# Mrp Algorithm

Topics: Manufacturing resource planning, Material requirements planning, Advanced planning and scheduling Pages: 44 (1669 words) Published: November 11, 2014
Material Requirements Planning
Lecturer: Stanley B. Gershwin

MRP Overview

• Primary source: Factory Physics by Hopp and
Spearman.
• Basic idea: Once the ﬁnal due date for a product is
known, and the time required for each production
step is known, then intermediate due dates and
material requirement times can be determined.
• Original goal: To determine when material for
production is required.

MRP Overview

Demand

Demand
• ... from outside the system is independent demand.

• ... for components or raw material is dependent
demand.

Before MRP, buyers were not synchronized with
producers.

MRP Overview

Planning Algorithm

• Start at the due date for a ﬁnished product (or end
item ) (Tk).

• Determine the last operation, the time required for
that operation (tk−1), and the material required for
that operation.
• The material may come from outside, or from earlier
operations inside the factory.
• Subtract the last operation time from the due date to
determine when the last operation should start.

MRP Overview

Planning Algorithm

Tk−1 = Tk − tk−1
• The material required must be present at that time.

• Continue working backwards.

• However, since more than one component may be
needed at an operation, the planning algorithm must
work its way backwards along each branch of a tree
— the bill of materials.

MRP Overview

Planning Algorithm
Time

• In some MRP systems, time is divided into time
buckets — days, weeks, or whatever is convenient.
• In others, time may be chosen as a continuous
variable.

MRP Overview

Discussion

• What assumptions are being made here ...

• How realistic are those assumptions?

• Is it more ﬂexible to use time buckets or continuous
time?

MRP Overview

Jargon

• Push system: one in which material is loaded based

on planning or forecasts, not on current demand.

� MRP is a push system.
• Pull system: one in which production occurs in
response to the consumption of ﬁnished goods
inventory by demand.
• Which is better?

Bill of Materials

(BOM)

Level 0

Level 1

Level 2

• Top level is end item.

• Items are given a
low-level code
corresponding to the
lowest level they appear
at, for any end item in
the factory.

The BOM must be maintained as the product mix
changes.

Master

Production

Schedule

• Information concerning independent demand.

• Gross requirements: What must be delivered in the
future, and when.
• On-hand inventory: Finished good already available.

• Net requirements: (Gross requirements) – (On-hand
inventory).

Master
Production

Schedule
1
Gross requirements 15
Projected on-hand 30 15
Net requirements
0

Example

Netting

Week
2 3 4 5 6 7 8
20 50 10 30 30 30 30
-5
5 50 10 30 30 30 30

• 15 of the initial 30 units of inventory are used to
satisfy Week 1 demand.
• The remaining 15 units are 5 less than required to
satisfy Week 2 demand.

Master
Production
Schedule

Example
Lot Sizing

• Lot sizes are 75. The ﬁrst arrival must occur in Week 2. • 75 units last until Week 4, so plan arrival in Week 5.
• Similarly, deliveries needed in Weeks 5 and 7.
1
Gross requirements
15
Cumulative gross
15
Planned order receipts 30 0
Cumulative receipts
30

Week
2
3
4
5
6
7
8
20 50 10 30 30 30 30
35 85 95 125 155 185 215
75 0
0 75 0 75 0
105 105 105 180 180 255 255

Master

Production

Schedule

Example
Cumulatives

300

cumulative gross
cumulative receipts

250
200
150
100
50
00

1

2

3

4

5

6

7

8
week

Material requirements
are determined by
considering whether
inventory would
otherwise become
negative.

Master
Production
Schedule

Example
Time Phasing

• Lead times are 1 week. Therefore, order release

must occur one week before delivery is required.

1
Gross requirements 15...