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Management
Chapter 14
Material Requirements
Planning (MRP) and ERP
PowerPoint presentation to accompany
Heizer/Render
Principles of Operations Management, 7e
Operations Management, 9e
2008 Prentice Hall, Inc.
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Material Requirements
Planning (MRP)
- Dependent demand technique that
uses
bill-of-material,
inventory,
expected receipts, and a master
production schedule to determine
material requirements in a production
process.
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Benefits of MRP
1. Better response to customer
orders
2. Faster response to market
changes
3. Improved utilization of facilities
and labor
4. Reduced inventory levels
2008 Prentice Hall, Inc.
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Dependent Demand
The demand for one item is related
to the demand for another item
Given a quantity for the end item,
the demand for all parts and
components can be calculated
In general, used whenever a
schedule can be established for an
item
MRP is the common technique
2008 Prentice Hall, Inc.
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COMPONENTS OF MRP
DEPENDENT INVENTORY MODEL
REQUIREMENTS:
1.
2.
3.
4.
5.
2008 Prentice Hall, Inc.
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Aggregate
Production Plan
Months
Aggregate Production Plan
(Shows the total
quantity of amplifiers)
Weeks
January
February
1,500
1,200
100
100
500
100
500
300
100
450
450
100
Figure 14.2
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MPS Examples
For Nancys Specialty Foods
Gross Requirements for Crabmeat Quiche
Day
Amount
6
50
8
100
9
47
10
60
11
12
110
13
75
14 and so on
7
8
9
100 200 150
10
11
12
60
13
75
14
15
100
16 and so on
Table 14.1
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Bills of Material
List of components, ingredients,
and materials needed to make
product
Provides product structure
Items above given level are called
parents
Items below given level are called
children
2008 Prentice Hall, Inc.
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BOM Example
Level
E(2)
D(2)
E(2)
Packing box and
installation kit of wire,
bolts, and screws
booster assembly
G(1)
D(2)
Amp-booster
12 Speaker
2008 Prentice Hall, Inc.
12 Speaker
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BOM Example
Level
D(2)
Part B: 2 x number of As =
(2)(50) =
100
Std. 12 Speaker150
kit w/
C:
3
x
number
of
As
=
(3)(50)
=
BPart
Std.
12
Speaker
kit
C
(2)
(3)
amp-booster
Part D: 2 x number of Bs
+ 2 x number of Fs = (2)(100) + (2)(300) = 800
Part E:
E(2) 2 x number of Bs
E(2)
F(2) Std. 12 Speaker
booster
+ 2 x number of Cs = (2)(100) + (2)(150)
= assembly
500
Part F: 2 x number of Cs =
(2)(150) =
300
Packing box and
Part G: 1installation
x numberkitofofFs
=
(1)(300)
300
wire,
G(1) =
D(2)
bolts, and screws
Amp-booster
12 Speaker
2008 Prentice Hall, Inc.
12 Speaker
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Accurate Records
Accurate inventory records are
absolutely required for MRP (or
any dependent demand system) to
operate correctly
Generally MRP systems require
99% accuracy, if not
Outstanding purchase orders must
accurately reflect quantities and
scheduled receipts
2008 Prentice Hall, Inc.
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Lead Times
The time required to purchase,
produce, or assemble an item
For production the sum of the
order, wait, move, setup, store, and
run times
For purchased items the time
between the recognition of a need
and the availability of the item for
production
2008 Prentice Hall, Inc.
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Time-Phased Product
Structure
Must have D and E
completed here so
production can
begin on B
Start production of D
1 week
2 weeks to
produce
2 weeks
2 weeks
1 week
1 week
2 weeks
C
3 weeks
1 week
D
|
4
5
Time in weeks
Figure 14.4
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Required date
Order release date
B.
Required date
Order release date
C.
Required date
Order release date
E.
Required date
Order release date
F.
Required date
Order release date
G.
Required date
Order release date
G.
Required date
Order release date
7
50
100
100
150
200
300
200
300
300
600
300
600
300
300
200
200
150
8 Lead Time
50
1 week
2 weeks
1 week
2 weeks
3 weeks
1 week
2 weeks
Table 14.3
2008 Prentice Hall, Inc.
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