Material Requirements Planning

Material Requirements Planning: Example 1

Ronald S. Lau, Ph.D.

HKUST – ISMT
 Material Requirements Planning

Example 1

A customer ordered 50 units of RX7 to be delivered 10 weeks later. The following data are
given for you to complete the MRP schedule:

Beginning Scheduled Lead Order

Item Components Inventory Receipts Time Quantity
RX7 AC(2),L8(4) - - 2 wks LFL
AC XD(3),Y9(4) - 20 (wk1) 2 20
L8 TS500(1) 5 - 1 LFL
TS500 - - 250 (wk2) 3 250
XD - 20 - 1 50
Y9 TS500(2) - - 2 LFL

Construct a low-level product structure tree and prepare a MRP schedule. Is there any
"past due“ or "immediate action" to take?
 Material Requirements Planning

Product Structure Tree

RX7 Item Components

RX7 AC(2),L8(4)
AC XD(3),Y9(4)
AC (2) L8 (4)
L8 TS500(1)
TS500 -
XD (3) Y9 (4) TS500 XD -
Y9 TS500(2)
TS500 (2)
 Material Requirements Planning

Product Structure Tree Low Level Product Structure Tree

Level

RX7 RX7 0

AC (2) L8 (4) AC (2) L8 (4) 1

XD (3) Y9 (4) TS500 XD (3) Y9 (4) 2

TS500 (2) TS500 (2) TS500 3

 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
AC (2) Gross Requirements
L8 (4) Scheduled Receipts
RX7 On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release
XD (3) Gross Requirements
Level
Y9 (4) Scheduled Receipts
AC On Hand
Net Requirements
Planned-Order Receipt
RX7 0
Planned-Order Release
TS500 Gross Requirements
Scheduled Receipts
L8 On Hand AC (2) L8 (4) 1
Net Requirements
Planned-Order Receipt
Planned-Order Release
Gross Requirements
Scheduled Receipts
XD (3) Y9 (4) 2
XD On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release TS500 (2) TS500 3
TS500 (2) Gross Requirements
Scheduled Receipts
Y9 On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release
Gross Requirements
Scheduled Receipts
TS500 On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
AC (2) Gross Requirements
Scheduled Receipts
L8 (4)
RX7 On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = LFL Planned-Order Release
XD (3) Gross Requirements
Y9 (4) Scheduled Receipts
AC On Hand

LT = 2
Net Requirements Beginning Scheduled Lead Order
Planned-Order Receipt
Q = 20 Planned-Order Release Item Inventory Receipts Time Quantity
TS500 Gross Requirements
Scheduled Receipts
RX7 - - 2 wks LFL
L8 On Hand AC - 20 (wk1) 2 20
Net Requirements
LT = 1 Planned-Order Receipt L8 5 - 1 LFL
Q = LFL Planned-Order Release TS500 - 250 (wk2) 3 250
Gross Requirements
Scheduled Receipts XD 20 - 1 50
XD On Hand
Y9 - - 2 LFL
Net Requirements
LT = 1 Planned-Order Receipt
Q = 50 Planned-Order Release
TS500 (2) Gross Requirements
Scheduled Receipts
Y9 On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = LFL Planned-Order Release
Gross Requirements
Scheduled Receipts
TS500 On Hand
Net Requirements
LT = 3 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
AC (2) Gross Requirements
Scheduled Receipts
L8 (4)
RX7 On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = LFL Planned-Order Release
XD (3) Gross Requirements
Y9 (4) Scheduled Receipts 20
AC On Hand

