Detailed Scheduling and Planning (Lesson 4)

Detailed Scheduling and Planning
Unit 2
UUnit
nit 22
DDetailed
etailed SScheduling
cheduling aand
nd
PPlanning
lanning
Lesson 4
Basic MRP Logic
Unit 2
© 2004 e - SCP -The Centre for Excellence in Supply Chain Management
No portion of this publication may be reproduced in whole or in part.
The Leading Edge Group will not be responsible for any statements, beliefs, or opinions expressed by the
authors of this workbook. The views expressed are solely those of the authors and do not necessarily
reflect any endorsement by The Leading Edge Training Institute Limited.
This publication has been prepared by E-SCP under the guidance of Yvonne Delaney MBA, CFPIM,
CPIM. It has not been reviewed nor endorsed by APICS nor the APICS Curricula and Certification
Council for use as study material for the APICS CPIM certification examination.
The Leading Edge Training Institute Limited

Charter House
Cobh
Co Cork
Ireland
© Copyright Leading Edge Training Institute Limited ii

Unit 2
Preface............................................................................................................4
Course Description................................................................................................................. 4
Lesson 4 – Basic MRP Logic...........................................................................5
Introduction and Objectives.................................................................................................. 5
Material Planning Process..................................................................................................... 5
MRP Design Features ............................................................................................................ 6
Operation and Performance of Material Planning Process............................................... 8
MRP Mechanics.................................................................................................................... 10
Starting Requirements for MRP......................................................................................... 11
MRP Grid.............................................................................................................................. 11
Low-Level Codes .................................................................................................................. 12
MRP Calculations ................................................................................................................ 14
Gross Requirements of Independent Demand from the MPS ......................................... 14
Bill of Material for items A and F....................................................................................... 16
Gross Requirements of Independent Demand for Service Parts ..................................... 16
Inventory Status ................................................................................................................... 16
Net Requirements and Planned Orders ............................................................................. 17
Lower Level Gross Requirements – Level 1...................................................................... 17
Level 1 Gross Requirements................................................................................................ 20
Determining Level 1 Net Requirements and Planned Orders ......................................... 20
Level 2 Gross Requirements................................................................................................ 22
MRP Exercise ....................................................................................................................... 24
Summary ............................................................................................................................... 27
Further Reading ................................................................................................................... 27
Review ................................................................................................................................... 28
What’s Next? ........................................................................................................................ 29
Appendix.......................................................................................................30
Answers to Review Questions .............................................................................................. 31
Glossary ........................................................................................................33
© Copyright Leading Edge Training Institute Limited iii

Unit 2
Preface
Course Description
This document contains the fourth lesson in the Detailed Scheduling and Planning unit, which is
one of five units designed to prepare students to take the APICS CPIM examination. Before
completing the Detailed Scheduling and Planning unit, you should complete the Basics of
Supply Chain Management unit or gain equivalent knowledge. The five units that cover the
CPIM syllabus are:
Basics of Supply Chain Management
Master Planning of Resources
Execution and Control of Operations
Strategic Management of Resources
Please refer to the preface of Lesson 1 for further details about the support available to you
during this course of study.
This publication has been prepared by E-SCP under the guidance of Yvonne Delaney MBA,
CFPIM, CPIM. It has not been reviewed nor endorsed by APICS nor the APICS Curricula and
Certification Council for use as study material for the APICS CPIM certification examination.
© Copyright Leading Edge Training Institute Limited 4

Unit 2
Lesson 4 – Basic MRP Logic
Introduction and Objectives
This lesson examines in detail the logical processes involved in material requirements planning
(MRP). Beginning with the system inputs, the processing steps are explained through a
progression of worksheet examples and exercises, showing how each input factor affects MRP
processing and how the MRP outputs are calculated.
On completion of this lesson you will be able to:
Identify components of an MRP spreadsheet
Detail initial requirements for the planning process
Perform the netting process for a given MRP record
Explode a set of MRP records to produce a complete material plan
Explain the characteristics and workings of a rolling schedule
Describe the necessity for low- level codes
Explain how low- level codes are used
Identify alternative techniques for handling various planning factors
Material Planning Process

Business Strategy
Plan Material requirements planning (MRP) is a set of
techniques or system that uses bill of material (BOM)
Sales and Operations Master data, the master production schedule (MPS), and
Plan Plan inventory data to calculate requirements for materials
Planning and make recommendations regarding purchases.
Master Production MRP has been the most widely implemented large-scale
Schedule
production management system since the early 1970s. It
Material
originated in the early 1960s in the U.S. as a
Requirements computerized approach for the planning of materials
Planning (MRP)
acquisition and production. Previously, MRP was
practiced manually at more aggregated levels. Using
Purchasing and computers, the technique can be applied in more detail
Implementation Production
Activity Control making it more effective for the planning and
(PAC) management of material.
Originally developed for companies with highly engineered assembled products, it is now the
most widely used material planning system in businesses involving chemical, pharmaceutical,
food, service, heavy industry, remanufacturing, and complex processes.
MRP Model
MRP takes several inputs and converts them by means of logical processing, into useful outputs
that are essential for further planning.
The inputs include:

