IMM 8th ed Ch 4

Introduction to Materials Management

  • Authors: Chapman, Arnold, Gatewood, Clive

  • Edition: 8th Edition

  • Copyright: 2017 by Pearson Education, Inc.

Chapter 4 Overview

  • Focus: Material Requirements Planning (MRP)

Chapter 4 Summary

Nature of Demand

  • Independent Demand: Demand for products that is not driven by the demand for other goods.

    • Originates from outside sources.

    • Predominantly forecasted.

  • Dependent Demand: Demand that is related to production levels of other items.

    • Calculated based on the Master Production Schedule (MPS).

Objectives of MRP

  • Determine Requirements:

    • What to order.

    • How much to order.

    • When to order.

    • Delivery scheduling.

  • Maintain Current Priorities.

Links to MPC Hierarchy

  • MRP is integrated into the broader Manufacturing Planning and Control (MPC) framework.

Inputs to MRP

  • Master Production Schedule (MPS): Quantities and timing for production.

  • Inventory Records: Detailed records including planning factors such as lead times, order quantities, and safety stock.

  • Bills of Material (BOM): Detailed definition of materials required for production.

MRP Process

  1. Gross to Net Calculation:

    • Determine total requirements without accounting for inventory.

  2. BOM Explosion:

    • Break down the components of assemblies to determine total needs.

  3. Lead Time Offset:

    • Adjustments made to account for lead times in ordering processes.

  4. Keeping Priorities Current:

    • Update plans based on changing demands.

Key Concepts in MRP

Low-Level Coding

  • Assigning the lowest level in the BOM where a part resides.

Schedule Receipts vs Planned Orders

  • Scheduled Receipts: Open orders expected to be delivered at a specific time.

  • Planned Orders: Orders derived from the MRP that are scheduled but not yet released for processing.

  • Firm Planned Orders: Orders that are set in quantity and schedule to stabilize fluctuations in demand.

Messages in MRP

  • Release: Initiate an order to start the procurement or production process.

  • Pull in: Adjust order quantities to meet increased demand.

  • Push out: Adjust orders further into the schedule due to decreased demand.

  • Cancel: Stop previously scheduled orders.

Bottom-up Replanning

  • Adjustments made to correct systems based on changes at the lowest levels of the product structure.

Bill of Materials (BOM)

  • Purpose:

    • Defines components needed to create a finished product.

    • Each part has a unique identifier (part number).

    • Changes in the BOM necessitate new part numbers.

Classification of BOM

  • Indented BOM: Visual representation showing parent-component relationships.

  • Planning BOMs: Grouping components for forecasting and simplifying planning processes.

  • Multilevel BOM: Breaks down products into required components at various levels.

Key Terms Defined

  • Lead Time: Duration required for a specific process.

  • Exploding: Multiplying requirements based on usage to fulfill the needs outlined in the BOM.

  • Offsetting: Adjusting requirements to the correct period based on lead times.

  • Planned Order Release: Amount to order released in line with the MRP recommendations.

  • Projected Available Inventory: Expected stock at the end of a period, taking into account orders placed.

Planner Responsibilities in MRP

  • Launch Orders: Initiating production and purchasing processes.

  • Reschedule Orders based on demand changes.

  • Reconcile Errors and identify solutions to material shortages.

  • Coordinate with other functions to resolve discrepancies in the supply chain.

MRP Example Problem

  • Scenario: Lead time of 2 weeks and an order quantity of 200. Actions needed are determined based on MRP calculations to ensure smooth operation.

Additional Key Terms

  • Exception Messages: Alerts generated when planners need to intervene due to MRP system outputs.

  • Bottom-up Replanning: Adjustments made at lower product levels to manage changes effectively.

Conclusion

  • MRP is integral to effective materials management, necessitating a thorough understanding of demand types, scheduling, order types, and BOM structures.