5.1 IntroductIon
5.2.2 MrP Processing and outputs
The MRP system determines the net requirements for raw materials, component parts and subassemblies based on the information gathered from the bill of materials, master schedule and inventory records file. It determines the gross material requirements, then subtracts out the inventory on hand and adds back in the safety stock in order to compute the net requirements.
The main outputs from MRP include three primary reports and three secondary reports. The primary reports consist of planned order schedules, order releases and changes to planned orders, which might include cancellations or revisions of the orders. The secondary reports generated by MRP include performance control reports (which are used to track problems like missed delivery dates and stock outs in order to evaluate system performance), planning reports (which can be used in forecasting future inventory requirements); and exception reports (which call managers’
attention to major problems).
The MRP process involves the following steps:
• Determine the gross requirements of a finished product.
• Determine the net requirements and when orders will be released for fabrication or subassembly.
• Net requirements = Total requirements – Available inventory.
• Net requirements = (Gross requirements + Allocations) – (On hand) − Scheduled receipts.
example 5.1: A firm manager receives an order of 500 staplers. The order is to be delivered at the end of 10th week from now. He had 200 staplers in the inventory at the time of the order receipts. The product components and its structure are shown in Figures 5.2 and 5.3, respectively.
The lead time to manufacture the components is shown in Figure 5.4. Using MRP, determine the schedules for the orders to be released for the manufacturing and assemblies of the components so that the 500 staplers can be delivered on time.
Top assembly
Arm Rubber pad
Spring steel and
Tooth
Carriage Helical
spring Magazine
cartridge Pin Base Strike pad
Rubber
pad Level-2 Level-1 Level-0
Base assembly Middle assembly
Stapler
Figure 5-3: Product structure (Bill of materials) of staplers Rubber pad
Arm Spring steel and tooth
Carriage Spring Magazine cartridge
Strike pad Pin
Base Rubber pad
Figure 5-2: Stapler with its components
solution:
The order release schedules and the amount of the components at various stages of the manufacturing are shown in Tables 5.1 to 5.14.
Table 5-1: MRP schedules for the stapler
Item: Stapler Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 500
Scheduled receipts 0
Projected on-hand inventory 200
Net requirements 300
Planned order receipts 300
Planned order releases 300
Rubber pad Top assembly
1 week 1 week
1 week 1 week
2 weeks
2 weeks
Rubber pad Middle assembly
Pin 1 week
1 week 1 week
1 week 1 week
Strike pad
1 week
week
0 1 2 3 4 5 6 7 8 9 10
Base
Base assembly
1 week Stapler Helical spring
Magazine catridge Carriage
Arm 1 week spring steel and tooth
Figure 5-4: Lead times of the various components of the stapler
Table 5-2: MRP schedules for the top assembly of the stapler
Item: Top assembly Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-3: MRP schedules for the rubber pad (top assembly) of the stapler
Item: Rubber pad Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-4: MRP schedules for the spring steel and tooth (top assembly) of the stapler Item: Spring steel and tooth Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-5: MRP schedules for the arm (top assembly) of the stapler
Item: Arm Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-6: MRP schedules for the middle of the stapler
Item: Middle assembly Lead time: 2 weeks
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-7: MRP schedules for the carriage (middle assembly) of the stapler
Item: Carriage Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-8: MRP schedules for the magazine cartridge (middle assembly) of the stapler
Item: Magazine catridge Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-9: MRP schedules for the helical spring (middle assembly) of the stapler
Item: Helical spring Lead time: 2 weeks
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-10: MRP schedules for the pin (middle assembly) of the stapler
Item: Pin Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-11: MRP schedules for the base assembly of the stapler
Item: Base assembly Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-12: MRP schedules for the rubber pad (base assembly) of the stapler
Item: Rubber pad Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-13: MRP schedules for the strike pad (base assembly) of the stapler
Item: Strike pad Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300
Table 5-14: MRP schedules for the base of the stapler
Item: Base Lead time: 1 week
Week
1 2 3 4 5 6 7 8 9 10
Gross requirements 300
Scheduled receipts 0
Projected on-hand inventory 0
Net requirements 300
Planned order receipts 300
Planned order releases 300