Unit 2
MPS - The anticipated production schedule for all BOM or inventory purchasing
components that are assigned to the master scheduler.
Bill of Material (BOM) for every parent item - A list of all the components and their
quantities that are needed to assemble a finished product.
Inventory status information for every part - A statement of physical stock on hand,
material allocated or released to orders but not yet drawn from physical stock, and
scheduled receipts.
Planning data – This includes lead-time, scrap factors, lot size, and safety stock.
MRP then converts this information into a schedule of planned purchase order releases to
suppliers, an internal schedule of planned work order releases, and a series of action notices.
MPS
Schedule of Planned Order Releases
BOMs
MRP Schedule of Planned Production

Order Releases
Inventory Status
Planning Data Action Notices
Functions of MRP
MRP helps in the planning and control of inventory. It determines the items required, the
quantities required, and the dates on which they should be ordered, ensuring that orders are
released on an appropriate date to ensure required due dates are met. It also ensures that the due
dates are valid when circumstances change. It provides a schedule of planned production order
releases that can be used in capacity requirements planning and constraint management.
The principal functions of MRP are:
To plan and control inventories
Plan and control work order and purchase order releases
Provide accurate planned order loading for capacity requirements planning (CRP)
MRP Design Features

Planning Horizon
The length of the planning horizon is influenced by the cumulative lead
times of the items being planned. MRP must plan further into the future
than the longest cumulative lead time of the planned items.
MRP works by predating or offsetting the order release date for an item
from its due date by the lead time for that item. If the planning horizon is
too short, MRP may generate order releases for past dates at the lowest
level. With multilevel product structures, the effects of lot sizing and
successive lead-time offsetting lead to a loss of horizon. The explosion of

Unit 2
the bill of material tends to diminish the planning horizon as MRP progresses from the parent
level to the next lower one.
Short planning horizons prohibit the application of some lot-sizing techniques and limit capacity
requirements planning (CRP) for lower leve l items, such as fabricated parts, where CRP often
provides most benefit.
Over- long planning horizons lead to wasted effort as, generally, the further into the future we
plan, the greater likelihood that unexpected events will make the plan unviable.
Time Buckets
With MRP, time is typically represented as a series of weekly intervals
or buckets, although the unit of time can be hours, days, weeks, or
months. In most manufacturing processes, the units of time are in
weeks at the general MRP level and in days at the shop floor level. The
master production schedule (MPS) and MRP are usually run weekly so
as to have a new set of information every week for the agreed time
span.
Usually the MPS has a time span of between 12 and 18 months. The first 13 weeks are detailed
and fixed, whereas the next 13 weeks are flexible and not as detailed. The next time period and
beyond are very flexible, usually in intervals of months.
Occasionally, the use of weekly buckets can lead to undesirable discrepancies such as the
delivery on Thursday of material required for an order the previous Tuesday. In such cases, a
bucket-less system may be used where the time-phased data is displayed as dated records rather
than buckets. Alternatively, planners may decide to use daily buckets for the first several days,
weekly buckets for the next few weeks, and monthly buckets for the rest.
Frequency of Replanning
As there are continual changes to inventory status and therefore material requirements, it is
important to run MRP frequently to ensure all changes are taken into account and that the plan
remains valid. Sometimes there are frequent small changes, leading to constant material plan
changes, which cause disruption to planners, vendors and production floor. This is sometimes
termed nervousness. It may be caused by changes in the MPS, supplier deliveries, item quality,
order quantities, safety stock requirements, lead times, design, safety, data mistakes and
unplanned transactions.
Dynamic production environments demand frequent replanning but this may also cause
nervousness: changes in higher level MRP planning lead to many changes of time and quantity
on lower level item requirements.
Firm Planned Orders

It is up to the planner to judge whether the changes in the replanned
MRP are significant enough to warrant action. A useful way to suppress
MRP nervousness is to use firm planned orders. MRP recalcula tes
planned orders as net requirements change. Sometimes it may be
preferable to hold a planned order firm against changes in quantity and
time. For example, some suppliers will not allow changes to orders close
to the due date.

