Lectures on Production Planning and Control for B.Sc. Students - Industrial Engineering Branch -Department of Production Engineering and Metallurgy- University of Technology - Baghdad -Iraq

1. MATERIAL AND CAPACITY REQUIREMENTS
PLANNING (MRP AND CRP)
Part -1
Dr. Mahmoud Abbas Mahmoud Al-Naimi
Assistant Professor
Industrial Engineering Branch
Department of Production Engineering and Metallurgy
University of Technology
Baghdad - Iraq
dr.mahmoudalnaimi@uotechnology.edu.iq
dr.mahmoudalnaimi@yahoo.com
2015 - 2016

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6- MATERIAL AND CAPACITY REQUIREMENTS PLANNING (MRP AND
CRP)
6.1 MRP AND CRP OBJECTIVES
The demand for a finished good tends to be independent and relatively stable.
However, firms typically make more than one product on the same facilities, so
production is generally done in lots, e.g., of different end items or models. The
quantities and delivery times for the materials needed to make those end items are
determined by the production schedule.
Material Requirements Planning (MRP) is a computer-based technique for
determining the quantity and timing for the acquisition of dependent demand items
needed to satisfy the master schedule requirements. By identifying precisely what,
how many, and when components are needed, MRP systems are able to reduce
inventory costs improve scheduling effectiveness, and respond quickly to market
changes.
Capacity Requirements Planning (CRP) is the process of determining what
personnel and equipment capacities (times) are needed to meet the production
objectives embodied in the master schedule and the material requirements plan. MRP
focuses upon the priorities of materials, whereas CRP focuses primarily upon time.
Although both MRP and CRP can be done manually and in isolation, they are
typically integrated within a computerized system, and CRP (as well as production
activity control) functions are often assumed to be included within the concept of “an
MRP system.” Computerized MRP systems can effectively manage the flow of
thousands of components throughout a manufacturing facility. Following are some of
the terminology used to describe the functioning of MRP systems.
• MRP: A technique for determining the quantity and timing dependent demand
items.
• Dependent demand: Demand for a component that is derived from the demand for
other items.

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• Parent and component items: A parent is an assembly made up of basic parts, or
components. The parent of one subgroup may be a component of a higher-level parent.
• Bill of materials: A listing of all components (subassemblies and materials) that go
into an assembled item. It frequently includes the part numbers and quantity required
per assembly.
• Level code: The level on which an item occurs in the structure, or bill-of-materials
format.
• Requirements explosion: The breaking down (exploding) of parent items into
component parts that can be individually planned and scheduled.
• Time phasing: Scheduling to produce or receive an appropriate amount (lot) of
material so that it will be available in the time periods when needed-not before or
after.
• Time bucket: The time period used for planning purposes in MRP-usually a week.
• Lot size: The quantity of items required for an order. The order may be either
purchased from a vendor or produced in-house. Lot sizing is the process of specifying
the order size.
• Lead-time offset: The supply time, or number of time buckets between releasing an
order and receiving the materials.
Figure 6.1 describes MRP and CRP activities in schematic form. Forecasts and orders
are combined in the production plan, which is formalized in the master production
schedule (MPS). The MPS, along with a bill-of-material (BOM) file and inventory
status information, is used to formulate the material-requirements plan. The MRP
determines what components are needed and when they should be ordered from an
outside vendor or produced in-house. The CRP function translates the MRP decisions
into hours of capacity (time) needed. If materials, equipment, and personnel are
adequate, orders are released and the workload is assigned to the various work centers.
End items, such as TV sets, have an independent demand that is closely linked to the
ongoing needs of consumers. It is random but relatively constant. Dependent demand
is linked more closely to the production process itself. Many firms use the same

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facilities to produce different end items because it is economical to produce large lots
once the set-up cost is incurred. The components that go into a TV set, such as 24-inch
picture tubes, have a dependent demand that is governed by the lot size. Dependent
demand is predictable. MRP systems compute material requirements and specify when
orders should be released so that materials arrive exactly when needed. The process of
scheduling the receipt of inventory as needed over time is time phasing.
Fig. 6.1 Material and capacity planning flowchart
6.2 MRP INPUTS AND OUTPUTS
The essential inputs and outputs in an MRP system are listed in table 6.1:

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Table 6.1
6.2.1 Bill of Materials
A bill of materials (BOM) is a listing of all the materials, components, and
subassemblies needed to assemble one unit of an end item. Major function of the bill
of materials is to provide the product structure hierarchy that guides the explosion
process. Different methods of describing a BOM are in use. Figure 6.2 shows (a) a
product structure tree, and (b) an indented BOM. Both are common ways of depicting
the parent-component relationships on a hierarchical basis. Knowledge of this
dependency structure reveals clearly and immediately what components are needed for
each higher-level assembly. A third method (c) is to use single-level bills of material.
6.2.2 Low-level Coding
Figure 6.2 also includes level coding information. Level 0 is the highest (e.g., the end-
item code) and level 3 the lowest for this particular BOM. Note that the four clamps
(C 20) constitute a subassembly that is combined with base (A 10) and two springs (B
11) to complete the end-item bracket (Z 100). However, the same clamp (C 20) is also
a component of the base (A 10). To facilitate the calculation of net requirements, the
product tree has been restructured from where the clamp components might have been
(shown dashed) to the lower level consistent with the other (identical) clamp. This
low-level coding enables the computer to scan the product structure level-by-level,
starting at the top, and obtain an accurate and complete count of all components
needed at one level before moving on to the next.
Bill of materials for Z 100 bracket is shown below:

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Fig. 6.2 Product structure tree
Table 6.1(a) Indented bill of materials
SINGLE-LEVEL BOM
Table 9.1 (a) depicts a single-level bill of materials for Z 100 bracket. It is a less
intuitive but more efficient means of storing the information on computer. In the
single-level bill each entry (on the left) contains only an item or part number followed
by a list of the part numbers and quantities of components needed to make up the
parent item only. This type of listing avoids the searches for duplicate items down

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through several levels of a tree. On the other hand, it necessitates that the computer
search through many single-level bills to find all the components that are included in a
product that has several levels of code. Single-level bills frequently contain “pointers”
to link the records of components with their parents and accommodate the retrieval of
a complete bill of materials for an item.
Table 6.1 (b) Single-level BOM

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ILLUSTRATION 1: Determine the quantities of A10, B11, C20, D2l, E30, F3l, and
G32 needed to complete 50 of the Z100 brackets depicted in Fig. 6.2.
SOLUTION
Table 6.2 Determining BOM requirements
First determine the requirements for one bracket as shown in Table 6.2, and then
multiply by 50. Note that parts C and E are used in two different subassemblies, so
their separate amounts must be summed. For 50 brackets, each of the requirements
column amounts must be multiplied by 50 to obtain the gross requirements.
ILLUSTRATION 2: Given the product structure tree shown in Figure 6.3 for
wheelbarrow W099, develop an indented bill of materials.
Fig. 6.3

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Table 6.3
ILLUSTRATION 3: (a) A flashlight is assembled from three major subassemblies: a
head assembly, two batteries, and a body assembly. The head assembly consists of a
plastic head, a lens, a bulb subassembly (comprising a bulb and bulb holder), and a
reflector. The body assembly consists of a coil spring and a shell assembly, which in
turn is made up of an on-off switch, two connector bars, and a plastic shell. The on-off
switch is assembled from a knob and two small metal slides. The plastic head is made
from one unit of orange plastic powder, and the plastic shell is made from three units
of orange plastic powder. Develop a product structure tree of the flashlight, and
include the level coding for each component.
Plastic head Lens Bulb assembly SpringShell assemblyReflector
Head assembly Body assemblyBatteries
Flashlight
Plastic powder
Bulb holder Plastic shellON-off switchBulb
Knob Metal slides (2) Plastic powder
(3)
Connector bars
(2)
Level 0
Level 1
Level 2
Level 3
Level 4

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(b) Design an indented bill of materials for the flashlight in (a). (Note: Assign
appropriate four-digit part numbers to the components.)
Table 6.4