Material Requirements

Planning (MRP)
From Aggregate to
Master Planning
Aggregate Production Plan

No
Can we produce 10,000
Capacity ? equivalent units (total for
products A, B and C) per month
for the next year?
Yes
Master Production Schedule

No Can we produce 500

Feasibility approved?
Yes
Material Requirement Planning
units of A, 600 of B and
400 of C per week for the
next month ?
Production Plan VS
Master Production Schedule
Production Master Production
Plan Schedule

Objective Long term capacity Mid term production planning

decisions Order promising

Product Product families SKU level

(Equiv. Units) (stock keeping unit)

Horizon 12 to 15 months About 3 months

Time 1 month 1 week

buckets
 Objectives of MRP

Calculate with precision the quantities
of components, parts and raw material
that must be produced or purchased in
order to realize the MPS
→ HOW MANY ?

To determine when to release

production or to place the orders in
order to receive the required units at
the right moment
→ WHEN ?
• Product tree

A Level 0

B(2) C(4) Level 1

D(1) E(3) D(2) F(1) G(3) Level 2

 Lead
44 45 46 47 48 49 50 51 52 Time
Gross Rqmts. 100 1
A
Planned order rls. 100
Gross Rqmts. 200 2
B
Planned order rls. 200
Gross Rqmts. 400 3
C
Planned order rls. 400
Gross Rqmts. 1200 200 3
D
Planned order rls. 1200 200
Gross Rqmts. 600 2
E
Planned order rls.
Gross Rqmts. 400 3
F
Planned order rls. 400
Gross Rqmts. 300 4
G
Planned order rls. 300
MRP Matrix
Product Tree (2)

A LEVEL 0

B(2) C(3) LEVEL 1

D(1) E(2) D(2) F(2) LEVEL 2

MRP (with lead time)

PARÇA 1 2 3 4 5 6 7 TEDARĐK
SÜRESĐ
A 100 100 1

B 200 200 2

C 300 300 2

D 800 800 2

E 400 400 1

F 600 600 1
MRP (with loss rate)

PARÇA 1 2 3 4 5 6 7 FĐRE
ORANI(%)
A 101 100 1

B 205 202 1.5

C 306 303 1

D 834 817 2

E 432 410 5

F 612 612 0
MRP (with existing inventory)
PARÇA 1 2 3 4 5 6 7
A Ürünü Net 101 100
Gereksinim
B parçası 202
Brüt Gereksinim
Varolan Miktar 112
Net Gereksinim 92 90
C Parçası 303
Brüt Gereksinim
Varolan Miktar 157
Net Gereksinim 148 146
D Parçası 388
Brüt Gereksinim
Varolan Miktar 50
Net Gereksinim 345 338
E Parçası 184
Brüt Gereksinim
Varolan Miktar 75
Net Gereksinim 115 109
F Parçası 296
Brüt Gereksinim
Varolan Miktar 421
Net Gereksinim 0
MRP
PARÇA
(Rescheduling open orders)
1 2 3 4 5 6 7
A ürünü 100
Gereksinim
B parçası 90
Net gereksinim
Planlanmış 20 19
Üretim 20 19
Ek Üretim 53 52
Gereksinimi
C parçası 148
Net Gereksinim
Planlanmış 50 49
Üretim 50 49
Ek Üretim 51 50
Gereksinimi
D parçası 155
Net Gereksinim
Varolan Miktar 50
Açık sipariş 100 95
100 95
Ek Satınalma 0
gereksinimi
E parçası 106
Varolan Miktar 75
Açık sipariş 75 71 75 71
Ek Satınalma 0
gereksinimi
Lot Sizing in MRP Systems

Lot-for-lot (L4L) ordering policy

Minimum order quantity (Ex: Min 250)

Multiple order quantity (Ex: X100)

Economic order quantity (Ex: 350; annual

demand: 4 200)

Periodic order quantity (Ex: 2 months)

Example
A firm that produces wood shutters and bookcases has received two
orders for shutters: one for 100 shutters and one for 150 shutters. The
100-unit order is due for delivery at the start of week 4 of the current
schedule, and the 150-unit order is due for delivery at the start of
week 8. Each shutter consists of two frames and four slatted wood
sections. The wood sections are made by the firm, and fabrication
takes one week. The frames are ordered, and lead time is two weeks.
Assembly of the shutters requires one week. There is a scheduled
receipt of 70 wood sections in (i.e., at the beginning of) week 1.
Determine the size and timing of planned-order releases necessary to
meet delivery requirements under each of these conditions:
1. Lot-for-lot ordering (i.e., order size equal to net requirements).
2. Lot-size ordering with a lot size of 320 units for frames and 70 units for
wood sections.
1. Develop a master schedule:

2. Develop a product structure tree:

3. Using the master schedule, determine gross requirements for shutters.

Next, compute net requirements. Using lot-for-lot ordering, determine
planned-order receipt quantities and the planned-order release timing
to satisfy the master schedule
17
MRP calculation process

Always process the items in the order of their low level
code: level 0  level 1  level 2

When an item appears at different levels of the product
structure(s), the lowest level (highest number) is the
level that we must use.

Gross requirements for an item are calculated by:
 Multiplying the quantity of the planned order

release(s) of the parent(s) of the item by the

quantity required as per the BOM for the specific
parent-component relationship(s).
19
Example
Consider the two product structure trees shown in figure. Note that
both products have D as a component. Suppose we want to develop a
material requirements plan for D given this additional information:
There is a beginning inventory of 110 units of D on hand, and all items
have lead times of one week. The master schedule calls for 80 units of
A in week 4 and 50 units of C in week 5. The plan is shown in figure 2.
Note that requirements for B and F are not shown because they are
not related to (i.e., neither a “parent” nor a “child” of) D.
Material
requirements plan
for component D

21