Chapter 13

Material Requirements
Planning (MRP)

Business 3401
 Example (Chair Assembly)
 Suppose that a 100-unit delivery of chairs is
scheduled at the start of week 6. Determine the
size and the timing of back-support parts to meet
this delivery.
LEADTIME
Final Chair Assembly 1 week
Back Assembly 1 week
Back Support Procur. 2 weeks

 Each assembly requires 3 back supports.

 The firm has 20 back support units available and
60 more is scheduled to arrive at the beginning
of Week 4.
Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Example (Chair Assembly)
Week Number 1 2 3 4 5 6
Part: Chair Gross Requirements 100
LT: 1 Scheduled Receipts
Projected On-hand
Net Requirements 100
Planned-order Receipts 100
Planned Order Releases 100

Week Number 1 2 3 4 5 6
Part: Back Gross Requirements 100
Assembly Scheduled Receipts
LT: 1 Projected On-hand
Net Requirements 100
Planned-order Receipts 100
Planned Order Releases 100

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Example (Chair Assembly)
Week Number 1 2 3 4 5 6
Part: Back Gross Requirements 300
Support Scheduled Receipts 60
LT: 2 Projected On-hand 20 20 20 80
Net Requirements 220
Planned-order Receipts 220
Planned Order Releases 220

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Lot Sizing Rules
Week Number 1 2 3 4 5 6
Part: Back Gross Requirements 300
Support Scheduled Receipts 60
LT: 2 Projected On-hand 20 20 20 80
Net Requirements 220
Planned-order Receipts 220
Planned Order Releases 220

Suppose that the lot-size of back support units is 50.

 Can only produce at multiples of 50.
Week Number 1 2 3 4 5 6
Part: Back Gross Requirements 300
Support Scheduled Receipts 60
LT: 2 Projected On-hand 20 20 20 80 30 30
Net Requirements 220
Planned-order Receipts 250
Planned Order Releases 250
Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 MRP Outputs - Primary Reports
Immediate Planned order Changes to
order releases releases open orders

revisions to
indicate
authorize due dates or
amount and
execution of quantities
timing of
planned (expedite,
future
orders cancel,
orders
move, etc.)

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 MRP Outputs - Secondary
Reports
Performance Demand
control reports history reports
useful for
assessing future
Evaluate system material
operation, requirements
including
deviations from
plans and cost include net
information requirements,
plus

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 MRP Planning in Practice
Develop a tentative Use MRP to
Master Production simulate material
Schedule requirements

Convert material Revise tentative

requirements to Master Production
resource requirements Schedule

Can No
Is shop capacity be
capacity No changed to meet
adequate? requirements
Yes Yes

Firm up a portion Change

of the MPS capacity

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Question 4
Eighty units of product E are needed at the beginning of week
6. Three cases (30 units per case) of J have been ordered and
one case is scheduled to arrive in week 3, one in week 4, and
one in week 5. Note: J must be ordered by the case, and B
must be produced in multiples of 120 units. There are 60 units
of B and 20 units of J on hand now. Manufacturing lead times
are two weeks each for E and B, and purchase lead time is one
week for J.
E

B(2) J(3)

J(4) F(2)

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Question 4
a) Prepare the material requirements plan for component J.
b) Suppose that now is week 4 and the quantity of E needed
in week 6 has changed from 80 to 70. The planned order
releases through week 3 and scheduled receipts have all
been executed as in part a. How many more (relative to
part a) Bs and Js will be on hand in week 6?

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Question 5
Product P is composed of three subassemblies: K, L, and W.
Subassembly K is assembled using 3 Gs and 4 Hs; L is made of 2
Ms and 2 Ns; and W is made of 3 Zs. On-hand inventories are
40 Gs, and 200 Hs. Scheduled receipts are 10 Ks at the start of
week 3 and 30 Ks at the start of week 6.
One hundred Ps must be shipped at the start of week 6 and
another 100 at the start of week 7. Manufacturing lead times
are two weeks for subassemblies and purchase lead times are
one week for the components. Final assembly P requires one
week for 100 units. Include an extra 10-percent scrap
allowance in each planned order of G. The minimum order size
for H is 200 units. For other items, use lot-for-lot ordering.
Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Question 5
a) Develop the product structure tree
b) Develop the material requirements plan for P, K, G and H.

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Question 5a (New)
One hundred twenty units of end item Z are needed at the
beginning of week 7. Prepare a material requirements plan for
component C. Take into account that on hand there are 40 units of
Z, 70 units of A, 100 units of B, and 30 units of C. Also, there is a
scheduled receipt of 20 units of component C in week 4. Lead times
are two weeks for Z and B, and one week for the other components.
Lot-for-lot ordering will be used for Z and B; orders for A and C must
be in multiples of 100.

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)
 Question 5b (New)
Ninety-five units of end item E are needed at the beginning of week
7. Prepare a material requirements plan for component D. Take into
account that 5 units of E are currently on hand, as well as 50 units of
B, 100 units of C, and 80 units of D. Also, 30 units of C have been
outsourced and are expected to arrive in week 4. Lead times are
two weeks for E and C, and one week for the other components.
Assume lot-for-lot ordering except for D, where multiples of 40
must be used.

Chapter 13 – Material
Business 3401
Requirements Planning (MRP)