What are the main actions taken by an MRP planner?

 

MRP Planner Should familiar with these things

 

1) What are the material required?

2) When they are required ?

3) How much quanity they required?

MRP planning can be done by keeping in view the below points :

1) Contigency levels

2) Consuption rate variations 

3) inventory inwards variations

4) inventory outwards variations

5) materials requirements as per their criticality restore points 

MRP planner has the responsibility of "proper planning" to ensure all what is needed for a smooth execution of the production plan is taken care of in the best way possible.  

 

This responsibility stretches the MRP planner to other functions that are vital to achiecing the above stated objective ... speifically the sales function which determines to a high degree what the production plans will look like in short/medium/long terms, and also the supply chain function to make sure purchasing, stock levels, storaage, supplier relations, .. etc are all in good and healthy shape.

 

Intenrally with MRP, the MRP planner should be in close and ongoing coordination with production and operations related to production ... (the internal customer if you wish).

 

For detaied activities, responsibilities, there is enough mentioned in sample job description of MRP planner which is already available oin the net

 

The primary actions taken by an MRP planner are:

1.       Release orders (i.e., launch purchase or shop orders when indicated by the system).

2.       Reschedule due dates of existing open orders when desirable.

3.       Analyze and update system planning factors for the part numbers under her control. This would involve such things as changing lot sizes, lead times, scrap allowances, or safety stock.

4.       Reconcile errors or inconsistencies and try to eliminate root causes of these errors.

5.       Find key problem areas requiring action now to prevent future crises.

6.       Use the system to solve critical material shortage problems so actions can be captured in the records for the next processing. This means the planner works within formal MRP rules, not by informal methods.

 

7.       Indicate where further system enhancements (outputs, diagnostics, etc.) would make the planner's job easier.

Materials requirements planning, referred to by the initials MRP, is a technique which assists a company in the detailed planning of its production. Recall here that the master production shcedule sets out an aggregate plan for production. MRP translates that aggregate plan into an extremely detailed plan.

Example

The production manager at Aldershot Manufacturing wishes to develop a materials requirements plan for producing chairs over an8 week period. She estimates that the lead time between releasing an order to the shop floor and producing a finished chair is2 weeks. The company currently has260 chairs in stock and no safety stock (safety stock is stock held in reserve to meet customer demand if necessary). The forecast customer demand is for150 chairs in week1,70 in week3,175 in week5,90 in week7 and60 in week8.

It helps to understand what is going on if we write out, over time, the demand for chairs as below.

Week Demand On-hand at end of week110 Order ? ? ? ? ? ? ? ?

Here we have shown the demand in each of the eight weeks, initially we have260 chairs available so if these are used to meet the demand of150 in week1 we have260-150 =110 left on-hand (i.e. in stock) at the end of the week. Plainly we will need to order some more chairs in order to meet all of the forecast future demand over the8 week planning period.

Conceptually therefore we face two related decisions about ordering:

• timing - when to order
• quantity - how much to order

You can think of asking yourself the question, in each and every period, should I order in this period and if so how much?

For the moment suppose we order nothing in week1, nothing in week2, etc. The situation by the time we reach the end of week5 will be as below:

Week Demand On-hand at end of week -135 Order ? ? ? ? ? ? ? ?

If we are to avoid a stockout in week5 we plainly need to order at least135 chairs. Now we know that the lead time between ordering a chair and receiving it is2 weeks. Therefore to avoid a stockout in week5 we must have ordered135 chairs either in week3, or in any week before week3. In other words ordering

• 135 chairs in week1, or
• 135 chairs in week2, or
• 135 chairs in week3,

would each ensure that we have sufficient chairs available to meet forecast demand in week5.

If we order these chairs earlier than week3 we will be carrying extra inventory (stock) for a number of periods and, as we know, carrying stock costs money. It would seem appropriate therefore to order135 chairs in week3. This will give:

Week Demand On-hand at end of week Order00135 ? ? ? ? ?

Continuing on in the same manner we get:

Week Demand On-hand at end of week -90 Order00135 ? ? ? ? ?

requiring an order of90 chairs in week5 and giving:

Week Demand On-hand at end of week Order ? ? ?