Unit 2
The due date, release date and order quantity of firm planned orders in MRP cannot be changed
unless the planner authorizes the change. In addition, MRP does no t allow another planned order
for that item to exist in the same time bucket. The firm planned order is therefore fixed against
MRP logic and may be used as a tool for manipulating load, beating prices increases and
adjusting orders to compensate for shutdowns or other events.
Firm planned orders may be completely firm or only partially fixed. For example, in an
organization where recent inventory checks have revealed mistakes related to inventory levels in
the MRP system, a firm planned order may be fixed in quantity only, to override the MRP
suggested order.
Pegging
Pegging, or ‘where-used’, analysis is used to identify the source of
requirements. It is a feature of MRP systems allowing the planner to trace
requirements for low- level products up through the product structure to
determine the originating requirement for the parent product.
For example, the demand for hinges in a furniture- making company is analyzed
and reveals that 30% of the demand is for pine kitchen dressers, a further 40% is
for fitted kitchen cabinets, 20% is for bedroom cabinets, and the final 10% is for
free standing blanket boxes.
Pegging is useful to determine what orders will be affected if supplier delivery
for a particular component or item will be late. This will help the planner prioritize critical orders
and channel the available parts to those orders.
1. Which of the following is NOT a function of MRP?

A. To plan and control inventories
B. To plan and control work orders and purchase orders
Review Q C. To schedule operations

D. To provide accurate loading information to the CRP system
Operation and Performance of Material Planning Process

MRP should be easy to use, with a simple data entry process involving the fewest possible
keystrokes per transaction. Bar coding can be useful to speed up data entry and reduce the
possibility of data entry errors.
More recently, MRP systems have tended to follow the client-server model in computer system
architecture. Client-server MRP systems exist on a computer network. All data is maintained in a
central database on the server, which is usually a powerful machine maintained in a secure
physical location.
Client
Client computers on the network have electronic access to this data, allowing them to view the
data, add data, modify and perhaps delete data. However, all clients are modifying a single
central data repository. No data is stored on the client computer. Clients act as an interface

Unit 2
between user and server, processing requests for information retrieval or storage. They are
usually located on computers near workstations. Although not concerned with the actual storage
of data, clients usually do some data processing, for example:
Interpretation or translation of user requests into a format understood by the server
computer
Verificatio n of user identity and authorization level prior to forwarding commands to the
server
Validation of user commands: for example, not allowing a user to enter an order quantity
that falls outside lot-sizing regulations for a particular item.
Server
The server is a passive repository of information. It responds to requests from client computers.
Ideally, the server provides a standardized transparent interface to clients so that the client
computer does not need to be aware of the specifics of the system (hardware and software)
providing the service. The server is usually physically accessible only to IT support staff and is
often protected by an uninterruptible power supply (UPS) system to ensure that data does not
become lost or corrupted.
Performance Characteristics
The MRP system should be constantly monitored, comparing MRP plans with actual execution.
MRP reports delinquencies of allocated, gross requirements; scheduled receipts; and projected
available and planned order releases for each item. From these, the planner may generate reports
of deviations from plan and the causes of those deviations. In addition, item inactivity, inventory
investment, and purchase commitments may be used to measure MRP performance.
To measure MRP performance it is necessary to:
Set clear objectives for the MRP system
Allocate resources to the measurement process
Assign responsibility for measuring MRP
Measure performance accurately
Identify and correct the causes of problems
Reward success
Learn from all successes and failures
There are many metrics that can be used to measure MRP performance. In any given situation,
the aims and objectives of the company will help to determine the most effective metrics. Some
ways in which MRP performance may be monitored include the measurement of:
Orders without shortages Orders released on time
Due dates met Late start dates
Time spent waiting for materials Rescheduled orders
Actual and planned order lead times Number of orders expedited
Action message trends Actual and planned stock levels

Unit 2
MRP Training
By doubling the amount of money spend on training in MRP procedures, can result in a return on
investment of up to four-to-one. This is because employees are more likely to understand the
workings of MRP and its significance to the whole company. They are more confident and more
likely to take risks, experiment, and attempt problem resolution. Those at management level and
those with particular responsibility for MRP need intensive training.
A first step to devising an MRP training programme is to
evaluate existing employee skill sets. Then, the desired skill set
for each level of employee with respect to MRP should be
determined by management and HR. It is important that each
employee understand the benefits of MRP to the company and
the impact of their own personal inputs to the overall system. It
is vital that employees enter data accurately and on time.
Company processes, transaction forms, and relevant examples
should be used to help employees understand the benefits of
MRP. Training employees can lead to them assuming greater
personal ownership of the system.
An essential part of training in MRP is to make employees aware of the need for problem-
solving and innovation. They should understand the importance of finding problem causes and
developing solutions to those problems to prevent them occurring again. The training should be a
hands-on approach supported by the use of system specific transactions where employees ‘learn
by doing’ in a controlled environment.
MRP Mechanics
The starting point for MRP is the plan for satisfying independent demand, which is derived from
the MPS. The MPS can be thought of as the plan for the demand for products. Production
planning must balance what the company has with what it can produce. Materials and capacity
must be sufficient to meet demands.
The material in a company’s products cannot exceed the component material the company has to
work with. A balance must be reached between component material and demand material. This
requires balance of both capacity and material. Production planning is concerned with ensuring
balance of capacity and material. How and when these balances are reached depends on the
manufacturing environment. Sometimes material is wholly independent of capacity and other
times it is not. When capacity and material are independent of each other, it does not signify
whether capacity or materials are planned first.
Material requirements planning valances materials, by planning for all components and raw
materials needed to satisfy the MPS. MRP calculates the items, the quantities, the due dates and,
when lead times are factored in, the order release dates, required to fulfil the MPS.
The second job MRP must handle is that of material planning maintenance. In a constantly
changing environment, where deliveries and work orders may be delayed and inventory records
may be inaccurate, MRP must maintain a valid plan with valid quantities and due dates. The
MRP planner uses due dates to establish an order of priority for the jobs on hand. MRP advises
the production planner when orders should be changed, expedited or delayed to meet required
due dates.

