Materials Requirement Planning Add-in

Transcription

1 Computation MRP Materials Requirement Planning Add-in Example Add MRP Sheet Information Required Entering the Data Link Parts Schedule Lots Change MRP Download Add-in Demo Workbook OM/IE Tour Materials Requirement Planning (MRP) is a scheduling procedure for production processes that have several levels of production. Given information describing the production requirements of the several finished goods of the system, the structure of the production system, the current inventories for each operation and the lot sizing procedure for each operation, MRP determines a schedule for the operations and raw material purchases. This add-in provides all the features necessary to formulate and solve small examples.

2 -Example: P, Q and R Production System To illustrate, consider the production process producing three products P, Q and R. The process is described in the figure below. Each rectangle describes an operation in the production process. The number in the center of each box is a unique identifier for the part produced by the operation. Each circle indicates a raw material input. The unit price and raw material designation is shown in the circle. The rectangles with the rounded corners name the finished goods P, Q and R which correspond to parts 400, 450 and 250 respectively. The arrows passing between operations and raw materials show the flow of materials between operations and from raw materials to operations. The small numbers next to the arrows show the number of units of material necessary for the receiving operation.

3 - Add MRP Sheet MRP requires a complicated accounting form relating the demand for the finished goods and the schedule for production of the several parts of the process and the raw material purchases. The structural information is entered by selecting the Add MRP Sheet item from the OR/MS menu. The following dialog is presented. Definitions of the quantities are the table below. Problem Name Time Horizon Number of MPS Number of Parts Interest Rate per Period Lot Size Periods This becomes the name of the worksheet and the prefix to a number of ranges on the worksheet. The name should be chosen carefully following the Excel rules for naming regions and worksheets. Once chosen it cannot be changed. The number of periods to be considered by the analysis. The meaning of a time period, day, week or month, is the choice of the analyst. Again the number of periods cannot be changed. This is the number of finished goods to be scheduled. This number can be changed with the Change MRP command. This is the number of parts to be entered. Here we use the total number of parts in the process. The data could be entered as one or a few parts at a time. New parts are added at the bottom of the current worksheet. This is an interest rate used for time value of money calculations. It is used to compute the cost of holding inventory for one period. This is a selection of the method for computing the lot size for the parts. The four alternatives are: LFL, lot of lot, FOP, fixed order period, FOQ, fixed order quantity and WW, Wagner Whiten optimum policy. All parts entered will be assigned this method but the method may be changed by changing a cell on the worksheet. The default value for the number of periods for the FOP method.

4 Quantity Setup Cost Lead Time Number in BOM Initial Inventory The default value for the lot size quantity for the FOQ method. The default value of the cost of setting up the production process for a manufactured part or to place an order for a purchased part. It may be changed on the worksheet. The default value of the lead time for producing or ordering a part. It may be changed on the worksheet. This is the number of rows allowed for the Bill of Materials for a part. It affects the worksheet and cannot be changed for a particular part. Parts may be entered one at a time to provide different numbers of BOM. The default value of the initial inventory for a part. It may be changed on the worksheet. Pressing the OK button will construct the worksheet describing the process. The figure below shows the worksheet ready to receive the problem specific data. Several columns of the display have been made narrow to make the picture smaller. Only the first of the 12 parts is shown. Details for the other parts appear below this one on the worksheet. The white areas on the worksheet may be changed, but the yellow areas, shown in gray in the picture, contain formulas which should not be changed by the user. The columns on the right of the display are used to compute the EOQ, economic order quantity, and EOP, economic order period for the parts. The cells will have values once data is entered. Operations Management / Industrial Engineering Internet by Paul A. Jensen Copyright All rights reserved

5 -Information Required To complete the MRP analysis, problem specific data is required. This is entered on the MRP worksheet. The table below, called the master production schedule (MPS), shows the production requirements for the three products for the next 12 periods, weeks, in this case. The demands for the finished goods may be determined from actual orders or through forecasts. The table below shows data required for each part. The first column is the part number or name. The second column is the current on hand inventory. The third column describes the inventory replenishment policy, called the lot sizing policy. The column labeled Policy Parameter shows the parameter for the lot sizing policy. Its meaning is different for the various policies. No parameter is required for LFL or WW. The Lead Time is the time required between when an order for the part is released to the shop and when it will be received. The Cost Added is the the direct cost expended to purchase or manufacture one unit of the part. Only the raw materials have costs for the example. The last column designates the setup cost for a production run for the part.

6 For each part, we must also specify the scheduled receipts for each period in the time horizon. These indicate the amounts that will arrive due to orders placed at an earlier time. For the example we assume that there are no scheduled receipts. The following lot sizing policies are allowed. Abbreviation Policy Definition LFL Lot for lot Deliver in each period the amount required FOP FOQ WW Fixed order period Fixed order quantity Wagner-Whiten When a delivery is required deliver the amount required for the next m periods, where m is a parameter of the policy. When a delivery is required deliver the amount Q, where Q is a parameter of the policy. If the current requirement exceeds Q deliver the amount of the current requirement. Determine the optimum production schedule that minimizes the sum of the setup plus inventory costs for the time horizon. Operations Management / Industrial Engineering Internet by Paul A. Jensen Copyright All rights reserved

