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  • Material Requirements Planning
  • nishitD
  • 2015-05-20 15:15:43
Material requirements planning is used to transform MDS demand to appropriate planned orders via exploding the bills of material, and time-phasing of requirements using posted average lead times.

MRP derives demand for components, subassemblies, materials, etc., from demand for and master demand schedules of parent items. The material requirements plan’ s objective is to determine what components are needed to meet the MDS and, based on lead time, to calculate the periods when the components must be available.

MRP Inputs:
• Master Demand Schedule
• Bills of Material
• Order Modifiers
• Lead Times
• Calendar
• Sourcing Rules
• On Hand Inventory
• Scheduled Receipts (POs, IRs & WOs)

MRP Principle:
MRP works in a simple principle - "Order as Late and as Little" and concentrate on two parameters
Timing - when to order
Quantity - how much to order
With respect to the timing decision MRP 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 MRP always ordered as little as possible, i.e. just enough to avoid a stockout.

MRP Outputs:
• Planned Orders
• Cancellation Messages
• Reschedule In
• Reschedule Out

Simplified Process:
Starting with end items the MRP process goes through the following steps
1. Assign Low Level Code: Explodes the BOM to determine the lower level code for all components used in the FG item.
2. Netting & Lot Sizing: Starts with the top level finished good item and considers all the demand of that item to establish gross requirements. Next MRP determines net requirements of the item by subtracting scheduled receipts and on hand inventory from the gross requirements.
3. Time Phasing: Time phase the net requirements by the lead time to determine the planned order releases for the item.
4. Demand Explosion: Explodes the BOM to determine the gross requirements for next level components.

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