Material Requirement Planning (MRP) Lecture Notes

Overview

• Understanding how to find required items for assembly and create an assembly time chart.
• Ready to create a Material Requirement Plan (MRP).

MRP Table Components

1. Gross Requirement: Total expected demand for an item during each time period.
2. Scheduled Receipts: Orders expected to arrive from vendors or elsewhere.
3. Projected on Hand: Expected inventory at the start of each time period (previous period's inventory + scheduled receipts).
4. Net Requirement: Actual amount needed for each time period.
5. Planned Order Receipt: Quantity expected to be received at the start of the period.
6. Planned Order Release: Planned amount to order in each time period.
   • Lot for Lot Ordering: Quantity equals net requirements.
   • Lot Size Ordering: Quantity may exceed net requirements.

Example Problem

• Firm Producing Shutters & Bookcases:
  • Two orders for shutters: 100 units (due week 4) and 150 units (due week 8).
  • Each shutter consists of:
    • 2 frames
    • 4 wood sections
  • Wood sections made in-house, fabrication takes 1 week.
  • Frames ordered, lead time of 2 weeks.
  • Assembly takes 1 week.

Steps to Solve

1. Construct Master Schedule:

   • Week 4: 100 shutters.
   • Week 8: 150 shutters.

2. Create Product Structure Tree:

   • Each shutter requires:
     • 2 frames
     • 4 wood sections

3. Calculate Number of Items Needed:

   • For 100 shutters: 200 frames, 400 wood sections needed.
   • For 150 shutters: 300 frames, 600 wood sections needed.

4. Construct Assembly Time Chart:

   • Week 3: Assembly for week 4 delivery (100 shutters).
   • Week 5: Order frames for week 7 delivery (150 shutters).
   • Week 6: Fabricate wood sections for week 8 delivery.

Material Requirement Plan (MRP)

1. Lot for Lot Ordering

• Shutters:

  • Week 4: Gross Requirement = 100, Net Requirement = 100, Planned Receipt = 100, Planned Order Release = 100 (in week 3).
  • Week 8: Gross Requirement = 150, Net Requirement = 150, Planned Receipt = 150, Planned Order Release = 150 (in week 7).

• Frames:

  • Week 3: 200 frames required, Planned Order Release in week 1.
  • Week 7: 300 frames required, Planned Order Release in week 5.

• Wood Sections:

  • Week 3: 330 wood sections needed, Planned Order Release in week 2.
  • Week 7: 600 wood sections needed, Planned Order Release in week 6.

2. Lot Size Ordering (Lot Size of 320 for Frames & 70 for Wood Sections)

• Frames:

  • Week 3: Planned Order Receipt = 320 (order in week 1).
  • Week 7: Gross Requirement = 300; Projected on Hand = 120, Net Requirement = 180; Planned Order Receipt = 320 (order in week 5).

• Wood Sections:

  • Week 3: Planned Order Receipt = 350 (order in week 2).
  • Week 7: Planned Order Receipt = 630 (order in week 6); Net Requirement = 580.

Conclusion

• Size and timing of planned order releases necessary to meet delivery requirements under both ordering conditions have been established.
• For further questions, reach out to the instructor.
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