Material Requirements Planning

The material requirements planning (MRP) model is used to determine production requirements for items which are dependent.

The Data

Consider the following example:

The numbers on the left of each item indicate the number of subcomponents that must be used in the parent component. Lead times are 1 week, except for item b, that has a 2 week lead time.

The framework for MRP is given by the number of lines in the indented bill of materials and the number of time periods. In our screen, which follows, representing the example above, we show a problem with 7 BOM lines and 8 periods, as seen at the top of the screen.

Item names. The item names are entered in this column. The same name will appear in more than one row if the item is used by two parent items, such as item e. Note that as a rule, names are unimportant, but in MRP names are extremely important. Case (upper/lower) does not matter, but spaces matter very much.

Item level. The level in the indented BOM must be given here. The item can not be placed at a level more than one below the item immediately above. Do not low level code. Also, please note that it is permissable to have more than one item at level 0 (more than one end item) as shown in example 2.

Lead time. The lead time in order to get the item is entered here. The default is 1 week.

Number(#) per parent. The number of units of this subassembly needed for its parent is entered here. The default is 1.

On-hand. The current inventory on hand at the beginning of the problem is listed here. If a subassembly is listed twice, it makes sense for the current inventory to appear only one time. However, if it appears twice, the starting inventory will be the sum of the listed amounts (see example 2).

Lot size. The lot size can be specified here. A 0 or a 1 will perform lot-for-lot ordering. If another number is placed here, all orders for that item will be in lots that are integer multiples of that number (see example 2).

Minimum Quantity. It is possible to specify minimum order sizes (see example 2).

Demands (entered under period 1 through period 8). The demands are entered for any level 0 item, in the week in which the items are demanded.

Scheduled receipts. If units are scheduled to be delivered in the future they should be listed in the appropriate time period (column) and item (row) (see example 2).

Example 1 - A simple MRP example

A sample data screen that expresses the problem appears in the preceding illustration. The levels indicate that we have an item termed a, which has two (level 1) subcomponents named b and c. Subcomponent b has two (level 2) subcomponents named e and f. Subcomponent c has two subcomponents named d and e. Notice that e is a subcomponent of both b and c.

The demand for the end item, a, is 120 units in week 7 and 140 units in week 8. The number of subcomponents used is given in the number per parent column. For example, end item a consists of two subcomponent b, which in turn consists of 1 e and 2 fs . At the beginning of the problem, there are no units of any kind of inventory on hand.

MRP Product Tree Viewer

MRP has a product tree viewer as shown below. An indented bill of materials is displayed.

Results

A portion of the results is displayed in the following screen.

Total required. The total number of units required in each week is listed in the first row. For the end item, this is the demand schedule that was input on the data screen. For other items, this is computed.

On-hand. The number on hand is listed here. This starts as given on the data screen and is reduced according to needs. A later example will demonstrate on hand inventory.

Scheduled receipt. This is the amount that was scheduled in the original data screen (see example 2).

Net required. The net amount required is the amount needed after the on hand inventory is used. Again, component c illustrates the subtraction (see example 2).

Planned Receipt. This is the amount that will be received. It will be the same as the net required many times but it also may be larger due to minimum order size and lot size requirements (see example 2).

Order release. This is the net required but offset by the lead time.

Printing

We show a portion of the printout for the problem for one main reason. The printout of the input is in slightly different form than the screen display. Notice that the software prints an indented bill of materials.

Module/ submodule : Material Requirements Planning

Problem title: Example 1

Indented Bill of Materials

Item Number per On hand Lot Size Minimum

ID Leadtime parent Inventory (if not lot for lot)

quantity

a 1 1

b 2 2

e 1 1

f 1 2

c 1 3

d 1 5

e 1 4

Demands for level 0 items

Item Id = a

Period Demand

1 0

2 0

3 0

4 0

5 0

6 0

7 120

8 140

Scheduled receipts for all items which are not end (level 0) items (if any)

a(low level = 0)

<= pd 0 pd1 pd2 pd3 pd4 pd5 pd6 pd7 pd8

--------------------------------------------------------------------------------------------------

TOT.REQ . 120 140

ON HAND

SchdREC .

