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Sem 5 Prep
← OperationsMaterial requirements planning

Formulas for this chapter

Net requirement

Net requirement = Gross requirement - Projected on hand - Scheduled receipts

Row 4 of every MRP record. Do it at every level, not only at the top.

Gross requirement
Demand for the part in the period, ignoring stock
Projected on hand
Expected inventory at the beginning of the period
Scheduled receipts
Orders already placed, arriving at the start of the period

The explosion

Gross requirement of child = Planned-order RELEASE of parent x quantity per parent Planned-order release period = Planned-order receipt period - lead time

Moving from one level of the product structure tree to the next. Use the release row of the parent.

quantity per parent
The bracketed number on the tree, per one parent unit
lead time
That item's own lead time, in periods

Lot-size ordering

Lots ordered = ROUND UP ( net requirement / lot size ) Receipt = lots x lot size Surplus = receipt - net requirement, carried forward

When a fixed batch is imposed by the supplier or the machine. Always round up and always carry the surplus forward.

lot size
The fixed order multiple
surplus
Added to projected on hand for the next period

Cumulative lead time

Cumulative lead time = sum of the lead times of the sequential phases

To set the minimum horizon of the master schedule, and to know how early the deepest component must be released.

sequential phases
From ordering raw material through to completing final assembly
Step 1 of 22
The ideaTheory

Working backwards from the wedding

The wedding is on the 20th. The cake takes two days, so start baking on the 18th. The flour has to arrive before that, so order it on the 15th.

You do not ask "when shall I order flour?" You ask "when is the cake needed?" and then walk backwards through the lead times.

MRP is that walk, done for thousands of components by a computer, and it is the reason a factory can commit to a delivery date at all.

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