MRP, MRP II &

ERP
The TOYOTA Way
MATERIAL RESOURCE PLANNING (MRP
I)
Material Requirements Planning (MRP)
is a  software based production planning
and inventory control system used
to manage manufacturing processes.

Although it is not common now-a-days, it is possible to

conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three
objectives:

 Ensure materials and products are available
for production and delivery to customers.

 Maintain the lowest possible level of inventory.

 Plan manufacturing activities, delivery schedules and purchasing

activities.
WHEN TO USE
 MRP I systems are usually employed when 1 or more of
following conditions exist:

 When usage (demand) of materials is discontinuous or highly

unstable during a firm’s normal operating cycle (intermittent
manufacturing or job shop operation as opposed to a
continuous-processing or mass-production operation)
MRP Inputs MRP Processing MRP Outputs

Changes
Order releases
Master
schedule Planned-order
schedules
Primary
reports Exception reports
Bill of Planning reports
materials MRP computer Secondary
Performance-
programs reports control
reports

Inventory
records Inventory
transaction
 MRP PROCESSING
 Gross requirements: (Forecasted)Demand period by period
 Net requirements(t)
=Gross requirements(t)-Projected inventory(t-1)
-Scheduled receipt(t)
 If Net requirement(t) > 0
set Planned order receipts(t)>=Net requirement(t)
 Planned-order receipts is the production planned
 Projected inventory(t)

=Projected inventory(t-1)+Scheduled receipt(t)

+Planned order receipts(t)-Gross requirements(t)
 Planned order release(t-LT)=Planned-order receipts(t)
MRP AT PLANT LEVEL

 The system adds together stocks from all of the individual

storage locations, with the exception of individual customer
stock, to determine total plant stock.

 Individual storage locations can be planned separately or be

excluded from planning.
MRP AT AREA LEVEL

 Only the stocks from the storage locations or subcontractor

assigned to the respective MRP area are taken into account.

 This enables you to plan material requirements specifically for

certain areas.
 MRP PLANNING

Develop a tentative Use MRP to

master production simulate material
schedule requirements

Convert material Revise tentative

requirements to master production
resource requirements schedule
No
Can
Is shop capacity be
capacity No
changed to meet
adequate? requirements
Yes Yes

Firm up a portion Change

of the MPS capacity
MRP OUTPUTS

 Planned orders - schedule indicating the amount and timing of

future orders.
 Orderreleases - Authorization for the execution of planned
orders.
 Changes - revisions of due dates or order quantities, or
cancellations of orders.
 Performance-control reports
 Planning reports
 Exception reports
THE BENEFITS OF MRP

 Inventory reduction,
 Reduction in production & delivery time

 Increased efficiency.

 Faster response to market changes

 Improved labor & equipment utilization

 Better inventory planning & scheduling

 Reduced inventory levels without reduced customer service

SALES & OPERATIONS PLANNING
OBJECTIVES

 SUPPORT THE PROFIT PLAN

 SUPPORT THE CUSTOMER

 INSURE REALISTIC PLANS

 LEAD CHANGE

 MANAGE INVENTORY

 MAKE DECISIONS -RESOLVE ISSUES

 MEASURE PERFORMANCE

 BUILD TEAM WORK!

MANUFACTURING RESOURCE
PLANNING (MRP II)

 Expanded MRP with and emphasis placed on

integration
 Financial planning
 Marketing
 Engineering
 Purchasing
 Manufacturing
 MANUFACTURING RESOURCE
PLANNING (MRP II)
 Feedback: feedback from the shop floor on how the work has progressed, to
all levels of the schedule so that the next run can be updated on a regular basis.
 Resource Scheduling: scheduling capability of the resources
 Batching Rules
 'Lot for Lot' means batches that match the orders.
 Economic Batch Quantity (EBQ) is calculated to minimize the cost through
balancing the set up cost against the cost of stock.
 'Part Period Cover' means making batches whose size cover a fixed period
of demand.
 Software Extensions
 Rough Cut Capacity Planning (RCCP), an initial attempt to match the order
load to the capacity available,
 Sales Order Processing
 Cost accounting
 Data Accuracy
 ENTERPRISE RESOURCE PLANNING (ERP)

 Enterprise resource planning (ERP):

An expanded effort to integrate standardized record keeping that
will permit information sharing throughout the organization
 Strategic considerations
 High initial cost
 High cost to maintain
 Future upgrades
 Training
 See ERP courses in the course catalog
EXPERT SCHEDULER (EXSCHED)

 ExSched is a software package designed specially for

production resources scheduling on the shop floor.

 It is an Advanced Planning and scheduling solution.

 It simulates the shop floor environment and provides the most

effective and efficient scheduling for jobs.
 The software uses the Discrete Event Simulation technique to
schedule jobs. Using built-in decision rules ExSched assigns
priorities to waiting jobs, thereby resolving conflicts among
competing jobs.

 The package keeps track of the current status of each and every
job. 

 Based on the current status and the process sheet data ExSched
can forecast the completion time of jobs.
SALIENT FEATURES OF EXSCHED
On-line visual graphical interface

Can work with different databases

Charts for schedules

Load charts for facilities

Print-outs for job routings

Customized reports

Has a ‘what if’ facility, wherein users can try out various permutations and
combinations of job mix, priorities, capacities etc. and select the most appropriate
plan
4 WAYS OF WORKING OF EXSCHED

 Takes user input/constraints from the excel spreadsheet and

parses through it.
 Converts the input into an executable SICStus program.

 Executes the generated SICStus program using the back end

SICStus engine.
 Displays the result of execution in the spreadsheet.
HOW EXSCHED FUNCTIONS?
 Constraint Logic Programming:

 Conventional programming languages such as C and Java do

not provide adequate support for solving CSPs (Constraint
solving problems)
 Traditional Logic based programming languages like Prolog
on the other hand are better than conventional programming
languages but are inefficient as compared to constraint logic
programming (CLP) languages.
 This is because logic based languages use the “Generate and
Test” paradigm. When the generate-and-test strategy is used,
constraints are applied after the values have been chosen for
the unknown variables.
Knowledgesheet Paradigm:

 The main idea behind the development of Knowledgesheet was to

generalize the functions to constraints/predicates.
 Knowledgesheet consists of a two dimensional array of cells. Each
cell acts as an unbound variable.
 When a problem is to be solved, it is modeled into a two
dimensional structure and constraints are imposed on the cells.
 The knowledge sheet then gathers the input from the cells and
converts it into an executable constraint logic program.
 The generated CLP program is then executed to print the results onto
an output file.
 Finally, the Knowledgesheet reads the output generated and displays
it in the corresponding cells.
VISUAL INTERFACE
 The visual interface of this tool is the same as that of the
normal Microsoft Excel spreadsheet except that it has a
new menu item called “Constraint Solve” with various
options. These options are divided into five major
categories:

 Macros to facilitate copying cells/formulas with and without

formatting
 Macros for some In-Built Functions
 Macros for Arithmetic Functions
 Macros for creating Auxiliary Tables
 Macros for executing the problem and for viewing the
solution
EXAMPLE: EMPLOYEE SCHEDULING
SOLUTION