LT = 2
Net Requirements Beginning Scheduled Lead Order
Planned-Order Receipt
Q = 20 Planned-Order Release Item Inventory Receipts Time Quantity
TS500 Gross Requirements
Scheduled Receipts
RX7 - - 2 wks LFL
L8 On Hand 5 AC - 20 (wk1) 2 20
Net Requirements
LT = 1 Planned-Order Receipt L8 5 - 1 LFL
Q = LFL Planned-Order Release TS500 - 250 (wk2) 3 250
Gross Requirements
Scheduled Receipts XD 20 - 1 50
XD On Hand 20 Y9 - - 2 LFL
Net Requirements
LT = 1 Planned-Order Receipt
Q = 50 Planned-Order Release
TS500 (2) Gross Requirements
Scheduled Receipts
Y9 On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = LFL Planned-Order Release
Gross Requirements
Scheduled Receipts 250
TS500 On Hand
Net Requirements
LT = 3 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
AC (2) Gross Requirements 50
Scheduled Receipts
L8 (4)
RX7 On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = LFL Planned-Order Release
XD (3) Gross Requirements
Y9 (4) Scheduled Receipts 20
AC On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = 20 Planned-Order Release
TS500 Gross Requirements
Scheduled Receipts
L8 On Hand 5
Net Requirements A customer ordered 50 units of RX7 to be delivered in
LT = 1
Q = LFL
Planned-Order Receipt
Planned-Order Release
week 10.
Gross Requirements
Scheduled Receipts
XD On Hand 20
Net Requirements
LT = 1 Planned-Order Receipt
Q = 50 Planned-Order Release
TS500 (2) Gross Requirements
Scheduled Receipts
Y9 On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = LFL Planned-Order Release
Gross Requirements
Scheduled Receipts 250
TS500 On Hand
Net Requirements
LT = 3 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
AC (2) Gross Requirements 50
Scheduled Receipts
L8 (4)
RX7 On Hand
Net Requirements 50
LT = 2 Planned-Order Receipt 50
Q = LFL Planned-Order Release 50
XD (3) Gross Requirements 100
Y9 (4) Scheduled Receipts 20
AC On Hand 20 20 20 20 20 20 20
Net Requirements 80
LT = 2 Planned-Order Receipt 80
Q = 20 Planned-Order Release 80
TS500 Gross Requirements 200
Scheduled Receipts
L8 On Hand 5 5 5 5 5 5 5 5
Net Requirements 195
LT = 1 Planned-Order Receipt 195
Q = LFL Planned-Order Release 195
Gross Requirements 240
Scheduled Receipts
XD On Hand 20 20 20 20 20 20 30 30 30 30
LT = 1
Net Requirements 220
Planned-Order Receipt 250
Q = 50 Planned-Order Release 250
TS500 (2) Gross Requirements 320
Scheduled Receipts
Y9 On Hand
Net Requirements 320
LT = 2 Planned-Order Receipt 320
Q = LFL Planned-Order Release 320
Gross Requirements 640 195
Scheduled Receipts 250
TS500 On Hand 250 250 110 110 110 165 165 165
Net Requirements 390 85
LT = 3 Planned-Order Receipt 500 250
Q = 250 Planned-Order Release 500 250
Immediate action: Order 500 units of TS500 in week 1
 Material Requirements Planning

Material Requirements Planning: Example 2

Ronald S. Lau, Ph.D.

HKUST – ISMT
 Material Requirements Planning

Example 2

Dakota Inc. sells electronic transducers to major automotive companies. The transducer
(A) consists of three chips (B), one circuit board (C), and two inductors (D). A chip (B) is
composed of two resistors (E) and two capacitors (F). An inductor (D) is composed of two
chips (B) and three capacitors (F). Additional information are given below:

Lead Lot Beginning Scheduled

Item Time Size Inventory Receipts
A 3 wks LFL 0 -
B 1 wk 100 5 -
C 3 wks 25 12 -
D 1 wk LFL 0 -
E 2 wks 250 10 250 (wk2)
F 2 wks 250 32 250 (wk1)

The master production schedule requires 40 units of transducer (A) at week 8 and 20 units
at week 10. Prepare an MRP schedule for all items. Identify all immediate actions, past
dues, and inventory on hand.
 Material Requirements Planning

Product Structure Tree

A

B (3) C D (2)

E (2) F (2) B (2) F (3)

E (2) F (2)

The transducer (A) consists of three chips (B), one circuit board (C),
and two inductors (D)

A chip (B) is composed of two resistors (E) and two capacitors (F)

An inductor (D) is composed of two chips (B) and three capacitors (F)
 Material Requirements Planning

Product Structure Tree

A

B (3) C D (2)

E (2) F (2) B (2) F (3)

E (2) F (2)

