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Materials Requirements PlanningModule 11July 23, 2014

Outline Material Requirements Planning (MRP) What is it?When do we use it?Bill of MaterialsLot sizing rulesMRP ReportsMRP BenefitsMRP in Services

What is MRP? Computerized inventory control andproduction planning system Helps us determine how much and when toproduce component items

Material Requirements Planning(MRP) 1. MRP A. Computer-based system that developsplans for ordering and producing dependentdemand items 2. Main MRP Principles A. Requirements derived from productionschedule of parent items and Productionorder offset to account for lead time B. What Does This Mean?4

Independent vs. DependentDemand 1. Independent Demand A. Demand for “End Items” B. Examples: a. Televisions b. Refrigerators 2. Dependent Demand A. Demand for items used to make other items B. Examples: a. Refrigerator Door, Motor, Drawers, etc. b. Bicycle Two wheels, frame, seat, etc.5

MRP30,000 Parts in a CarBrake Pads(California)3 DaysTires(Ohio)2 DaysAirbags(Utah)3 DaysHeadlights(China)7 Days

When do we use it? Dependent demand itemsIndependent demandDependent demand100 x 1 100 tabletops100 x 4 400 table legs100 tablesContinuous demandDiscrete demand400 –300 –200 –tablesof tables400 –300 –200 –

When do we use it?Independent demandDependent demand Dependent demand items Discrete demand items100 x 1 100 tabletops100 x 4 400 table legs100 tablesContinuous demandDiscrete demand400 –300 –No. of tablesNo. of tables400 –200 –100 –123Week4300 –200 –100 –5M T W Th FM T W Th F

When do we use it? Dependent demand itemsDiscrete demand itemsComplex productsJob shop productionAssemble-to-order environmentsIf we want to know how many and when toorder table legs we need to know howdemand for table legs is related to demand for tables

Overview of MRPMRP InputsMRP ProcessingMRP OutputsChangesOrder releasesMaster ortsBill ofmaterialsInventoryrecords14-10MRP computerprogramsException reportsPlanning ventorytransaction

Master Schedule Quantities derived from Sales & Operations Plans’production plan (product groups) [input] Drives MRP process with a schedule of finishedproducts (actual items by week) [output] Quantities may consist of a combination of customerorders & demand forecasts Quantities represent what needs to be produced,not what can be produced

Master Schedule (MS) Quantity of end items to be producedwithin a specified period of time12

Master Production ScheduleOne of three primary inputs inMRP;states which end items are tobe produced, when these areneeded, and in what quantities.

Windows Defined by Time Fences Frozen No schedule changes allowed within thiswindow------------ Demand Time Fence ---------- Moderately Firm (slushy) Specific changes allowed within productgroups as long as parts are available------------ Planning Time Fence ---------- Flexible (liquid) Significant variation allowed as long asoverall capacity requirements remain at thesame levels

Sales and Operations Plan (S&OP)Relationship to the MPS and MRPSALES AND OPERATIONS PLANMonthJanDays20Plan20,000Master Production ScheduleWeek14Product A750Product BProduct 02005,0005,000Material Requirements PlanSubassembly A101 (2 required)Week 141,500Week 150Week 160Week 171,0002005,0005,000

Bill-of-Materials (BOM)One of the three primary inputs ofMRP;a listing of all of the raw materials,parts, subassemblies, andassemblies needed to produceone unit of a product.

Bill of Materials (BOM) Specifies the Following: a. Assemblies and Subassemblies b. Parts c. Raw Materials BOM Items Specify Amounts of aboveneeded to Make a Single Unit ofFinished Product17

Example of BOMTopLegShort RailLong Rail18

BOM (Product Structure)Table (End Item)1 weekLeg Assembly (1)1 weekShort Rails (2) Long Rails (2)1 week1 weekTop (1)2 weeksLegs (4)1 week19

MRP Sample BOM20

A Physical BOM: Ford’s Model T21

A Physical BOM: Jet Engine22

Bill-of-MaterialsProduct structure tree:Visual depiction of therequirements in a bill ofmaterials, where allcomponents are listed by levels.