NET REQ 120 140

PlanREC . 120 140

ORD REL . 120 140

Options

The next example will demonstrate some of the features of our MRP module. We modify our previous example as shown next.

First, notice that we have changed the level for product d and the subcomponent e below it. Thus e is at level 2 for a but level 1 for d. Item d is an end item with a demand of 65 in period 8. Second, we have given e an initial inventory of both 10 and 20. (We really should not have both but we want to demonstrate what happens.) Third, we have a scheduled receipt of 800 units in period 2 for item c. Fourth, item f must be bought or made in lots that are multiples of 144 units. Fifth, item b must be purchased in quantities of 300 or more.

The results can be seen in the following printout display. (We have edited some of the input data by eliminating some 0's)

P:\Manual\Examples\ Example2 .mat 02-20-1999 12:00:52

Module/ submodule : Material Requirements Planning

Problem title: Example 2

Indented BOM and Results ----------

Indented Bill of Materials

Item Number per On hand Lot Size Minimum

ID Leadtime parent Inventory (if not lot for lot)

quantity

a 1 1

b 2 2 300

e 1 1 10

f 1 2 144

c 1 3

d 1 5

e 1 4 20

Demands for level 0 items

Item Id = a

Period Demand

7 120

8 140

Item Id = d

Period Demand

8 65

Scheduled receipts for all items which are not end (level 0) items (if any)

Item Id = c

Period Receipt

2 800

a(low level = 0)

<= pd 0 pd1 pd2 pd3 pd4 pd5 pd6 pd7 pd8

----------------------------------------------------------------------------------

TOT.REQ . 120 140

ON HAND

SchdREC .

NET REQ 120 140

PlanREC . 120 140

ORD REL . 120 140

d(low level = 0)

<= pd 0 pd1 pd2 pd3 pd4 pd5 pd6 pd7 pd8

----------------------------------------------------------------------------------

TOT.REQ . 65

ON HAND

SchdREC .

NET REQ 65

PlanREC . 65

ORD REL . 65

b(low level = 1)

<= pd 0 pd1 pd2 pd3 pd4 pd5 pd6 pd7 pd8

----------------------------------------------------------------------------------

TOT.REQ . 240 280

ON HAND 60 80

SchdREC .

NET REQ 240 220

PlanREC . 300 300

ORD REL . 300 300

c(low level = 1)

<= pd 0 pd1 pd2 pd3 pd4 pd5 pd6 pd7 pd8

----------------------------------------------------------------------------------

TOT.REQ . 360 420

ON HAND 800 800 800 800 440 20

SchdREC . 800

NET REQ

PlanREC .

ORD REL .

e(low level = 2)

<= pd 0 pd1 pd2 pd3 pd4 pd5 pd6 pd7 pd8

----------------------------------------------------------------------------------

TOT.REQ . 300 300 260

ON HAND 30 30 30 30 30

SchdREC .

NET REQ 270 300 260

PlanREC . 270 300 260

ORD REL . 270 300 260

f(low level = 2)

<= pd 0 pd1 pd2 pd3 pd4 pd5 pd6 pd7 pd8

----------------------------------------------------------------------------------

TOT.REQ . 600 600

ON HAND 120 96 96 96

SchdREC .

NET REQ 600 480

PlanREC . 720 576

ORD REL . 720 576

Notice the on-hand inventory for item e. It begins at 30 and remains until it is needed. Notice that for item c a scheduled delivery arrives in period 2 and then goes into inventory until it is needed. Notice that for item f in period 4, 600 units are needed but the order is placed for 720 units because it must be a multiple of 144. Notice that for b in period 6 the amount required is 240 but 300 units are ordered since this is the minimum order size.