Materials Requirement Planning
The material requirements planning portion of manufacturing activities most closely interacts with the master schedule, bill of materials file, inventory record file, and the output reports .
Each facet of Exhibit 12.4 is detailed in the following sections, but essentially, the MRP system works as follows: the master production schedule states the number of items to be produced during specific time periods. A bill of materials file identifies the specific materials used to make each item and the correct quantities of each. The inventory records file – contains data such as the number of units on hand and on order. These three sources – master production schedule, bill of materials file, and inventory records file - become the data sources for the materials requirements program, which expands the production schedule into a detailed order scheduling plan for the entire production sequence.
Demand for Products
Product demand for end items comes primarily from two main sources.
The first is known customers who have placed specific orders, such as those generated by sales personnel, or from interdependent transactions. These orders usually carry promised delivery dates. There is no forecasting involved in these orders – simply add them up.
The second source is forecast demand. These are the normal independent-demand orders; the forecasting models can be used to predict the quantities.
The demand from the known customers and the forecast demand are combined and become the input for master production schedule, as described in the previous section.
In addition to the demand for end products, customers also order specific parts and components either as spares or for service. These demands are not usually part of the master production schedule; instead, they are fed directly into the material requirements planning program at the appropriate levels. That is, they are added in as a gross requirement for that part or component.
Bill of Material
The bill of materials (BOM) files contains the complete product description, listing not only the materials, parts, and components but also the sequence in which the product is created
This BOM file is one of the three main inputs to the MRP program.
The BOM file is often called the product structure file or product tree because it shows how a product is put together. It contains the information to identify each item and the quantity used per unit of the item of which is a part. Bills of materials often list parts using an intended structure. This clearly identifies each item and the manner in which it is assembled because each indention signifies the components of the item.
A modular bill of materials is the term for a buildable item that can be produced and stocked as a subassembly. It is also a standard item with no options within the modules. Many end items that are large and expensive are better scheduled and controlled as modules (or subassemblies). It is particularly advantageous to schedule subassembly when the same subassemblies appear in different end items.
A super bill of materials includes items with fractional options.
Low-Level Coding
If all identical parts occur at the same level for each end product, the total number of parts and materials needed for a product can be computed easily. Consider Product L shown in Exhibit 12.6 A. Notice that Item N, for example. Occurs both as an input to L and as an input to M. Item N, therefore, needs to be lowered to level 2 (Exhibit 12.6 B) to bring all Ns to the same level, it becomes a simple matter for the computer to scan across each level and summarize the number of units of each item required.
Inventory Records
The inventory records file can be quite lengthy. Exhibit 12.7 shows the variety of information contained in the inventory records. The MRP program accesses the status segment of the record according to specific time periods (called time buckets in MRP slang). These records are accessed as needed during the program run.
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