Low Level Product Structure Tree Level

A 0

C D (2) 1

B (3) B (2) 2

E (2) F (2) E (2) F (2) F (3) 3

 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
B (3) Gross Requirements
Scheduled Receipts
C
A D (2)
On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release
Gross Requirements
Level
Scheduled Receipts
C On Hand
Net Requirements
Planned-Order Receipt A 0
Planned-Order Release
B (2) Gross Requirements
F (3) Scheduled Receipts
D On Hand C D (2) 1
Net Requirements
Planned-Order Receipt
Planned-Order Release
E (2) Gross Requirements
Scheduled Receipts B (3) B (2) 2
F (2)
B On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release E (2) F (2) E (2) F (2) F (3) 3
Gross Requirements
Scheduled Receipts
E On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release
Gross Requirements
Scheduled Receipts
F On Hand
Net Requirements
Planned-Order Receipt
Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
B (3) Gross Requirements
Scheduled Receipts
C
A On Hand
D (2) Net Requirements
LT = 3 Planned-Order Receipt
Q = LFL Planned-Order Release
Gross Requirements
Scheduled Receipts
C On Hand
Net Requirements
LT = 3 Planned-Order Receipt
Q = 25 Planned-Order Release
B (2) Gross Requirements Lead Lot Beginning Scheduled
F (3) Scheduled Receipts Item Time Size Inventory Receipts
D On Hand
Net Requirements A 3 wks LFL 0 -
LT = 1 Planned-Order Receipt
Q = LFL Planned-Order Release B 1 wk 100 5 -
E (2) Gross Requirements C 3 wks 25 12 -
F (2) Scheduled Receipts D 1 wk LFL 0 -
B On Hand
Net Requirements
LT = 1 Planned-Order Receipt E 2 wks 250 10 250 (wk2)
Q = 100 Planned-Order Release F 2 wks 250 32 250 (wk1)
Gross Requirements
Scheduled Receipts
E On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
Gross Requirements
Scheduled Receipts
F On Hand
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
B (3) Gross Requirements
Scheduled Receipts
C
A On Hand
D (2) Net Requirements
LT = 3 Planned-Order Receipt
Q = LFL Planned-Order Release
Gross Requirements
Scheduled Receipts
C On Hand 12
Net Requirements
LT = 3 Planned-Order Receipt
Q = 25 Planned-Order Release
B (2) Gross Requirements Lead Lot Beginning Scheduled
F (3) Scheduled Receipts Item Time Size Inventory Receipts
D On Hand
Net Requirements A 3 wks LFL 0 -
LT = 1 Planned-Order Receipt
Q = LFL Planned-Order Release B 1 wk 100 5 -
E (2) Gross Requirements C 3 wks 25 12 -
F (2) Scheduled Receipts D 1 wk LFL 0 -
B On Hand 5
Net Requirements
LT = 1 Planned-Order Receipt E 2 wks 250 10 250 (wk2)
Q = 100 Planned-Order Release F 2 wks 250 32 250 (wk1)
Gross Requirements
Scheduled Receipts 250
E On Hand 10
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
Gross Requirements
Scheduled Receipts 250
F On Hand 32
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
B (3) Gross Requirements 40 20
Scheduled Receipts
C
A On Hand
D (2) Net Requirements
LT = 3 Planned-Order Receipt
Q = LFL Planned-Order Release
Gross Requirements
Scheduled Receipts
C On Hand 12
Net Requirements
LT = 3 Planned-Order Receipt
Q = 25 Planned-Order Release
B (2) Gross Requirements
F (3) Scheduled Receipts
D On Hand
Net Requirements The master production schedule requires 40 units of
LT = 1 Planned-Order Receipt
Q = LFL Planned-Order Release
transducer (A) at week 8 and 20 units at week 10.
E (2) Gross Requirements
F (2) Scheduled Receipts
B On Hand 5
Net Requirements
LT = 1 Planned-Order Receipt
Q = 100 Planned-Order Release
Gross Requirements
Scheduled Receipts 250
E On Hand 10
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
Gross Requirements
Scheduled Receipts 250
F On Hand 32
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
B (3) Gross Requirements 40 20
Scheduled Receipts
C
A On Hand
D (2) Net Requirements 40 20
LT = 3 Planned-Order Receipt 40 20
Q = LFL Planned-Order Release 40 20
Gross Requirements 40 20
Scheduled Receipts
C On Hand 12 12 12 12 12 22 22 2 2 2
Net Requirements 28
LT = 3 Planned-Order Receipt 50
Q = 25 Planned-Order Release 50
B (2) Gross Requirements 80 40
F (3) Scheduled Receipts
D On Hand
Net Requirements 80 40
LT = 1 Planned-Order Receipt 80 40
Q = LFL Planned-Order Release 80 40
E (2) Gross Requirements 160 120 80 60
F (2) Scheduled Receipts
B On Hand 5 5 5 5 45 25 45 85 85 85
Net Requirements
LT = 1 Planned-Order Receipt
155 75 55 15
200 100 100 100
Q = 100 Planned-Order Release 200 100 100 100
Gross Requirements 400 200
Scheduled Receipts 250
E On Hand
Net Requirements
10 = 240 + 200
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
Gross Requirements 400 240 120
Scheduled Receipts 250
F On Hand 32
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
B (3) Gross Requirements 40 20
Scheduled Receipts
C
A On Hand
D (2) Net Requirements 40 20
LT = 3 Planned-Order Receipt 40 20
Q = LFL Planned-Order Release 40 20
Gross Requirements 40 20
Scheduled Receipts
C On Hand 12 12 12 12 12 22 22 2 2 2
Net Requirements 28
LT = 3 Planned-Order Receipt 50
Q = 25 Planned-Order Release 50
B (2) Gross Requirements 80 40
F (3) Scheduled Receipts
D On Hand
Net Requirements 80 40
LT = 1 Planned-Order Receipt 80 40
Q = LFL Planned-Order Release 80 40
E (2) Gross Requirements 160 120 80 60
F (2) Scheduled Receipts
B On Hand 5 5 5 5 45 25 45 85 85 85
Net Requirements
LT = 1 Planned-Order Receipt
155 75 55 15
200 100 100 100
Q = 100 Planned-Order Release 200 100 100 100
Gross Requirements 400 200 200 200
Scheduled Receipts 250
E On Hand
Net Requirements
10 = 120 + 200
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
Gross Requirements 400 440 200 120
Scheduled Receipts 250
F On Hand 32
Net Requirements
LT = 2 Planned-Order Receipt
Q = 250 Planned-Order Release
 Material Requirements Planning

