Chapter 13 MRP & ERP

Dependent demand: Demands for items that are subassemblies or component parts to be used in the production of finished goods. Example: The parts and materials that go into the production of a automobile because the total quantity of parts and raw materials needed during any time period is a function of the number of cars that will be produced. Independent demand: Demand for the finished product is independent. Example, demand for the finished cars. Material requirement planning (MRP): MR is a computer!based information system that translates the finished product requirements of the master schedule into time!phased requirements for subassemblies, component parts and raw materials, wor"ing bac"ward from the due date using lead times and other information to determine when and how much to order. #ence, requirements for end items generates requirements for lower!le$el components, which are bro"en down by planning periods so that ordering, fabrication, and assembly can be scheduled for timely completion of end items while in$entory le$els are "ept reasonably low. MRP is designed to answer three questions: %i& 'hat is needed( %ii& #ow much is needed( %iii& 'hen is it needed( Primar inputs o! MRP: %i& )ill of materials %)*M& %ii& + master schedule or master production schedule and %iii& +n in$entory record file "ill o! materials: *ne of the three primary inputs of MR . ,t contains a listing of all the assemblies, subassemblies, parts, and raw materials that are needed to produce one unit of a finished product. Master s#hedule: *ne of the three primary inputs of MR . ,t states which end items are to be produced, when are they needed, and in what quantities. In$entor re#ord !ile: *ne of the three primary inputs of MR . ,t tells how much in$entory is on hand or on order. Produ#t stru#ture tree: + product structure tree pro$ides a $isual representation of the subassemblies and components needed to assemble a product. ,t is useful in illustrating how the bill of materials is used to determine the quantities of each of the requirements needed to obtain a desired number of end items.

-or example, here we present a product structure tree for the chair. /hair

0eg assembly

1eat

)ac" assembly

0egs %2&

/ross bar

side rails

/ross bar

)ac" support

+ product structure tree for end item .: .

0e$el 5

)%2&

2 3

D %3&

E%2&

-%2&

E%4&

Example 6: /onsider the end item . is composed of two )s and one /. Moreo$er ) requires three Ds and one E and each D requires four Es. 1imilarly / requires two Es and two -s. The requirements are listed from le$el 5 to 3. The items at each le$el are components of the next le$el up and are parents of their respecti$e components. %a& Determine the quantities of ), /, D, E, and - needed to assemble one .. %b& Determine the quantities of ), /, D, E, and - needed to assemble 65 .s ta"ing into account the in$entories of $arious components. /omponent *n hand ) 4 / 65 D 7 E 85 %olution: (a) .

):

)%2&

/: 696:6

D:392:8

D %3&

E:692:2 E

E:296:2 E%2&

-:296:2

-%2&

E:498:24 E%4& Thus one . will require ): /: D: E: -: 2 6 8 27 %24;2;2:27& 2

(&)

): 5!4:68 )%2&

/: 6965:65!65:5

/ no lower!le$el component

D:3968:47!7:45

D%3&

E:6968:68 E

E%2&

-%2&

E:4945:685!85:655 E%4& Thus 65 .s will require ): 68 /: 5 D: 45 E: 668 -: 5 E'ample (: The following product structure tree indicates the components needed to assemble one unit of product '. Determine the quantities of each component needed to assemble 655 units of'. '

)%2& E%2& -

/%4&

D%4& D%2& E

<%2& D

1olution:

' 655

69655

29655 )%2&
29255 E%2&

49655 /%4& 69255 -

29655 D%2&

69655 E

39455 D%4&

29255 <%2& 69 755 D

1ummary: 0e$el 5 6 2 3 ,tem ' + ) / E < D =uantity 655 655 255 455 >55 255 755 2,255

Example 3: <i$en the following diagram for a product. Determine the quantity of each component required to assemble one unit of the finished product. E

-%2& 0%2&

< ?%2&

+%4& ?%2& MRP outputs: D%4&

D%2&

MR systems ha$e the ability to pro$ide management with a broad range of outputs. These are often classified as %i& rimary reports %main report& and %ii& 1econdary reports %optional output& Primar reports: roduction and in$entory planning and control are part of primary reports. This report includes 6. lanned orders %a schedule indicating the amount and timing of future orders& 2. *rder release %authori@ing the execution of planned orders& 3. /hanges to planned orders, including re$ision of due dates or order quantities and cancellations of orders. %e#ondar reports: erformance control, planning and expectations belong to secondary reports. 6. erformance control reports %e$aluation of system operation, including de$iation from plans and cost information& 2. lanning reports are useful in forecasting future in$entory requirements. They include purchase commitments and other data that can be used to assess future material requirements. 3. Exception reports call attention to maAor discrepancies such as late and o$erdue orders, excessi$e scrap rates, reporting errors and requirements for nonexistent parts. "ene!its o! MRP: MR offers a number of benefits for the typical manufacturing or assembly type of operation, including %i& 0ow le$els of in!process in$entories %ii& The ability to "eep trac" of material requirements %iii& The ability to e$aluate capacity requirements generated by a gi$en master schedule. %i$& + means of allocating production time Requirements o! MRP: ,n order to implement and operate an effecti$e MR system, it is necessary to ha$e %i& + computer and the necessary software programs to handle computations and maintain records. %ii& +ccurate up!to!date master schedules, bill of materials, in$entory records %iii& ,ntegrity of file data. ERP (Enterprise resour#e planning): ,t is the next step in an e$aluation that began with MR . ,t represents an expanded effort to integrate standardi@ed record "eeping that permits information sharing among different areas of an organi@ation in order to manage the system more efficiently.