MRP II:Manufacturing Resource Planning Systems

The Evolution of MRP II

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1960s and 1970s

MRP: Material Requirement Planning
Assumed infinite capability

1980s
MRP II : Manufacturing Resource Planning
Assumed limited capability Closed loop system

IE 505: Production Planning Control Lecture Notes* Rakesh Nagi University at Buffalo
* Adapted in part from Lecture Notes of Dr. George Harhalakis, University of Maryland
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1990s
ERP: Enterprise Resource Planning
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The Fundamental Logic of MRP System

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The Modules In MRP II System

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What are we going to make ?

The Master Production Schedule

What do we (already) have ?

Inventory Record

What is it made up of ?
The Bill Of Materials

How will it be made ?

The Routings
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Master Production Scheduling Inventory Bill Of Materials (BOM) Material Requirements Planning (MRP) Purchasing Receiving/ Quality Control Shop Floor
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Typical MRP II Architecture

Independent Demand Master Production Schedule

Dependent vs Independent Demand

Suppliers Dependent Demand
Raw materials & Semi-finished products

Strategic Modules

Inventory Dependent Demand Material Requirement Planning Purchasing

Bill of Material/ Routings

Market Independent Demand

Finished products

Company

Execution Modules

Shop Floor

Receiving/Quality Control Delivery

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Capacity OK ?
Yes

No

Manufacturing
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Material Requirements Planning (MRP)

Inputs Outputs

Master Production Schedule

Customer Orders Sales Forecasts Order from Dealers

MRP Process

Inputs
Master Production Schedule Bill Of Materials Inventory Data.

Outputs
Replenishment Orders Reschedule Notices

Independent Demand Backlog

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Master Production Schedule

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Master Schedule
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Forward looking plan Objectives

To support sales To run operations effectively

Inputs
Sales forecasts Customer orders Orders from dealers or other distribution centers Inventory of finished products Currently produced and expected finished product delivers Rough-cut routing

Fundamental factors
What we intend to make How much we intend to make When we intend to make

Input : sale plan

Must consider the capacities available by rough cut routing
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Outputs
Quantities, types and due dates of required products
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Bill Of Material (BOM)

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A Sample BOM Structure

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The list of the end items Characteristics

Part Numbering Parents and Child Relationship Bill Of Material Levels Explosions and Implosions Phantom Bills
Assy B

Assy C

Assy D

Subassy F

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Part Numbering
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Example
Random Numbering
Part Number: 37-7213 Type of Item: 37 = Ink Cartridges Four digit: 7213 = Random

The unique identifier

Called a part number or item number

Three ways to define the number

Random numbering
is used as an identifier only, not as a descriptor

Significant Numbering
Part Number: 37-1-3-16-432 Type of item: 37 = Ink Cartridges Type: 1 = Screw-in-type Point type: 16 = Fine Line Color: 16 = Blue Length: 432 = 4.5 inches long

Significant numbering
describes specific information about the item, such as source, material, shape, etc

Semi-significant numbering
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Parents and Child Relationship

Level 0 Parent

BOM Levels
A

Child

Child

Level 1

B (1)

C (1)

D (2)

Children are the objects that are assembled together to make a parent object

Level 2

F (2)

E (2)

G (1)

H (1)

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Explosions
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Examples of Explosion Types

Single Level Explosion of D Part # Qty E 2 G 1 H 1 Indented Explosion of A Level 1 2 2 1 1 2 2 2 Part # B E F C D E G H Qty 1 1 2 1 2 2 1 1 Summarized Explosion of A Level 1 1 1 2 2 2 2 Part # B C D E F G H Qty 1 1 2 5 2 2 2

Two different way to display the BOM

Explosion and implosion

Explosions: going down the BOM

Single level explosions
Displays the immediate component parts (children)

Indented explosion
Parent on left-hand side and each additional level indented farther to the right

(Ordered by Part #)

Summarized explosion
Arranges an indented explosion into total quantity order or part number order
Adds together the total Rakesh Nagi for each part number requirement
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Implosions
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Phantom BOM
Phantom Motor Hair Dryer Phantom Plastic Housing Phantom Heating Element

Implosions: going up the BOM

Single level implosion
Displays the immediate parent of a given component Called where used list or goes into Useful when a design change for the imploded part is under discussion

Indented implosion
Displays all of the parent of a given component, all the way up to the top level part Used for the two main reasons To detect commonality of parts in different assemblies Ro assess the impact of a design change made to a part on various assemblies that make use of it
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220V

110 V

Green

Red

Yellow

400 W

600 W

The items Motor, Housing, and Heating Element are Phantoms To create individual Bills of Materials we would need 12 different product structures
2 motor types * 3 plastic housing types * 2 heating element types = 12

Summarized implosion
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Phantoms cost and lead time are always zero

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Product Planning BOM

Phantom Motor Hair Dryer Phantom Plastic Housing Phantom Heating Element

The Difference Between An Engineering BOM and Manufacturing BOM

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An Engineering BOM E (1) B (1) F (2) C (1) E (2) D (2) G (1) H (1)

220V 20 %

110 V 80 %

Green 34 %

Red 45 %

Yellow 20 %

400 W 30 %

600 W 70 %

A
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Phantom items are transparent to MRP. They are completely ignored Based on the percentage figures associated with each option (from statistical data from past sales). MRP will generate the appropriate gross requirements For example. For 500 Master Schedule hair dryers MRP will generate a requirement for 100 200V motors and 400 110 V motors etc
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An Manufacturing BOM E (1)

