35 Overview to Single Facility Material Requirements Planning

This chapter contains these topics:

Section 35.1, "Objectives,"
Section 35.2, "About Single Facility MRP."

35.1 Objectives

To generate Material Requirements Planning (MRP)
To validate the material requirements plan
To review MRP action messages
To set up Capacity Requirements Planning (CRP)
To set up MRP and capacity requirements display
To generate and process work orders

35.2 About Single Facility MRP

Material Requirements Planning (MRP) uses information from the bill of material and inventory records to calculate the time-phased net material requirements for every component item and subassembly. MRP suggests a replenishment plan to support the production of the quantities that are specified in the Master Production Schedule.

A single facility requirements plan critically impacts lower-level components or resources, such as skilled labor or revenues. Single facility implies material requirements planning at the component level.

The MRP process consists of:

Determining what you need (forecast, customer orders, and interplant demands)
Subtracting what you have (inventory, purchase orders, and work orders)
Calculating what you need and when you need it

You can process a material requirements plan in one of two ways:

Freeze the MPS and generate MRP
Validate the MPS and then generate a combination of MPS and MRP

When you process a material requirements plan, the system summarizes gross material requirements for each assembly, component, and raw material part number. The requirements plan supports the MPS for each time period in the planning horizon.

You can generate a material requirements plan for all items or for a net change generation, which includes only the items that have changed since the last generation. After you generate MRP output, you can review and respond to messages.

The system uses the following inputs to MRP:

Demand
- Service part's forecast and sales orders
- Parent's planned and firm work order demand

Supply
- Firm work orders
- Rate schedules
- Purchase orders
- Inventory
- In-receipt routing

Product data
- Item Branch (F4102)
- Bill of Materials Master (F3002)

The system generates the following outputs from MRP:

Messages
- Action
- Warning

Time series with calculated quantities for:
- Ending Available (EA)
- Available to Promise (ATP)
- Cumulative Available To Promise (CATP)
- Planned orders

Material requirements planning consists of the following tasks:

Generating material requirements plans
Working with material requirements plans
Validating material requirements plans
Setting up material and capacity requirements planning
Processing orders for MRP

The system records material planning information in the following tables:

Table	Description
Bill of Materials Master (F3002)	Contains warehouse or facility level information about bills of material, such as: Costs and quantities of components Features and options Levels of detail for each bill
Work Order Master (F4801)	Contains supply rate information and work orders.
Branch Relationships Master (F3403)	Contains the supply and demand relationship among the branches.
Forecast Consumption Periods (F3405)	Contains the forecast consumption periods that you defined on Forecast Consumption Periods.
MPS/MRP/DRP Detail Message Review (F3411)	Contains the action messages that were generated by an MPS or MRP scheduling run.
MPS/MRP/DRP Lower Level Requirements (F3412)	Contains the source of gross requirements that are posted to items from parent items.
MPS/MRP/DRP Summary (F3413)	Contains the time series data for screens and reports.
Forecast (F3460)	Contains the forecast data that MRP uses for calculations.
Item Master (F4101)	Contains basic information about each item that has been defined in inventory, such as: Item numbers and descriptions Category codes Units of measure
Item Branch (F4102)	Contains warehouse or plant-level information, such as: Costs Quantities Location Branch level category codes

35.2.1 How Do You Use Bills of Material in MRP?

The bill of material provides product structure information that MRP uses to explode the master production schedule to all component items. If a parts list does not exist for a work order, MRP generation uses the standard bill of material to explode demand.

The following features determine which components explode, how to modify the quantity, and how the system calculates schedule dates:

Effectivity checking
Feature planning percentage
Quantity per
Bill of material scrap factor
Leadtime offset
Operation scrap
Fixed or variable quantity per assembly

35.2.2 What Are the Differences Between MRP and MPS?

MPS generally has independent demand, while MRP has dependent demand. Independent demand is demand for an item that is unrelated to the demand for other items, such as demand for finished goods. Dependent demand is demand that is directly related to or derived from the bill of material structure for other items or end products. MRP might also include forecast and sales orders if items are sold as service (spare) parts. The majority of demand, however, is demand from parent orders. The demands on MRP include:

Parent's firm work orders
Parent's planned work orders
Interplant demands
Service part forecast
Service part sales orders

The following illustration compares the flow of MRP to that of MPS.

Figure 35-1 MRP and MPS Flow Comparison

Description of "Figure 35-1 MRP and MPS Flow Comparison"

35.2.3 How Do You Run MRP Effectively?

MRP runs most effectively when you ensure the accuracy and validity of the following items:

Item	Description
Master schedule	Ensure that the master schedule is at least 95% accurate. Accuracy is measured by comparing the creation of an end product to the performance of the schedule.
Bill of material	Ensure that the bill of material is at least 98% accurate and contains the correct components and quantities. Accuracy is measured by comparing how the item is built in the factory to the correct components and quantities contained in the bill of material. If you find a discrepancy between the parts list and the bill of material, you cannot count the bill of material as accurate.
Inventory	Ensure that your inventory count is at least 95% accurate. You can achieve this accuracy through the cycle count process.
Lead times	Ensure that your lead times are valid. Note that the system gives you planned lead times. In execution, the actual time it takes to complete an order can vary.