Continuing again we get:

Week Demand On-hand at end of week -60 Order ? ? ?

requiring an order of60 chairs in week6 and giving:

Week Demand On-hand at end of week Order ? ?

Note that we have no data given here on which to base order decisions in weeks7 and8. As we are at the end of the planning period these are usually taken as zero.

Let us be clear about what we have done here with respect to our two decisions of:

• timing - when to order
• quantity - how much to order

With respect to the timing decision we always ordered as late as possible, but never planned a stockout. This is a driving principle in MRP, never order before you need to, never plan to stockout.

With respect to the quantity decision we always ordered as little as possible, i.e. just enough to avoid a stockout. This is known as the lot for lot rule, sometimes called LFL or L4L or LL rule. This quantity decision rule can be varied in MRP and some other rules are:

• fixed order quantity rule (sometimes called FOQ or FO) - the quantity ordered is an integer multiple of the same fixed amount each time an order is made
• fixed period requirements rule (sometimes called FPR) - the quantity ordered should be enough for a fixed number of periods

To illustrate the FPR rule suppose that we decide to order enough for3 weeks when we make an order. The situation at the end of week5 is (from above) repeated below:

Week Demand On-hand at end of week -135 Order ? ? ? ? ? ? ? ?

To decide the FPR order quantity we continue this table until week7. The quantity ordered must then be just sufficient to cover weeks5 to7 (i.e. to cover3 weeks as required for a3 week FPR). This is done below:

Week Demand On-hand at end of week -135 -135 -225 Order ? ? ? ? ? ? ? ?

Hence the3 week FPR order is225 units in week3, giving the situation below:

Week Demand On-hand at end of week -60 Order00225 ? ? ? ? ?

Plainly we need some order in week6 to cover the stockout in week8. As we are at the end of the planning period we usually order just sufficient (i.e. revert to the LFL rule) and order60 in week6 to give:

Week Demand On-hand at end of week Order ? ?

Note here that with the FPR rule applied to cover p periods you make (at most) one order every p periods (ignoring any order necessary at the end of the planning period).

How then are we to choose between different lot size rules (LFL, FPR and FOQ). We could, of course, redo our calculations with different lot size rules (e.g. a FOQ ordering multiples of100 each time). We would see their different effects but would still have to choose between them.

All of the rules ensure forecast demand is meet, i.e. no stockouts, so this is not a distinguishing feature. The LFL rule (by ordering as little as possible each time) will keep average inventory levels low, but will result in more orders on average. Both the FPR and FOQ rules will have higher inventory levels, but will result in less orders on average. Choosing a lot size rule therefore comes down to balancing the number of orders against the cost of holding inventory, just as we considered in deriving the EOQ formula in the inventory notes. Hence, given cost information, it is possible to derive the most effective (least costly) lot rule to use for any particular item.

 

Whilst for the example considered above, just a single item, we easily worked out the orders manually it is obvious that as the number of items increases, a manual calculation becomes too complicated and we need a computer package. We illustrate this below.

For the chair production problem considered before suppose now that the production manager as well as planning the production of the chair must also plan the production of the components that make up the chair. These are: the seat, a back and four legs. The lead time for seats and backs is2 weeks and the lead time for legs is one week. The company currently has an inventory of60 seats,40 backs and80 legs. Scheduled receipts are50 seats in week1 and10 backs in week1. The lot size rules the production manager has decided to adopt is LFL for for all items.

Now in planning the production of chairs we need also to plan the production of seats, backs and legs. For example we show below the situation as derived above where in week3 we issued an order for135 chairs.

Week Demand On-hand at end of week Order00135 ? ? ? ? ?

Now to have135 chairs made we need to have to hand (i.e. currently available)135 seats,135 backs and4(135) =540 legs. The current inventory of these items (plus scheduled receipts) is insufficient, so orders must be placed for these items. Just as we did for the chair itself above these orders must be phased in time so as to ensure that we never stockout.