Product StructureClipboardTop clip (1)Pivot (1)Bottom clip (1)Spring (1)Rivets (2)Finished clipboardPressboard (1)

Graphical Representation of the BOM

Graphical Representation of the BOM If we need to meet demand for 100 clipboards nextJanuary how many and when do we need toproduce pressboards, clips, etc.?

Graphical Representation of the BOM1.Start by using MRP to determine how many andwhen to produce the end item

Graphical Representation of the BOM2.Given those needs for clipboards, use MRP todetermine how many and when to produce thepressboards , clip assemblies , and rivets

Graphical Representation of the BOM3.Given those needs for clip assemblies, use MRPto determine how many and when to produce theclip assembly component items

Special Considerations of BOMs Finished Products May Have Hundreds orThousands of Parts Parts May Appear Multiple Times in a BOM Supply of Parts May Not be 100%Consistent a. Longer Than Expected Lead Times b. Quality Issues Timing is Critical! All Parts for a Parent ItemMUST Be On-Hand to Produce Item!30

Inventory Records One of the three primary inputs in MRP Includes information on the status of eachitem by time period Gross requirementsScheduled receiptsAmount on handLead timesLot sizesAnd more

Consequences of InaccurateInventory Records Too much (or too little) inventory. Increased freight (shipping) costs. Expediting and missed due dates.

Inventory RecordSpecifies a. Order/Lot Size Policy b. Lead Times c. Records of All Transactions (Change inInventory Levels)33

Example Let’s say we produce file cabinets Each cabinet is made up of 2 side boards3 shelvesWhat would a graphicalrepresentation of ourBOM look like?

Example Let’s say we produce file cabinets Each cabinet is made up of 2 side boards3 shelvesCabinetSide boards (2)Shelves (3)

MRP Processing Gross requirements Total expected demand Scheduled receipts Open orders scheduled to arrive Planned on hand Expected inventory on hand at thebeginning of each time period

MRP Processing Net requirements Actual amount needed in each time period Planned-order receipts Quantity expected to received at thebeginning of the period Offset by lead time Planned-order releases Planned amount to order in each time period

Material Requirements PlanningNote the following: Gross requirements in level 0 (Tables) come fromthe master schedule. Gross requirements in level 1 (and below) comefrom the planned order releases in the levelabove. Planned order releases are offset by the leadtimes. Planned order releases are planned! Actual orderreleases must take available capacity intoaccount. Net requirements are the gross requirementsminus the projected on-hand.

Example How many and when should we produce cabinets? How many and when should we produce sideboards and shelves?CabinetSide boards (2)Shelves (3)

MRP MatrixItem:Description:PeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock Lot-Size Lead Time 123456789101112

Gross Requirements Expected demand for item in each periodItem:Description:PeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock Lot-Size Lead Time 123456789101112

Scheduled Receipts Pre-existing orders for items(scheduled to arrive at beginning of the period)Item:Description:PeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock Lot-Size Lead Time 123456789101112

Net Requirements Inventory needed to meet backorder andsafety stock needsItem:Description:PeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock Lot-Size Lead Time 123456789101112

Planned Order Receipts Planned order arrivals of the item(arriving at the beginning of the period)Item:Description:PeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock Lot-Size Lead Time 123456789101112

Planned Order Releases Planned order releases for the item(submitted at the beginning of the period)Item:Description:PeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock Lot-Size Lead Time 123456789101112

MRP MatrixItem:Description:PeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock Lot-Size Lead Time 123456789101112

Back to our cabinet example From our MPS system we know how many filecabinets need to be produced in the next 12 weeksItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriodGross RequirementsScheduled ReceiptsOn HandNet RequirementsPlanned Order ReceiptsPlanned Order Releases12120395452006782590 unitsFixed order qty (80)2 weeks10601112

Back to our cabinet example From our MPS system we know how many filecabinets need to be produced in the next 12 weeksItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod12Gross Requirements120Scheduled Receipts160On Hand20395452006782590 unitsFixed order qty (80)2 weeks101180?Net RequirementsPlanned Order ReceiptsPlanned Order Releases Additionally, we have 20 cabinets on hand now And 160 more are scheduled to be ready in week 212