Unit 2
Starting Requirements for MRP
The starting point for MRP is the MPS, accurate inventory data and a bill of material for each
item produced by the company. The inventory data must provide information of item counts on
hand, on order and allocated.
MRP cannot function effectively if any of the inputs are missing. It is also essential that the
information is accurate. The old computer adage of "garbage in, garbage out" is very true in the
case of materials management systems.
If transactions or data are entered incorrectly at any point in the process, the results can be both
embarrassing and costly. The importance of having accurate data at every stage of the process
cannot be over stressed.
MRP Grid
The MRP grid records such information as the order quantity, the safety stock, allocated
quantit ative, low- level code and lead time for an item along with the gross requirements,
scheduled receipts, projected available inventory, net requirements, planned order receipts, and
planned order releases for that item in each time bucket or time period in the planning horizon.
Figure 1 Example of MPS

MRP uses the MPS information (see the example above) on products required along with a bill
of material for each product to calculate the amount of each inventory item required. It then
compares this against the available inventory records to calculate how much of these items are
available and how much must be manufactured or purchased. An example of a multilevel bill of
material is shown below:
Chair
Chair
100
100
Base
Base Seat
Seat Back
Back
200
200 622
622 500
500
Legs
Legs(4)
(4) Frame
Frame Brace
Brace Supports
Supports(5)
(5)
201
201 629
629 512
512 545
545
Braces Seat
Seat Pad
Pad Arms
Arms (2)
(2)
Braces (2)
(2) 631 570
203 631 570
Figure 2 Example of a multilevel BOM

Unit 2
Each of the items at the lowest level must be available for the chair to be produced. For each
item, an MRP grid should be maintained to track availability and orders. A typical MRP grid for
an item is illustrated in the table below:
Lead Time 3 days, Lot size 25, Safety Stock, 0, Quantity on hand 60
Component Part No: Period
F131 1 2 3 4 5 6
Gross Requirements 20 30 30 20 30 20
Scheduled Receipts 50
Stock on hand 60 40 10 30 10 -20 -40
PAB 60 40 10 30 10 30 10
Net Requirements 10
Planned Order Receipts 25
Planned Order Releases
MRP calculates material s form the product structure and due dates. Capacity checks are then
used to ensure the MRP calculations are valid and achievable.
Low-Level Codes
Each level of the BOM can be identified by a level code. Usually the final product is set at level
0. The items at the next level of the BOM (the base, seat and back components shown in Figure 2
on page 11) are level 1. Level 2 contains items needed to produce level 1 items and so on.
These codes are used in low- level coding. The low level code for any item is the lowest level of
any BOM that uses that item. Net requirements for that item are not calculated until all gross
requirements have been calculated down to that level.
Low- level coding is used as a signal to the software to begin computing requirements for each
item .Some bills of material have many items and the software recomputes net requirements
frequently. Use of the low level code eases and speeds computations.
The following graphic illustrates a three level BOM:
Chair
Chair
100
100
Base
Base Seat
Seat Back
Back
200
200 622
622 500
500
Legs
Legs(4)
(4) Frame
Frame Brace
Brace Supports
Supports(5)
(5)
201
201 629
629 512
512 545
545
Seat
Seat Pad
Pad Arms
Arms (2)
(2)
Braces
Braces (2)
(2) 631
631 570
570
203
Figure 3 Level Bill of Material

Unit 2
Low Level Codes and Requirements Calculations
To cut out unnecessary calculations, the requirements for an item are not calculated until the low
level code for that item is reached. The following example explains the concept:
Two BOMs are displayed in tabular form below, each requiring part number 9. In product B, part
number 9 is at level 2 of the BOM, while in product A, it appears at level 5. The low level code
for part 9 is therefore 5. MRP will not review requirements for part 9 along with other level 2
parts (3, 4, and 11) because it occurs at level 5 in product A. It will be reviewed after
requirements for parts 7 and 8 have been determined.
Parent Part No: B Rocking Chair

