Materials Requirements Planning (MRP)

Question 1

Dependent Demand

Answer 1

• Demand for items that are subassemblies or component parts to be sued in the production of finished goods.
• tends to be sporadic or “lumpy” (large quantities are used at specific points in time with little or no usage at other times)

Question 2

Dependent vs. Independent Demand

Answer 2

• Independent Demand (Stable Demand), random,continuous, can be forecast, not under the control of planners
• Dependent Demand (lumpy Demand), dependent on our plans

Question 3

MRP (Material Requirements Planning)

Answer 3

• Computer based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, & raw materials.
• MRP designed to answer three questions (WHAT,HOW,WHEN is needed?)
• High suitability of MRP for dependent demand systems.

Question 4

Overview of MRP

Answer 4

• MRP Inputs: Master schedule (orders & forecasts), Bill of materials (design changes), & Inventory records (receipts & withdrawals)
• MRP Processing: MRP computer programs
• MRP Outputs: Primary reports (changes, order releases, planned-order schedules) Secondary Reports (exception reports, planning reports, performance control reports, inventory transaction)

Question 5

MRP Input: Master Schedule

Answer 5

• states which end items are produced, when these are needed, and in what quantities.
• should cover a period that is at least equivalent to the cumulative lead time (the sum of the lead times that are sequential phases of process require, from ordering of parts or raw materials to completion of final assembly)

Question 6

Cumulative Lead time

Answer 6

• the sum of the lead times that are sequential phases of process require, from ordering of parts or raw materials to completion of final assembly
• Procurement, fabrication, subassembly, assembly)

Question 7

MRP Inputs: Bill of Materials

Answer 7

• a listing of all of the assemblies, subassemblies, parts and raw materials needed to produce one unit of a product
  -product structure tree
  (visual depiction of the requirements in a bill of the materials, where all components are listed by levels.)

Question 8

Low - Level Coding

Answer 8

the sum of the lead times that are sequential phases of process require, from ordering of parts or raw materials to completion of final assembly

Question 9

MRP Inputs: Inventory Records

Answer 9

• Includes information on the status of each item by time period called time buckets
• information about.. (gross requirements, scheduled receipts, expected amount on hand)
• Other details for each item such as (supplies, lead time, lot size policy, changes due to stock receipts and withdrawals, canceled orders & similar events)

Question 10

MRP Processing

Answer 10

MRP processing takes the end item requirements specified by the master schedule and “explodes” them into time- phased requirements for assemblies, parts, and raw materials offset by lead times

Question 11

Gross Requirements

Answer 11

total expected demand

Question 12

Scheduled receipts

Answer 12

open orders scheduled to arrive

Question 13

Projected on hand (projected available balance)

Answer 13

expected inventory on hand at the beginning of each time period

Question 14

Net Requirements

Answer 14

actual amount needed in each time period

Question 15

Planned- Order receipts

Answer 15

quantity expected to received at the beginning of the period

Question 16

Planned- order releases

Answer 16

planned amount to order in each time period

Question 17

MRP Pegging

Answer 17

The process of identifying the parent items that have generated a given set of material requirements for an item

Question 18

MRP Outputs: Primary

Answer 18

Primary Outputs – Planned orders
• A schedule indicating the amount and timing of future orders
– Order releases
• Authorizing the execution of planned orders
– Changes
• Revisions of the dates or quantities, or the cancellation of orders

Question 19

MRP Outputs: Secondary

Answer 19

Secondary Outputs
— Performance-control reports
— Evaluation of system operation, including deviations from plans and cost information
– e.g., missed deliveries and stockouts — Planning reports
— Data useful for assessing future material requirements – e.g., purchase commitments
— Exception reports
— Data on any major discrepancies encountered
– E.g., late and overdue orders, excessive scrap rates, requirements for nonexistent parts

Question 20

Lot Sizing Rules: (Lot-for-Lot (L4L) ordering

Answer 20

• The order or run size is set equal to the demand for the period
• Minimizes investment in inventory
• It results in variable order quantities
• a new setup is required for each run

Question 21

fixed period order

Answer 21

provides coverage for some predetermined number of periods

Question 22

MRP Benefits

Answer 22

Enables managers to easily
– determine the quantities of each component for a given order size
– To know when to release orders for each component
– To be alerted when items need attention
• Additional benefits
– Low levels of in-process inventories
– The ability to track material requirements
– The ability to evaluate capacity requirements
– A means of allocating production time
– The ability to easily determine inventory usage via backflushing
– Explodinganenditem’sBOMtodeterminethequantitiesofthe
components that were used to make the item
– Pegging enables better customer service

Question 23

MRP Requirements

Answer 23

• a computer and the necessary software

- accurate and up to date (master schedules, bills of materials, inventory records)