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod12Gross Requirements120Scheduled Receipts160?On Hand20Net RequirementsPlanned Order ReceiptsPlanned Order Releases20395452006782590 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod12Gross Requirements120Scheduled Receipts160?On Hand2020395452006782590 unitsFixed order qty (80)2 weeks1080Net RequirementsPlanned Order ReceiptsPlanned Order ReleasesMy convention sum of cells in red – sum of cells in blue1112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod1234Gross Requirements12095Scheduled Receipts16060?On Hand20Net RequirementsPlanned Order ReceiptsPlanned Order Releases2052006782590 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts16060-35On Hand20Net RequirementsPlanned Order ReceiptsPlanned Order Releases20354520067825We don’t want backorders90 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts16060-35On Hand20Net RequirementsPlanned Order ReceiptsPlanned Order Releases2035?452006782590 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts16060-35On Hand20Net RequirementsPlanned Order ReceiptsPlanned Order Releases2035?452006782590 unitsFixed order qty (80)802 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts16060-35On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases802 weeklead time452006782590 unitsFixed order qty (80)802 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts16060-35On Hand2020Net Requirements355620078259108080-35 4580Planned Order ReceiptsPlanned Order Releases40 unitsFixed order qty (80)2 weeks80Since an order for 80 units is now arrivingin week 3 what is the on-hand inventory?1112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases8045620080-35 45782590 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases8045200?6782590 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock 0 unitsFixed orderLot-Size Lead Time 2 weeksFile CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements35Planned Order ReceiptsPlanned Order Releases80452004567825-155155801601602 weeklead time160-155 59108011qty (80)12

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases801604520045678255155160160-155 590 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases801604567200455155160825?90 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases801604567200455155160825590 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases8016045672004551551608255?90 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases801604567200455155160892555?0 unitsFixed order qty (80)2 weeks10801112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order 2 weeklead time8090 unitsFixed order qty (80)2 weeks80-20 60

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases80160456720045582555101112806015520160802 weeklead time8090 unitsFixed order qty (80)2 weeks80-20 60

ExampleItem:Description:File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases800 unitsFixed order qty (80)2 weeksSafety Stock Lot-Size Lead Time 1604567200455892555601552016080801080?1112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases80160456720045580 unitsFixed order qty (80)2 weeks92555601552016080801080601112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases80160456720045580 unitsFixed order qty (80)2 weeks9255560155201608080108060601112

ExampleItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements3580Planned Order ReceiptsPlanned Order Releases80160456720045580 unitsFixed order qty (80)2 weeks9255560155201608080101180606020806012

ExampleItem:Description:File CabinetPeriod1Gross RequirementsScheduled ReceiptsOn HandSafety Stock Lot-Size Lead Time 2020312095160604535Net Requirements80Planned Order ReceiptsPlanned Order Releases280160456720045580 unitsFixed order qty (80)2 weeks925556010126060806060155202016080808011

ExampleItem:Description:File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net RequirementsPlanned Order ReceiptsPlanned Order Releases800 unitsFixed order qty (80)2 weeksSafety Stock Lot-Size Lead Time 0602080

CabinetSide boards (2)Shelves (3)How many and when should we produce the sideboards?Sideboards:currently 30 on hand300 scheduled to arrive in week 1produced LFLrequire a safety stock of 10 unitslead time of one week

CabinetSolutionItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements8067451Gross Requirements300Scheduled Receipts30Net RequirementsPlanned Order ReceiptsPlanned Order y Stock Lot-Size Lead Time 31016016020 unitsFOQ (80)2 weeks25Side boardPeriodOn Hand520080Planned Order ReceiptsItem:Description:435Planned Order ReleasesShelves (3)Side boards (2)9606010 unitsLFL1 week101112

CabinetSolutionItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements8067451Gross Requirements160Scheduled Receipts30030Net RequirementsPlanned Order ReceiptsPlanned Order 11260 602060806080Safety Stock Lot-Size Lead Time 20 unitsFOQ (80)2 weeks25Side boardPeriodOn Hand520080Planned Order ReceiptsItem:Description:435Planned Order ReleasesShelves (3)Side boards (2)910 unitsLFL1 week101112

CabinetSolutionItem:Description:1Gross Requirements160Scheduled Receipts300On HandSafety Stock Lot-Size Lead Time Side boardPeriod30Net RequirementsPlanned Order ReceiptsPlanned Order ReleasesShelves (3)Side boards (2)2332045616078160910 unitsLFL1 week101112

Item:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300?30On HandSafety Stock 10 unitsLFLLot-Size Lead Time 1 week2332045616078160Net RequirementsPlanned Order ReceiptsPlanned Order ReleasesMy convention sum of cells in red – sum of cells in blue9101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 30Net RequirementsPlanned Order ReceiptsPlanned Order Releases23320?45616078160910 unitsLFL1 week101112

ExampleItem:Description:SidePeriodboard1Gross Requirements160Scheduled Receipts300170On Hand30Net RequirementsPlanned Order ReceiptsPlanned Order ReleasesSafety Stock 10 unitsLFLLot-Size Lead Time 1 week23320170-15015045616078160We don’t want backorders9101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 302345320170-150Net Requirements150 10 160Planned Order Receipts160Planned Order Releases1601 weeklead time616078160910 unitsLFL1 week101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 3023320170561607891011160-150Net Requirements160Planned Order Receipts160Planned Order Releases40 unitsLFL1 week160-150 10160Since an order for 150 units is now arrivingin week 3 what is the on-hand inventory?12

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 3023320170160Planned Order Receipts1601605616010Net RequirementsPlanned Order Releases4160-150 107816090 unitsLFL1 week101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 3023532017010Net Requirements160Planned Order Receipts160Planned Order Releases41606160?78160910 unitsLFL1 week101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 30235632017010Net Requirements160Planned Order Receipts160Planned Order Releases415016010?78160910 unitsLFL1 week101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 30234532017010671601010160160150 10Planned Order Receipts160160160910160-150Net RequirementsPlanned Order Releases810 unitsLFL1 week160 1 weeklead time160-150 101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 3023453201701061601010160160Planned Order Receipts160160160160891016010Net RequirementsPlanned Order Releases710 unitsLFL1 week160-150 101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 302345320170106160101010Net Requirements160160Planned Order Receipts160160Planned Order Releases16071608160?910 unitsLFL1 week101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 302345320170106716010101081601010Net Requirements160160160Planned Order Receipts160160160Planned Order Releases160160160910 unitsLFL1 week101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On Hand302345320170106716010101081010160160160Planned Order Receipts1601601601601609160Net RequirementsPlanned Order Releases10 unitsLFL1 weekSafety Stock Lot-Size Lead Time 160?101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 302345320170106716010101081010160160160Planned Order Receipts1601601601601609160Net RequirementsPlanned Order Releases10 unitsLFL1 week16010101112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 302345320170106716010101081010160160160Planned Order Receipts1601601601601609101010160Net RequirementsPlanned Order Releases10 unitsLFL1 week1601112

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 302345320170106716010101081010160160160Planned Order Receipts16016016016016091011101010160Net RequirementsPlanned Order Releases10 unitsLFL1 week16012

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On HandSafety Stock Lot-Size Lead Time 302345320170106716010101081010160160160Planned Order Receipts160160160160160910111210101010160Net RequirementsPlanned Order Releases10 unitsLFL1 week160

ExampleItem:Description:Side boardPeriod1Gross Requirements160Scheduled Receipts300170On Hand302345320170106716010101081010160160160Planned Order Receipts1601601601601609101112101010160Net RequirementsPlanned Order Releases10 unitsLFL1 weekSafety Stock Lot-Size Lead Time 16010

Holding costOrdering costExample440 x 2 3 x 100880 300 1180 Cost of this policy?Item:Description:1Gross Requirements160Scheduled Receipts300170On Hand302345320170106716010101081010160160160Planned Order Receipts16016016016016091011160Net RequirementsPlanned Order Releases10 unitsLFL1 weekSafety Stock Lot-Size Lead Time Side boardPeriod 2/unit/period 100/order16012440SUM10101010COUNT3