BOM Level Part No. Description Qty UM
0 1 2 3 4 5 6 7 8 9
0 B Rocking Chair 1 EA
1 1 Base 4 EA
1 10 Leg 2 EA
2 11 Brace 1 EA
2 9 Fixing dowels 6 EA
Parent Part No: A Dresser

BOM Level Part No. Description Qty UM
0 1 2 3 4 5 6 7 8 9
0 A Dresser 1 EA
1 1 Base 1 EA
1 2 Back 1 EA
2 3 Bench 1 EA
2 4 Rack 1 EA
3 5 Glass door 3 EA
3 6 Wood door 3 EA
4 7 Shelf 2 EA
4 8 drawer 3 EA
5 9 Fixing dowels 20 EA
Figure 4 BOM for product A
0 A B
The graphic to the right illustrates the netting
process in MRP for the two BOMs above. 1 1 2 1 10
Note that although item 9 appears at level 2 in
product B, it is not netted until all the other 2 3 4 9 11
parts have been netted as it occurs at the
lowest level, level 5, in product A. 3 5 6
The low- level code of part 9 is 5. 4 7 8
5 9

Unit 2
MRP Calculations
The calculation of material requirements begins by extracting gross requirements for items from
the MPS. Then, at each level of the BOM for each item whose low level code is equal to the
level at which MRP is currently being calculated, net requirements are calculated, by taking into
account the gross requirements, inventory on-hand, scheduled receipts, allocations and required
safety stock levels.
These net requirements are converted into planned order receipts, using the lot sizing method for
the item in question. Depending on lot sizing rules, some order receipts may exceed net
requirements so inventory on-hand must be increased accordingly. Planned order releases are
calculated by offsetting planned order receipts by the lead time for the item in question. The
planned order releases are added to the gross requirements for items at the next level of the BOM
and the entire process begins again at the next level.
The process is illustrated in the following graphic:
Go to next
BOM Level 0
Safety Scheduled period

MPS Stock receipts Lot Size Lead Time No
Gross Net Planned Order Available Planned Order Are all periods
Requirements Requirements Receipt Inventory Release calculated?
Allocations Available
inventory Yes
Go to next
BOM level
BOM Level 1
Go to next
Level 0 Planned Safety Scheduled period
Order Releases Stock receipts Lot Size Lead Time No
Gross Net Planned Order Available Planned Order Are all periods
Requirements Requirements Receipt Inventory Release calculated?
inventory Yes
Go to next
BOM level
BOM Level 2
Go to next
Level 1 Planned Safety Scheduled period
Order Releases Stock receipts Lot Size Lead Time No
Gross Net Planned Order Available Planned Order

Requirements Requirements Are all periods
Receipt Inventory Release calculated?
inventory Yes
Go to next
BOM level
Gross Requirements of Independent Demand from the MPS

The following MRP grid shows gross requirements (quantities required to support parent orders)
for several items. Gross requirements come from a higher level of planning. Here, they are
derived from the MPS. Gross requirements for lower level items are derived from their parent
products.

Unit 2
Item 1 2 3 4 5 6 7 8 9
Technique : Lot for lot Gross Requirements 20 200 20
Order Quantity Scheduled Receipts

Allocated Qty Projected Avail.
Safety Stock
A Net Requirements
Low Level Code 0 Planned Order Receipts
Lead Time (wks) 2 Planned Order Releases

Safety Stock F Net Requirements
Technique : Lot for lot Gross Requirements
Safety Stock B Net Requirements
Technique Gross Requirements
Order Quantity 150 Scheduled Receipts
Allocated Qty 240 Projected Avail.
Safety Stock D Net Requirements
Technique : Lot for lot Gross Requirements 20 20 20 20 20 20 20 20 20

Allocated Qty Projected Avail. 240
Safety Stock 30 C Net Requirements
Technique : Lot for lot Gross Requirements
Safety Stock E Net Requirements
Table 1 MRP Grid

Unit 2
Bill of Material for items A and F
The following tables provide some BOM information for items A and F. You will need this
information, as well as the information in Table 1, page 15 to answer some of the questions in
this lesson.
Parent Part No: A

BOM Level Part No. (Parent) Lead time (weeks) Qty Unit of Measure
0 1 2 3 4 5 6 7 8 9
0 A 2 EA
1 B (A) 1 1 EA
1 C (A) 2 2 EA
1 D (A) 1 2 EA
2 C (B) 2 2
2 E (B) 1 3 EA
Parent Part No: F

