MRP and ERP
Operations Management, Eighth Edition, by William J. Stevenson
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights
Material requirements planning
(MRP): Computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.
Independent demand is uncertain.
Dependent demand is certain.
Dependent demand: Demand for items that are subassemblies or component parts to be used in production of finished goods.
Once the independent demand is known, the dependent demand can be determined.
Master schedule Planned-order schedules Primary reports Bill of materials Inventory records MRP computer programs Secondary reports Exception reports
Inventory transaction MPR Inputs
Master Production Schedule
Time-phased plan specifying timing and quantity of production for each end item.
Material Requirement Planning Process
c u d o Pr e e r
u r t
e r u ct a e L
s e m
Master schedule: One of three primary inputs in MRP; states which end items are to be produced, when these are needed, and in what quantities.
Cumulative lead time: The sum of the lead times that sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly. Planning Horizon
Bill of materials (BOM): One of the
three primary inputs of MRP; a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product.
Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels.
Product Structure Tree
2 Legs (2)
Cross bar Seat
Rails (2) bar Supports (3)
One of the three primary inputs in
Includes information on the status of each item by time period
Amount on hand
And more …
Assembly Time Chart
Procurement of raw material D Fabrication of part E
Procurement of raw material F
Procurement of part C
Final assembly and inspection
Procurement of part H
of part G
Procurement of raw material I
Projected on hand
Total expected demand
Open orders scheduled to arrive
Planned on hand
Expected inventory on hand at the beginning of each time period
Actual amount needed in each time period
Quantity expected to received at the beginning of the period
Offset by lead time
Planned amount to order in each time period Updating the System
Updates MRP records periodically
Updates MPR records continuously
Planned orders - schedule indicating the amount and timing of future orders.
Order releases - Authorization for the execution of planned orders.
Changes - revisions of due dates or order quantities, or cancellations of orders. MRP Secondary Reports