The MRP Procedure.

While the basic ideas of MRP are simple, the details can get very messy. We will go
through the MRP procedure in enough detail to give you the idea of the basic
workings of most commercial MRP systems.
The following notation will be used.
Dt !ross re"uirements
#t $uantity currently scheduled to comple in period t, %i.e., a scheduled receipt&.
't Pro(ected on)hand inventory for the end of period t, where current on)hand
inventory is given by '*.
+t+et re"uirement for period t.
With these we will now describe the four basic steps of MRP, netting, lot)si-ing,
time)phasing, and ./M e0plosion.
Netting.
+etting, or coverage analysis, provides two important functions,
't ad(usts scheduled receipts by e0pediting those that are currently scheduled
to arrive too late and deferring those currently scheduled to arrive too soon
't computes net demand.
't 't)1 2 Dt
3d(usted #cheduled Receipts, Pro(ected /n)4and, and net Re"uirements.
Part 3 1 2 3 4 5 6 7 8
Gross requirements
15 6* 5* 1* 7* 7* 7* 7*
Scheduled receipts
1* 1* 1**
Adjusted Ss
!rojected on"h#nd$ 2%
Net requirements
!l#nned order receipts
!l#nned order rele#ses
8ot #i-ing. /nce we have computed the net re"uirements, we must schedule
production "uantities to satisfy them. 9or clarity and to illustrate the basic MRP
computations, we restrict our attention at this point to two very simple lot)si-ing
rules.
The simplest lot)si-ing rule, known as lot)for)lot, states the amount to be
produced in a period is e"ual to that periods net re"uirements. This policy is easier
to use than the fi0ed "uantity policy and is consistent with (ust in time philosophy
of making only what is needed.
3nother simple rule is fi0ed order period %9/P&. This rules attempts to reduce the
number of setups by combining the net re"uirements of P periods. +ote that when
P1, 9/P is e"uivalent to lot)for)lot. Returning to our e0ample, assume that the
lot)si-ing rule for part 3 is fi0ed with period 6.
Part 3 1 2 3 4 5 6 7 8
Gross requirements
15 6* 5* 1* 7* 7* 7* 7*
Scheduled receipts
1* 1* 1**
Adjusted Ss
!rojected on"h#nd$ 2%
Net requirements
!l#nned order receipts
!l#nned order rele#ses
Time phasing. 3lmost universally, MRP systems assume that the time to make a
part is fi0ed, although a few systems do allow for the planned lead time to be a
function of the (ob si-e. +ow we will return to our e0ample and assume that the
planned lead time for the part 3 is two periods, we are able to compute the
planned order releases.
Part 3 1 2 3 4 5 6 7 8
Gross requirements
15 6* 5* 1* 7* 7* 7* 7*
Scheduled receipts
1* 1* 1**
Adjusted Ss
!rojected on"h#nd$ 2%
Net requirements
!l#nned order receipts
!l#nned order rele#ses
./M :0plosion. 'n the last table we can see final result of processing part 3.
Recall that part 3 is made of 1 unit of part . and 6 units of part ;. Thus the
planned order releases generated for part 3 create gross re"uirements for parts .
and ;. #pecifically we need <* units of part ; in period = %two are needed for
each unit of 3& and >* units for period >. 8ets suppose that there are no scheduled
receipts for part but there are 1** units on the stock, we must calculate planned
order releases by the rule lot)for)lot. The lead time is two periods.
Part ; 1 2 3 4 5 6 7 8
Gross requirements
Scheduled receipts
Adjusted Ss
!rojected on"h#nd$ 1%%
Net requirements
!l#nned order receipts
!l#nned order rele#ses
#o there are no more levels for unit ;, the calculation is completed. +ow we
should start the calculations for the part ., and afterward for the parts D and :.
The re"uirement for the unit . is the same as for the unit 3. There are 1* units of
unit . at the stock. The lead time is one period. 8ot si-ing rule is lot)for)lot
Part . 1 2 3 4 5 6 7 8
Gross requirements
=5 7*
Scheduled receipts
Adjusted Ss
!rojected on"h#nd$ 1%
Net requirements
!l#nned order receipts
!l#nned order rele#ses
The result will give us important information for ne0t level ./M processing for
parts D and :. The re"uirement for the part D will be 7 ?. part re"uirement for
part . and the re"uirement for part : will be = ? . part re"uirement.
Part D 1 2 3 4 5 6 7 8
Gross requirements
1*5 15*
Scheduled receipts
Adjusted Ss
!rojected on"h#nd$ 1%
Net requirements
!l#nned order receipts
!l#nned order rele#ses
Part : 1 2 3 4 5 6 7 8
Gross requirements
1=* 6**
Scheduled receipts
Adjusted Ss
!rojected on"h#nd$ 1%
Net requirements
!l#nned order receipts
!l#nned order rele#ses
We have now completed the MRP processing for all the parts of interest. 3s the
result system generates summary of outputs table