BOM Level Part No. (Parent) Lead time (weeks) Qty Unit of Measure
0 1 2 3 4 5 6 7 8 9
0 F 1 EA
1 B (F) 1 1 EA
1 D (F) 1 1 EA
1 E (F) 1 1 EA
2 C (B) 2 2
2 E (B) 1 3 EA
Figure 5 BOMS for Items A and F
Gross Requirements of Independent Demand for Service Parts

Most independent demand is derived from the MPs. However, service part requirements and
interplant requirements are also independent demand. Item C in the grid above is an example of
service part demand, which has been forecast at 20 units per period. This forecast must be
entered into the MRP system by increasing the automatically generated gross requirements for
the item. MRP treats this as an increase in demand during level-by- level explosion of dependent
item requirements.
Inventory Status
Before the MRP can run, information on each inventory item must be input to allow for the
planning of the inventory items and the calculation of net requirements. The information
required, which is usually in the item master record, includes:
planning factors such as lot size, lead time and safety stock
inventory status information such as on-hand inventory, allocated inventory and
scheduled receipts

Unit 2
Net Requirements and Planned Orders
Net requirements are determined by adding allocations to gross requirements and then reducing
gross requirements, on a period-by-period basis, by available on-order inventory (scheduled
receipts) and projected inventory. For each period:
Net requirements = gross requirements + allocations - (scheduled receipts + available inv.)
For item A, 10 units are required in period 4. There are no allocations, scheduled receipts or
projected available inventory, so, in this case, net requirements are equal to gross requirements.
When the need for an item cannot be met by projected available inventory, a new planned order
is scheduled for receipt in the period where the requirement arises. In the example above, a
planned order for item A is needed in period 4. Note that because the lead time for item A is 2
weeks the order must be released in period 2 to ensure it will be there when required in period 4.
This planned order anticipates future needs. It is not a real released order and its priority will be
automatically rescheduled by MRP logic.
2. For item A, using the data above, determine the planned order releases
for each period.
1 2 3 4 5 6 7 8 Period
Review Q Planned Order release
10
3. For item F, using the data above, determine the planned order releases
for each period.
1 2 3 4 5 6 7 8 Period
Review Q
Planned Order release
Lower Level Gross Requirements – Level 1

In the MRP grid displayed on page 15, items A and F are the parent items for items B, C, D, and
E. Much of the demand for B, C, D and E is dependent on demand for A and F. Therefore, the
planned order releases for A and F convert directly into gross requirements for the dependent
items. (Enter figures in the MRP grid, page 15, as you work through these calculations.)
Item B Gross Requirements

Items A and F each require one item B for assembly. Therefore, the combined planned order
releases for A and F will give a gross requirements figure for item B. Demand for item B is
wholly dependent on demand for items A and F. So gross requirements for Item B are:
1 2 3 4 5 6 7 8 9
Item A Planned Order Release 20 200 20
Item F Planned Order Release 40 40 20
Item B Gross Requirements 20 240 40 20 20

Unit 2
Item C Gross Requirements
Items requires 2 Cs at level 1 for assembly. There is no level 1 requirement for C in item F.
Therefore the demand for C at level 1 is dependent on item A only. Demand for item C also
includes an independent demand of 10 units per period, which must be added to the gross
requirements.
This means the gross requirements for Item C will be as follows:
1 2 3 4 5 6 7 8 9
Item A Order Release (needs 2 of item C) 20 200 20
Independent demand for item C 20 20 20 20 20 20 20 20 20
Item C Gross Requirements 20 20 60 20 420 20
4. What is the gross requirement for item C in periods 7, 8, and 9?
1 2 3 4 5 6 7 8 9 Period
Review Q 20 20 60 20 420 20 Gross Requirement
Item D Gross Requirements

Item A requires 2 units of item D for assembly, while item F requires 1 item D. Therefore, the
gross requirements for item D are equal to the planned order release for item F plus twice the
planned order release for item A.
This means the gross requirements for Item D will be as follows:
1 2 3 4 5 6 7 8 9
Item A Order Release (needs 2 of item D) 20 200 20
Item F Order Release (needs 1 of item D) 40 40 20
Item D Gross Requirements 40 440 40 40 20
Item E Gross Requirements

At level 1, one item E is required for each item F. However, there are no requirements for item E
at level 1 in the BOM for item A. Therefore, gross requirements at level 1 for item E will match
the planned order releases for item F in each period.
5. What are the gross requirements for item E in each period?
1 2 3 4 5 6 7 8 9 Period
Gross Requirement
Review Q
The following page shows the MRP grid with net requirements for items A and F and gross
requirements for B, C, D, and E, calculated as far as level 1 of the BOM for items A and F.