7 -Entering the Data With the MRP form constructed and the data available, it is time to enter the data on the worksheet. The worksheet portion shown below shows the worksheet for the master production schedule and the first part after the data has been entered. First enter the names and projected requirements for the MPS. Note that the names of the products entered into the first column of the MPS must correspond exactly to the names of the parts entered as the part number, cell C9 for part P-400 for example. The demand column is automatically computed in column S as the average per period demand over the 12 periods of the time horizon. Now enter the data for each part. We illustrate the data entry for part 400, but each part must be similarly entered. The Part No. is P-400. The BOM, bill of materials, is a list of the parts that go into making the P-400. For the example this is PP, 300 and 350. Again, the names in the BOM region must agree with the part numbers defined for the process. Associated with each part number listed in column B is a part quantity listed in column C, 1 for each part in the example. The lot sizing option for P-400, FOP, is in cell B15, and its parameter is in C15. The unit cost is in C16. The current inventory on hand, 130 for P-400 is placed in cell E12. The setup cost for the part is in cell S11. Scheduled Receipts for the part are entered in row 11 of the form. The part data takes the default values when first entered, but may be changed to reflect differences between the parts. Operations Management / Industrial Engineering Internet by Paul A. Jensen Copyright All rights reserved

8 -Linking the Parts When all the data has been entered, it is time to select the menu command "Link Parts" from the OR/MS menu. The result for the example is shown below for parts P-400 and PP. Linking parts results in a significant modification of the entries in the worksheet as shown in the table below. Most the information is computed using formulas inserted in the cells by the add-in. The formula cells are shown in yellow on the worksheet (gray in these pictures). The user should not modify the formulas. Rows of the Part Form Quantity Gross Requirements Explanation This is the sum of all the independent demand and dependent demand required for the production of other parts. P-400 has only independent demand obtained directly from the MPS. PP has only dependent demand. Its Gross Requirements come from the Planned Order Releases of P-400. The add-in places formulas in this row of the form so the numbers automatically adjust when the MPS is changed.

9 Level Unit Cost Projected on Hand Net Requirements Planned Order Receipts Planned Order Releases Inventory on Hand Work in Process This is the maximum number of production steps between the part and a finished good. P-400 is at level 0 and PP is at level 1. This is the accumulated value of the costs added by all the component parts lower in the process structure. This projects the on-hand inventory without additional production. The values are computed with formulas that take into account the initial inventory, gross requirements and scheduled receipts. The requirements that cannot be met with on-hand inventory or scheduled receipts are the net requirements. These must be satisfied from production during the time horizon. They are computed with formulas entered by the add-in. These are computed based on the net requirements and the lot sizing method. In the case of P-400 which uses a fixed order period of 3, the planned order receipts are based on the requirements in the next three periods. This row is the same as the planned order receipts except it is offset by the lead time for the part. This row becomes a portion of the Gross Requirements for parts in the BOM. If a number other than 0 appears as the first entry of this row (cell F15 for P-400), the number indicates the planned order receipts cannot be satisfied with the current lead time. The number indicates the total shortage. This row computes the number of complete units available in inventory in each period. This row computes the number of units in the production process, but not yet received. The column at the right of each part data computes averages over the time horizon. Quantity Demand Rate Setup Cost Holding Cost Average WIP and OH Average Setup Inventory Cost EOQ EOP Explanation The average demand per period over the time horizon. The cost for a production run for a manufactured part or an order for a purchased part. This is data. This is the cost of holding one unit for one period. It is computed by multiplying the Unit Cost by the Interest Rate. This is the average over the time horizon of the number of units in production and in inventory. This the average number of setups per period. This is a measure of effectiveness for the scheduling policy. It adds the cost of holding WIP and inventory and the cost of setups. An optimum policy would minimize this value. Economic Order Quantity. This is the optimum lot size based on the averages over the time horizon. It is computed with the standard EOQ formulas. Economic Order Period. This is the optimum period between orders assuming demand is continuous over the time horizon and the EOQ is used.

10 The Link Parts command produces a complete MRP schedule based on the data in the MPS and the information entered for each part. The worksheet is primarily implemented with formulas, so the MPS and most of the other data on the worksheet can be changed by the user and the effects of the changes are automatically reflected on the worksheet. The timing associated with the Wagner Whiten lot sizing policy is not reoptimized when the MPS changes, however, the order quantities are adjusted. One type of change that is not immediately reflected is a change in the BOM of a part. If the basic structure of the process is modified in this way, choose the Link Parts command from the menu to adjust the formulas. All WW policies are also recomputed. Operations Management / Industrial Engineering Internet by Paul A. Jensen Copyright All rights reserved

11 -Schedule Lots The lot sizing method for a part may be changed by entering one of the acronyms FOP, FOQ, LFL or WW into the cell defining the lot sizing method. The schedule of all the parts will automatically be recomputed by selecting the Schedule Lots command from the OR/MS menu. The add-in replaces the formulas in the planned order receipts rows of the part forms. It also re-optimizes any parts whose lots are governed by a WW policy. Operations Management / Industrial Engineering Internet by Paul A. Jensen Copyright All rights reserved

12 -Change MRP Selecting this command will show the following dialog. The grayed quantities indicate fields that cannot be changed. In particular the name and time horizon are fixed once an MRP worksheet is constructed. All the other quantities can be modified and the worksheet will be adjust to accommodate the change. Operations Management / Industrial Engineering Internet by Paul A. Jensen Copyright All rights reserved