Elements of Manufacturing, Distribution

and Logistics
7.9 Materials Requirement Planning 145

Table 7.7 Product structured Item q Source L M

table for end-item X, with
X 1 S100 1
components (A, B, C),
materials (d, e, f, g, h); A 1 S150 1 5
indented tiers; quantity per d 1 ABC 1 1
unit, q; source, lead-time e 1 XYZ 2 1
(weeks); L, and multiple, M B 1 S190 1 1
f 2 ABC 2 1
C 4 S200 2 20
g 1 AAA 2 5
h 1 XYZ 3 1

7.8 Product Structured Record

A product-structured record for an end-item contains the bill-of-materials data and

any other information needed in the production process. This data is housed on the
database for every end-item in the plant. Besides naming the components and
materials for each end-item and the quantity of each, the record typically includes
the description, the source, lead-time and lot size multiple-quantity.
Example 7.7 Table 7.7 shows how the product structured record would look using
the same end-item from Example 7.6. Components A, B, C are indented to the right
of end-item X indicating they are in the first tier, and materials, d, e, f, g, h are
indented to the right of their respective components and they are in second tier. The
example also lists the source for each item, identifying a shop in the plant (S100,
S150, S190, S200), or a vendor (ABC, XYZ, AAA). Included also is the lead-time
(weeks), L, of receive time to obtain each item, and the multiple quantity, M. For
simplicity in this example, all of the lead times are in weekly buckets.

7.9 Materials Requirement Planning

Materials requirement planning (MRP) concerns the simultaneous inventory and

production scheduling for each component and material included in the end-item
BOM. The goal is to systematically arrange to achieve the production quantity of
the end-item with the minimum throughput time and the least work-in-process
inventory. The production quantity of the end-item often is generated from the
MPS system. MRP determines the start and end dates for the end-item and for each
component and material, including the corresponding source and quantity.
Two examples are shown. The first is when one end-item is in production. This
example illustrates the basic needs and the methodology to achieve. The second is
when two end-items are in the plant and there is some interaction between the
components. The second example illustrates the method and computations that take
place. The latter example can be extended to include a multiple number of
146 7 Manufacturing Control

Table 7.8 Materials requirement planning for a production schedule of 100 units of end-item X
with due date 05.22.15; quantity per unit, q; current on-hand, OH; multiple, M; raw quantity, Q‵;
rounded quantity, Q; lead-time weeks, L; start date; end date; and source
Item q OH M Q‵ Q L Start End Source
X 100 1 051,815 052215 S100
A (X) 1 11 5 89 90 1 051115 051515 S150
B (X) 1 5 1 95 95 1 051115 051515 S190
C (X) 4 28 20 372 380 2 050415 051515 S200
d (A) 1 31 1 59 59 1 050415 050815 ABC
e (A) 1 7 1 83 83 2 042715 050815 XYZ
f (B) 2 17 1 173 173 2 042715 050815 ABC
g (C) 1 74 5 306 310 2 042015 050115 AAA
h (C) 1 53 1 327 327 3 041315 050115 XYZ