Unit 2
Item 1 2 3 4 5 6 7 8 9

Safety Stock A Net Requirements
Lead Time (wks) 2 Planned Order Releases 20 200 20

Lead Time (wks) 1 Planned Order Releases 40 40 20
Technique : Lot for lot Gross Requirements 20 240 40 20 20

Technique Gross Requirements 40 440 40 40 40

Allocated Qty 240 Projected Avail. 340
Technique : Lot for lot Gross Requirements 20 20 60 20 420 20 60 20 20


Table 2 MRP Grid with Level 0 net requirements and Level 1 gross requirements

Unit 2
Level 1 Gross Requirements
In the MRP grid displayed on page 15, items A and F are the parent items for items B, C, D, and
E. Much of the demand for B, C, D and E is dependent on demand for A and F. Therefore, the
planned order releases for A and F convert directly into gross requirements for the dependent
items.
Figure 6 Graphical BOM for items A and F

However, some of the items at level 1 also recur further down the BOM at level 2. Therefore,
while the gross requirements for B and D are accurate at this stage, further calculations must be
done to achieve the correct calculations for C and E. This is because the production of item B
will trigger further requirement for items C and E.
Determining Level 1 Net Requirements and Planned Orders

When gross requirements for level 1 items have been posted, the net requirements for those
items with a low level code of 1 can be calculated. As previously explained, net requirements are
determined by adding allocations to gross requirements and then reducing gross requirements, on
a period-by-period basis, by ava ilable on-order inventory (scheduled receipts) and projected
inventory. For each period:
Net requirements = gross requirements + allocations - (scheduled receipts + available inv.)
Note that there is no point in netting the requirements for items C and E at this point, as we have
not reached the low level code for those items yet. At this stage (level 1), net requirements can
be calculated for items B and D. Net requirements can only be calculated for those items whose
low level code has been reached. Where there is no net requirement, that is, available inventory
and scheduled receipts combined are greater than the total gross requirements and allocations,
the net requirements cell is left empty.
Item B Net Requirements

There are 200 units on hand for item B. Usually, when using a lot- for- lot ordering policy,
inventory on- hand is minimal, unless due to a production overrun, higher than expected yield,
customer order cancellation, or other unexpected change in circumstances. Using the formula
above, the net requirements for item B in each period are set out below:
Period 1 2 3 4 5 6 7 8 9
Gross Requirements 20 240 40 20 20
Allocations (add to gross)
Scheduled receipts (subtract)
Available inventory (subtract) 200 200 180 180
Net Requirements 60 40 20 20

Unit 2
Item B Planned Orders (lot for lot)
Now that the net requirements for item B are in place, it is possible to set the planned orders. As
a lot- for- lot ordering policy is in place for item B, an order equal to the net requirement for each
period must be scheduled to arrive in that period. As item B has a lead tie of 1 week, this means
that an order for each net requirement must be released a week before it is needed. For example,
the net requirement for 60 units in period 5 will be satisfied for an order placed in period 4.
The following table sets out the planned orders for item B.
Period 1 2 3 4 5 6 7 8 9
Allocations (add to gross)
Scheduled receipts (subtract)
Available inventory (subtract) 200 200 180 180
Planned Order Receipt 60 40 20 20
Planned Order Release 60 40 20 20
Item D Net Requirements

Each item A requires 2 of item D and each item F requires one item D.
Item D has inventory on-hand of 340 units. However, 240 units of this have been allocated to
another order. They are still in the stock room but have been promised to another work order and
are not available to use here. When calculating net requirements, the allocated quantity is treated
like a gross requirement in the first period.
There is also a scheduled receipt from a previous order due in period 1 of 320 units, which must
be factored in. The net requirement for period 1 is therefore gross requirements added to
allocations less the sum of scheduled receipts and available inventory. In this case:
0 + 240 – 100 – 340 = 200
As the result is a negative figure there is no net requirement in period 1. However, this results in
an available inventory of 200 for the next period. If there were no inventory on- hand, there
would have been a net requirement of 140 units.
Using the formula above, the net requirements for item D in each period are set out below:
Period 1 2 3 4 5 6 7 8 9
Allocations (add to gross) 240 240
Scheduled receipts (subtract) 100
Available inventory (subtract) 340 340 200 160 160

Unit 2
Item D Planned Orders (Specified lot size )
Unlike item B, item D has been allocated a lot size of 150. Orders for item D can only occur in
multiples of 150. Where the net requirements trigger an order, but are less than the specified lot
size, you increase the inventory on- hand by the amount that remains once the net requirement
has been taken out of the order. Notice that the arrival of a planned order in period 6 (see below)
satisfies net requirements but also results in 70 units of inventory on-hand, which is enough to
cover requirements for period 6 and part of period 7. A further order receipt in period 7 will
cover requirements for periods 7 and 8
As item D has a lead time of 1 week, each planned order must be released a week before it is
needed.
Period 1 2 3 4 5 6 7 8 9
Allocations (add to gross) 240 240
Scheduled receipts (subtract) 100
Available inventory (subtract) 340 340 200 160 160 70 30 140 120
Planned Order Receipt 450 150
Planned Order Release 450 150
6. If the lot size for item D were reduced to 100 and all other parameters
remained the same , determine the planned order releases required to fulfill
gross requirements.
Review Q 1 2 3 4 5 6 7 8 9 Period
Planned order release
Level 2 Gross Requirements

