning
Available capacity over the long term Decisions to expand
Aggregate planning
levels of production, staffing, inventory
I t di t L l
8/10/2019 Lecture05 MRP Indu6211
58/69
58
Intermediate Level
Production planning functions
Master Production Scheduling
Rough-cut Capacity Planning
Capacity Requirements Planning
M t P d ti S h d li (MPS)
8/10/2019 Lecture05 MRP Indu6211
59/69
59
Master Production Scheduling (MPS)
MPS drives MRP
Should be accurate in near term (firm orders)
May be inaccurate in long term (forecasts)
Software supports
forecasting
order entry
netting against inventory
Frequently establishes a frozen zone in MPS
R h C t C it Pl i (RCCP)
8/10/2019 Lecture05 MRP Indu6211
60/69
60
Rough Cut Capacity Planning (RCCP)
Quick check on capacity of key resources
Use Bill of Resource (BOR) for each item in MPS
Generates usage of resources by exploding MPS against BOR
(offset by leadtimes)
Infeasibilities addressed by altering MPS or adding capacity (e.g.,
overtime)
RCCP
8/10/2019 Lecture05 MRP Indu6211
61/69
61
RCCP
Week 1 2 3 4 5 6 7 8
Part A 10 10 10 20 20 20 20 10
Part B 5 25 5 15 10 25 15 10
Process
CenterPart A Part B
21 2.5 2.0
Week 1 2 3 4 5 6 7 8
Part A (hour) 25 25 25 50 50 50 50 25
Part B (hour) 10 50 10 30 20 50 30 10
Total (hour) 35 75 35 80 70 100 80 35
Available 65 65 65 65 65 65 65 65
Over (+)/under(-) 30 -10 30 -15 -5 -35 -15 30
Capacity Requirements Planning (CRP)
8/10/2019 Lecture05 MRP Indu6211
62/69
62
Capacity Requirements Planning (CRP)
Uses routing data (work centers and times) for all items
Explodes orders against routing information
Generates usage profile of all work centers
Identifies overload conditions
More detailed than RCCP
No provision for fixing problems
Leadtimes remain fixed despite queueing
CRP load profile
8/10/2019 Lecture05 MRP Indu6211
63/69
63
0
100
200
300
400
500
1 2 3 4 5 6 7 8
Days
CRP load profile
Load
Day 1 2 3 4 5
Planned order releases 300 350 400 350 300
Day 1 2 3 4 5
Planned order releases 1,200 0 0 1,200 0
Short Term Control / Shop Floor control
8/10/2019 Lecture05 MRP Indu6211
64/69
64
Short Term Control / Shop Floor control
Sometimes called shop floor control
Provides routing/standard time information
Sets planned start times
Can be used for prioritizing/expediting
Can perform input-output control (compare planned with actual
throughput)
Modern term is MES (Manufacturing Execution System), which
represents functions between Planning and Control.
Short Term Control cont
8/10/2019 Lecture05 MRP Indu6211
65/69
65
Short Term Control cont.
Job Dispatching
Shortest processing time, earliest due date etc..
I/O Control
WIP levels
Kanban vs. MRP
Enterprise Resources Planning
8/10/2019 Lecture05 MRP Indu6211
66/69
66
Enterprise Resources Planning
MRP MRP II
SCM
BPR
ERP
IT
Goal: link information
across entire enterprise:manufacturing
distribution
accounting
financial
personnel
Integrated ERP Approach
8/10/2019 Lecture05 MRP Indu6211
67/69
67
Integrated ERP Approach
Advantages:
integrated functionality
consistent user interfaces
integrated database
single vendor and contract
unified architecture
unified product support
Disadvantages:
incompatibility with existing systems
long and expensive implementation
incompatibility with existing
management practices
loss of flexibility to use tactical point
systems
long product development and
implementation cycles long payback period
lack of technological innovation
Other Planning Tools
8/10/2019 Lecture05 MRP Indu6211
68/69
68
Other Planning Tools
Manufacturing Execution Systems (MES):
automated implementation of shop floor control
data tracking (WIP, yield, quality, etc.)
merging with ERP?
Advanced Planning Systems (APS):
algorithms for performing specific functions
finite capacity scheduling, forecasting, available to promise,
demand management, warehouse management, distribution, etc.
partnerships between developers and ERP vendors
Conclusions
8/10/2019 Lecture05 MRP Indu6211
69/69
Conclusions
Insight: distinction between independent and dependent
demands
Advantages:
General approach
Supports planning hierarchy (MRP II, ERP)
Problems:
Assumptionsespecially infinite capacity
Cultural factorse.g., data accuracy, training, etc. Focusauthority delegated to computer