Operations and Supply Chain Management The Core

MATERIAL REQUIREMENTS PLANNING chapter 9 275
2. Next, the program uses the current on-hand balance together with the schedule of
orders that will be received in the future to calculate the “net requirements.” Net
requirements are the amounts that are needed week by week in the future over and
above what is currently on-hand or committed to through an order already released
and scheduled.
3. Using net requirements, the program calculates when orders should be received to
meet these requirements. This can be a simple process of just scheduling orders to
arrive according to the exact net requirements or a more complicated process where
requirements are combined for multiple periods. This schedule of when orders
should arrive is referred to as “planned-order receipts.”
4. Since there is typically a lead time associated with each order, the next step is to
find a schedule for when orders are actually released. Offsetting the planned-order
receipts by the required lead time does this. This schedule is referred to as the
“planned-order release.”
5. After these four steps have been completed for all the level zero items, the program
moves to level 1 items.
6. The gross requirements for each level 1 item are calculated from the planned-order
release schedule for the parents of each level 1 item. Any additional independent
demand also needs to be included in the gross requirements.
7. After the gross requirements have been determined, net requirements, planned-order
receipts, and planned-order releases are calculated as described in steps 2–4 above.
8. This process is then repeated for each level in the bill-of-materials.
The process of doing these calculations is much simpler than the description, as you
will see in the example that follows. Typically, the explosion calculations are performed
each week or whenever changes have been made to the master schedule. Some MRP
programs have the option of generating immediate schedules, called net change schedules.
Net change systems are “activity” driven and requirements and schedules are
updated whenever a transaction is processed that has an impact on the item. Net change
enables the system to reflect in “real time” the exact status of each item managed by
the system.
Net change systems
An MRP system
that calculates
the impact of a
change in the MRP
data (the inventory
status, BOM, or
master schedule)
immediately.
AN EXAMPLE USING MRP
Ampere, Inc. produces a line of electric meters installed in residential buildings by
electric utility companies to measure power consumption. Meters used on single-family
homes are of two basic types for different voltage and amperage ranges. In addition to
complete meters, some subassemblies are sold separately for repair or for changeovers
to a different voltage or power load. The problem for the MRP system is to determine a
production schedule to identify each item, the period it is needed, and the appropriate
quantities. The schedule is then checked for feasibility, and the schedule is modified
if necessary.
LO9–3 Analyze an
MRP problem.
Forecasting Demand
Demand for the meters and components originates from two sources: regular customers
that place firm orders in advance based on the needs of their projects; and other, typically
smaller, customers that buy these items as needed. The smaller customer requirements
were forecast using one of the usual techniques described in Chapter 3 and past demand