CabinetExampleSide boards (2)Shelves (3) We could determine how many and when toproduce shelves similarlyShelves:currently 20 on hand260 scheduled to arrive in week 1produced LFLrequire a safety stock of 20 unitslead time of one week

CabinetSolutionItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements8067451Gross Requirements260Scheduled Receipts20Net RequirementsPlanned Order ReceiptsPlanned Order y Stock Lot-Size Lead Time 310160160210 unitsFOQ (80)2 weeks25ShelvesPeriodOn Hand520080Planned Order ReceiptsItem:Description:435Planned Order ReleasesShelves (3)Side boards (2)9606020 unitsLFL1 week101112

CabinetSolutionItem:Description:Safety Stock Lot-Size Lead Time File CabinetPeriod123Gross Requirements12095Scheduled Receipts1606045On Hand2020Net Requirements8067451Gross Requirements240Scheduled Receipts26020Net RequirementsPlanned Order ReceiptsPlanned Order Releases8595560480126060 606020201608080808041180Safety Stock Lot-Size Lead Time 31015516020 unitsFOQ (80)2 weeks25ShelvesPeriodOn Hand520080Planned Order ReceiptsItem:Description:435Planned Order ReleasesShelves (3)Side boards (2)5624078240920 unitsLFL1 week101112

CabinetSolutionItem:Description:1Gross Requirements240Scheduled Receipts260On HandSafety Stock Lot-Size Lead Time ShelvesPeriod20Net RequirementsPlanned Order ReceiptsPlanned Order ReleasesShelves (3)Side boards (2)2348045624078240920 unitsLFL1 week101112

Item:Description:ShelvesPeriod1Gross Requirements240Scheduled Receipts260?20On HandSafety Stock 20 unitsLFLLot-Size Lead Time 1 week2348045624078240Net RequirementsPlanned Order ReceiptsPlanned Order ReleasesMy convention sum of cells in red – sum of cells in blue9101112

ExampleItem:Description:ShelvesPeriod1Gross Requirements240Scheduled Receipts26040On HandSafety Stock Lot-Size Lead Time 20Net RequirementsPlanned Order ReceiptsPlanned Order Releases23480?45624078240920 unitsLFL1 week101112

ExampleItem:Description:ShelvesPeriod1Gross Requirements240Scheduled Receipts24040On HandSafety Stock Lot-Size Lead Time 20Net RequirementsPlanned Order ReceiptsPlanned Order Releases23448040?5624078240920 unitsLFL1 week101112

ExampleItem:Description:ShelvesPeriod1Gross Requirements240Scheduled Receipts26040On HandSafety Stock 20 unitsLFLLot-Size Lead Time 1 week20Net RequirementsPlanned Order ReceiptsPlanned Order Releases2348040-44046045624078240We don’t want backorders9101112

ExampleItem:Description:ShelvesPeriod1Gross Requirements240Scheduled Receipts26040On HandSafety Stock Lot-Size Lead Time 20234548040-440Net Requirements440 20 460Planned Order Receipts460Planned Order Releases4601 weeklead time624078240920 unitsLFL1 week101112

ExampleItem:Description:ShelvesPeriod1Gross Requirements240Scheduled Receipts26040On HandSafety Stock Lot-Size Lead Time 202348040562407891011240-440Net Requirements460Planned Order Receipts460Planned Order Releases420 unitsLFL1 week460-440 20460Since an order for 460 units is now arrivingin week 3 what is the on-hand inventory?12

ExampleItem:Description:ShelvesPeriod1Gross Requirements240Scheduled Receipts26040On HandSafety Stock Lot-Size Lead Time 202348040460Planned Order Receipts4604605624020Net RequirementsPlanned Order Releases4460-4

the master schedule. Gross requirements in level 1 (and below) come from the planned order releases in the level above. Planned order releases are offset by the lead times. Planned order releases are planned! Actual order releases must take available capacity