Week
Item 1 2 3 4 5 6 7 8 9 10
B (3) Gross Requirements 40 20
Scheduled Receipts
C
A On Hand
D (2) Net Requirements 40 20
LT = 3 Planned-Order Receipt 40 20
Q = LFL Planned-Order Release 40 20
Gross Requirements 40 20
Scheduled Receipts
C On Hand 12 12 12 12 12 22 22 2 2 2
Net Requirements 28
LT = 3 Planned-Order Receipt 50
Q = 25 Planned-Order Release 50
B (2) Gross Requirements 80 40
F (3) Scheduled Receipts
D On Hand
Net Requirements 80 40
LT = 1 Planned-Order Receipt 80 40
Q = LFL Planned-Order Release 80 40
E (2) Gross Requirements 160 120 80 60
F (2) Scheduled Receipts
B On Hand 5 5 5 5 45 25 45 85 85 85
Net Requirements
LT = 1 Planned-Order Receipt
155 75 55 15
200 100 100 100
Q = 100 Planned-Order Release 200 100 100 100
Gross Requirements 400 200 200 200
Scheduled Receipts 250
E On Hand 10 10 260 110 160 210 10 10 10 10
Net Requirements 140 90 40
LT = 2 Planned-Order Receipt 250 250 250
Q = 250 Planned-Order Release 250 250 250
Gross Requirements 400 440 200 320
Scheduled Receipts 250
F On Hand 32 282 282 132 192 242 172 172 172 172
Net Requirements 118 308 8 78
LT = 2 Planned-Order Receipt 250 500 250 250
Q = 250 Planned-Order Release 250 500 250 250
Immediate action: Order 250 units of E and F in week 1