end-items, for which the computations become quite large, but are doable in a
systematic manner. A common problem with MRP is that the method is highly
depended on the integrity of the data of scheduling, on-hand, resource capacity, and
lead-times.
Example 7.8 Suppose a plant calls for producing 100 units of end-item X on
05.22,15 (May 22, 2015) in shop S100, and is seeking the scheduling of all the
items needed to accomplish. The results are summarized in Table 7.8. The table
lists the items, and their immediate predecessor and quantity per unit, q. Also listed
is the on-hand, OH, multiple quantity, M, and the raw production quantity, Q‵. The
final production quantity rounds Q‵ up to Q using M. The lead-time, L, is assumed
in weekly durations, to allow for simplicity in description. The start date is when
production begins, and is on a Monday for this example; and the end date is on a
Friday. Finally is the source that identifies either a shop in the plant or a vendor.
Note where 100 units of X is due on 05.22.15 and the lead time is 1 week,
indicating that the components A, B, C need to complete their production 1 week
earlier, 05.15.15. The production of X begins on Monday 05.18.15 and ends of
Friday 05.22.15. In the same way, all the start and end dates are listed. All the start
dates are on Mondays, and the end dates are on Fridays. To complete the schedule
for X on 05.22.15, item h, for example, has to begin its operation on Monday,
04.13.15, which is 5 weeks before X begins production.
Example 7.9 Assume the plant seeks the scheduling of two end-items, X and Y,
where X is the same as the earlier example, and the product structured record for Y
is listed in Table 7.9. Note Y requires items, A, D, d, e, g and k. Some of the items
needed are common with X and some are unique.
The MRP results for the two end-items are summarized in Table 7.10. where the
schedule calls for 100 units of X and 50 units of Y, all due on 05.22.15. The table
lists all the items needed for the production process and the BOM precedence relation-
ships are in parenthesis. Note, for example, item A is needed on X and Y.
Item A must produce enough units (150) for both X and Y. Because A has
7.10 Summary 147

Table 7.9 Product structured Item q Source L M

record for end-item Y, with
Y 1 S100 1
components (A, D), materials
(d, e, g, k), indented tiers; A 1 S150 1 5
quantity per unit, q; source, d 1 ABC 1 1
lead-time (weeks), L; and e 1 XYZ 2 1
multiple, M D 4 S200 2 20
g 1 AAA 2 5
k 1 XYZ 3 1

Table 7.10 Materials requirement planning for a production schedule of 100 units of end-item X,
50 of end-item Y; with due date 05.22.15; quantity per unit, q; current on-hand, OH; multiple, M;
raw quantity, Q‵; rounded quantity, Q; lead-time weeks, L; start date; end date; and source
Item q OH M Q‵ Q L Start End Source
X 100 1 051815 052215 S100
Y 50 1 051815 052215 S100
A (X,Y) 1 11 5 139 140 1 051115 051515 S150
B (X) 1 5 1 95 95 1 051115 051515 S190
C (X) 4 28 20 372 380 2 050415 051515 S200
D (Y) 4 69 20 131 140 2 050415 051515 S200
d (A) 1 31 1 109 109 1 050415 050815 ABC
e (A) 1 7 1 133 133 2 042715 050815 XYZ
f (B) 2 17 1 173 173 2 042715 050815 ABC
g (C,D) 1 74 5 446 450 2 042015 050115 AAA
h (C) 1 53 1 327 327 3 041315 050115 XYZ
k (D) 1 53 1 87 87 3 041315 050115 XYZ

11 units on-hand, they only need (15011) ¼ 139 units. But because the multiple on A
is M ¼ 5 pieces, the quantity to produce in Q ¼ 140. Note the end dates for X and Y
is 05.22.15 (Friday), and since the lead times is 1 week, the start dates for
both is Monday 05.18.15. The end date for A becomes Friday, 05.15.15. Note, items
h and k begin their processing on 04.13.15 which is 5 weeks prior to the start dates
for X and Y.

7.10 Summary

Controlling the production operations in a plant is not easy. To assist the manage-
ment, a series of quantitative tools are used in the planning and control decisions of
the manufacturing process in the plant. The production plan is used to determine the
aggregate volume over the near future time horizon for all of the items in the plant.
The plan depends on whether the products are: make-to-stock, make-to-order, or a
148 7 Manufacturing Control

combination of both. For each finished-good-item, a master production plan is

computed. The output yields the schedule for the planning horizon, and the
available-to-promise quantities. To ensure the sum of all schedules conforms to
the capacity by production center, a series of rough-cut-capacity calculations are
developed. For each component part to be produced, a bill-of-material is recorded,
and this is a key ingredient in computing the material requirement plan for the
component.