Now to do all this manually for chairs, seats, backs and legs would just be too time-consuming and error-prone. It would be far better to do this via as a computr package, such as the package used in this course.

In order to solve this example using the package we need to have a better overview of MRP.

In MRP two types of information are required:

• structural; and
• tactical.

Structural information is information about the items (parts/components) that the company uses and how different items are related to one another. It includes information for each item such as lead time and lot (or batch) size rule. The key point about this information is that it changes relatively infrequently.

Tactical information is information about the current state of the company - for example sales orders (real and forecast) pending, the master production schedule, on-hand inventory levels and purchase orders. Obviously the key point about this information is that it changes frequently.

 

The structural information required in MRP relates to:

• item information; and
• bill of materials.

We deal with each of these in turn below.

 

We have structural information relating to each of the items that we are producing. Below we give this structural information for each of the items in our simple example.

Item Lead Lot Unit ABC time size Measure code (weeks) rule chair2 LFL Each A seat2 LFL Each B back2 LFL Each B legs1 LFL Each C

Note that:

• • the lead time is the time between placing an order and receiving that order - note that this lead time assumes that all the items needed for production are available at the time at which we place an order. For example for the chair we, as mentioned previously, need one seat, one back and four legs to make it - the lead time of2 weeks for a chair assumes that all of these items are available when we place an order for a chair - the2 weeks covers the time required to assemble them into a chair
  • as mentioned above the lot size rule relates to deciding how large the lot (batch/order) should be each time an order is placed.
  • in fact the package contains a total of ten different lot size rules.
  • Unit Measure is the units of measurement for each item - here it is Each specifying that each item is identified individually.
  • the ABC code relates to inventory analysis. Essentially items are divided into three inventory categories (A, B and C) where:
    • category A items are the most important inventory items and in total are responsible for80% of inventory cost
    • category B items are only moderately important inventory items and in total are responsible for15% of inventory cost
    • category C items are relatively unimportant inventory items and in total are responsible for5% of inventory cost

Obviously the idea here is that management attention should be primarily focused upon category A items. In the package the ABC code is used purely to produce different management reports.

In turns of entering our example problem into the package the screen below is the initial screen we need to set up number of items, time units etc.

I agree with all answers .

MRP (Material Requirement Plan ) The main goal of MRP is Getting the net requirements After taking in to consideration - Annual plan -The agreement Bom's during the year - Opening PR - Inventory on hand ( open stock ) -lead time -Minimum order -

the main function of MRP planner is monitoring production plan, maintaining the priority plan, maintaining the accuracy of inventory, maintaining and adjusting planning factors as necessary (Lot size, lead time, Safety stock, scrap factors).

In order to perform this correctly, MRP planner has to take the following actions:

1-     Maintaining valid production plan can be done by responding to exception messages:

Exception messages are messages suggested by the ERP system to the planner to take action like:

A-   Expediting POs

B-   Production Schedule in

C-   Production Schedule out

D-   Cancelling PO or PR.

E-   Excess materials. 

2-     Maintain accuracy of inventory

This can be done through either by annual stock count or cycle counting and conduct root cause analysis if there is any discrepancies.

3-     Maintain Historical data.

A Production planner does not only relay on the MRP function in a database program. I had prior to our system upgrade programmed our MRP system myself....

Taking3 years sales history in account ...

Setting a safety stock

looking at on hand  stock/inventory

when you have calculated your monthly needs ... you want to make sure you just produce this item when needed it ... Jan -1; Feb-0; Mar-0 .... with having current inventory and a safety stock in place the system will prompt you when you need to produce more ... 

I had over800 line items to set the MRP system up and had to make sure not to have to many products to produce at the same time ...

When the system is in place ... you just have to monitor what you need to produce ... also keep special orders in mind which may not be ordered in the future...

I ran my reports every other day, unless costumer service flagged me of a special order... that is when I put my Work orders ahead of time into the system in order to get Purchasing's attention to order raw materials, boxes and any other items needed to package the item.... not to forget to adjust your Work order with scrap material needed ..prior to posting production.

This will eliminate the right offs on an item and puts the cost with the product.

I had great success with this approach ...