B (1) F (2)

C (1)

D (2) E (2) I (1) H (1)

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G (1)
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BOM Interfaces With

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Typical Characteristics Of A Routing

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Inventory Control
Uses part master data to identify inventory items

Material Requirements Planning (MRP)

Uses product structure to translate independent into dependent demand

Note that only manufacturing items may have a routing Each routing is identified by a unique routing number Necessary records for a routing
Manufacturing division Work station
Group of machines or subdivision

Purchasing and Receiving

Use part master records to identify items on order, inspection and receipts

Work center
Machine or assembly facility

Shop Floor
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Description of operation Tooling Labor craft code Standard labor hours Labor rates per hour by craft code
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Routing
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Basic Transactions in Inventory Control

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Used for rough cut capacity planning Incorporates with master schedule for forecasting rough capacity requirement Detail routings (setup time, moving time, etc) are used for shop floor capacity
Assembly line: #123 Setup time: 5 hours List of tools and fixtures: Tool --Fixture --. . Production rate: 42 assemblies/hr
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Receipts
Identified by part numbers Purchased items, Manufacturing items, etc Tow types:
Planned receipts: purchasing, manufacturing, subcontracting orders with vendors or subcontractors Unplanned receipts:

Issues
Related to raw materials, component parts and assemblies
Individual or sets of components for manufacturing or to the customer (finished goods) including shortages

Subtracted from on hand quantity

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Transfers
From one stores location to another or between warehouse
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Basic Transactions in Inventory Control (2)

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Impact of Inventory Volume

A. High Inventories

Scrapping
Disposal of scrap purchased or manufactured items

Adjustments
For quantities on hand after physical counts

Reports
ABC class reports with quantities and/or dollar value, rate of consumption per item etc.

Rocks

B. Low Inventories

Rocks
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Inventory Control Interfaces

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Material Requirements Planning (MRP)

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Provides MRP with on-hand balances to enable the computation of net requirement Obtains product structures from BOM to prepare kitting list Standard costs are furnished from purchasing and routings to evaluate stock holding Purchasing and manufacturing orders are signaled from MRP to prepare for upcoming receipts and issues respectively Completed manufacturing orders from Shop Floor Control module are received and closed
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Basic Functions
The right parts
Identified in the BOM module

The right quantities

Identified in the BOM module, an then compares to the on-hand quantities held in inventory control

The right timing

Calculated within MRP, based on purchasing and manufacturing lead times held in the BOM/Routings module
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Material Requirements Planning

Inventory

Material Requirements Planning (MRP)

BOMs

MRP Netting
Net = Gross- Available
Manufacturing Orders Purchasing Orders

Quantity Available

Example of MRP page 76, 77, and 78

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Regenerative MRP
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Net Change MRP

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Regenerates all requirements

All material requirements are regenerated once every planning period (usually a week) All previous plans are erased and replaced by new one Several parts are planned although there has not been changed in their plans

A Transaction Driven System

Updates the changed data Only those parts needing re-planning are affected Computer processing time is significantly reduced More frequent run is required

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Selection Criteria for Net Change and Regenerative MRP

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Key Points In MRP

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A Net Change System is best for:

Complicated product designs Short production runs for many products Frequent design changes Unstable purchased part supplies Simple product designs Long and stable production runs few design changes Stable purchased item supplies
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Maintain accurate data input

Forecasts, orders, on hand balances, and routing

Proper treatment of expedited orders

e.g., the addition of extra resources

A Regenerative System is best for:

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Close collaboration between marketing and manufacturing Proper shop floor feed back and tracking Early notification of changes
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Fundamental Requirements To Successful Run MRP

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Purchasing
Vendor information management
Retrieval by vendor number or name Should get vendor record to evaluate
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Absolute accuracy in Bill of Materials Design changes timely recorded together with their effectively start dates Accurate inventory records Accurate routings and purchasing records Full understanding of the systems algorithms and logic
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Vendor/item cross reference

Price quotations, discounts and lead times should be available Used by the receiving module for part recognition

Purchase orders management

Vendor selection, order release, purchase order history, etc

Vendor performance
Basic criteria
Quality of products supplied, On-time deliveries, price competitiveness, etc.
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Purchasing Module
Vendors Items Supplied by Vendors
Expected Receipts by Part or Vendors Overdue Purchase Orders by Part or Vendor Quality Vendor Performance On Time Deliveries Price
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Receiving
Current Quotes & Lead Times
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Material Receipts
Material recognition and count for purchase receipts Matching with purchase or manufacturing orders

Open Purchase Orders

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Material transfers Order Closing and Interfaces

MRP, Purchasing and Shop Floor Control are notified and the appropriate records are updated Updates stock quantities

Updates MRP, Shop floor control, inventory control, etc

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Receiving Module
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Shop Floor Control

Fundamental Functions
Input of manufacturing orders from MRP and execution Maintenance of work-center and labor data Capacity planning and control Capacity over/under loading detection and reporting back to MS and MRP for rescheduling Manufacturing order status reporting Manufacturing order closing and reporting to MRP
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Receipts

Inspection

Stock Receipts
Update Inventory Records
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Rejects

Shop Floor Control Module

Work Orders
Load Master Schedule to reschedule Capacity Available

MRP II /CAD/CAPP/CAM Integration

Master Schedule

Accounts

Bill of Materials & Routings

CAD

CAPP CAM
Shop Floor Control Receiving Data Base Inventory Control
Material Requirement Planning

Time

Purchasing

Delivers
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Rejects
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