Operations and Supply Chain Management The Core

MATERIAL REQUIREMENTS PLANNING chapter 9 273
Product L Hierarchy in (A) Expanded to the Lowest Level of Each Item in (B)
exhibit 9.7
Level
A. BOM for Product L B. Low-Level Coded BOM
0 L
L
1 M N M
2 P N Q R P N N
3 R S Q R S
R Q R Q R
4 S
S S
S
A modular bill-of-materials is the term for a buildable item that can be produced and
stocked as a subassembly. It is also a standard item with no options within the module.
Many end items that are large and expensive are better scheduled and controlled as modules
(or subassemblies). It is particularly advantageous to schedule subassembly modules
when the same subassemblies appear in different end items. For example, a manufacturer
of cranes can combine booms, transmissions, and engines in a variety of ways to meet a
customer’s needs. Using a modular bill-of-materials simplifies the scheduling and control
and also makes it easier to forecast the use of different modules. Another benefit in using
modular bills is that if the same item is used in a number of products, then the total inventory
investment can be minimized.
A super bill-of-materials includes items with fractional options. (A super bill can
specify, for example, 0.3 of a part. What that means is that 30 percent of the units
produced contain that part and 70 percent do not.) Modular and super bills-of-materials
are often referred to as planning bills-of-materials since they simplify the planning
process.
Low-Level Coding If all identical parts occur at the same level for each end product, the
total number of parts and materials needed for a product can be computed easily. Consider
product L shown in Exhibit 9.7A. Notice that item N, for example, occurs both as an input
to L and as an input to M. Item N, therefore, needs to be lowered to level 2 (Exhibit 9.7B)
to bring all Ns to the same level. If all identical items are placed at the same level, it
becomes a simple matter for the computer to scan across each level and summarize the
number of units of each item required.
Inventory Records
The inventory records file can be quite lengthy. Exhibit 9.8 shows the variety of information
contained in the inventory records. The MRP program accesses the status segment of
the record according to specific time periods (called time buckets in MRP slang). These
records are accessed as needed during the program run.
As we will see, the MRP program performs its analysis from the top of the product
structure downward, calculating requirements level by level. There are times, however,