At this point all gross requirements, net requirements and planned order receipts have been
calculated as far as possible at level 1. Planned order releases for item B in periods 4, 5, 6, and 7
lead to gross requirements for parts C and E at level 2. As 2 of item C and 1 of item E are
required for every item B, the following gross requirements for C and E must be added to those
already calculated at level 1.
1 2 3 4 5 6 7 8 9
Item B (needs 2 of C and 1 E) 60 40 20 20
Item C Gross Requirements 120 80 40 40
Item E Gross Requirements 60 40 20 20
The following table shows the calculations to date and posts gross requirements for parts C and
E generated from the planned order releases for item B at level 1.

Unit 2
Item 1 2 3 4 5 6 7 8 9
Technique : Lot for Gross Requirements 20 200 20

Low Level 0 Planned Order Receipts
Lead Time 2 Planned Order Releases 20 200 20
Technique : Lot for Gross Requirements 40 40 20

Technique : Lot for Gross Requirements 20 240 40 20 20

Allocated Qty Projected Avail. 200 200 200 180
Safety Stock B Net Requirements 60 40 20 20
Low Level 1 Planned Order Receipts 60 40 20 20
Lead Time 1 Planned Order Releases 60 40 20 20
Technique Gross Requirements 40 440 40 40 40
Order Quantity 150 Scheduled Receipts 100
Allocated Qty 240 Projected Avail. 340 340 200 160 160 70 30 140 100
Safety Stock D Net Requirements 380 10
Low Level 1 Planned Order Receipts 450 150
Lead Time 1 Planned Order Releases 450 150
Technique : Lot for Gross Requirements 20 20 180 500 60 100 60 20 20

Lead Time 2 Planned Order Releases
Technique : Lot for Gross Requirements 60 80 60 20 20

Table 3 MRP: Gross requirements, net requirements and planned orders for level 1

Unit 2
Item C Net Requirements
At level 2 all items with a low level code of 2 may be netted. In this example, this includes items
C and E. Item C has an order quantity or lot size of 300. In addition, it has a safety stock level of
30 units. These must be taken into account when calculating the net requirements for each
period.
Period 1 2 3 4 5 6 7 8 9
Gross Requirements for C 20 20 180 500 60 100 60 20 20
Available inventory (subtract) 240 220 40
Net Requirements 490 60 100 60 20 20
Item E Net Requirements

Item E has an order quantity or lot size of 280 and on- hand inventory of 240. These must be
taken into account when calculating the net requirements for each period. As can be seen below,
the inventory on-hand covers all requirements for E.
Period 1 2 3 4 5 6 7 8 9
Gross Requirements for E 60 80 60 20 20
Available inventory (subtract) 240 240 240 180 100 40 20
Net Requirements
MRP Exercise
Using the same bill of material for items A and F as the previous example (see page 16),
complete MRP calculations for the gross requirements detailed on Table 4, page 15. The gross
requirements for items A and F, the independent service part demand for item C, and inventory
status information for all items have been entered for you.
Follow these steps:
1. Calculate the net requirements for level 0 items A and F (net requirements = gross
requirements + allocations – scheduled receipts – projected available inventory + safety
stock)
2. Schedule planned order receipts for every positive net requirement, and offset order release
by the lead time
3. Post Item A and F planned order releases as gross requirements to items B, C, D, and E.
using the BOM information to calculate the quantities. (For example, every A requires 2 Ds)
4. Calculate the net requirements and planned order releases for item B and post these planned
order releases as gross requirements to be added to existing gross requirements for C and E.
5. Calculate net requirements for items D, C and E and then determine planned order releases

Unit 2
Item 1 2 3 4 5 6 7 8 9
Technique: Lot for Gross Requirements 60 80 20 40 40

Technique: Lot for Gross Requirements 20 20 30 20

Allocated Qty 40 Projected Avail. 340
Technique: Lot for Gross Requirements 30 30 20 40 40 20 30 10

Technique: Lot for Gross Requirements
Table 4 MRP Exercise

Unit 2
Item 1 2 3 4 5 6 7 8 9
Technique: Lot for Gross Requirements 60 80 20 40 40

Safety Stock A Net Requirements 60 80 20 40 40
Low Level 0 Planned Order Receipts 60 80 20 40 40
Lead Time 2 Planned Order Releases 60 80 20 40 40

Safety Stock F Net Requirements 20 20 30 20
Low Level 0 Planned Order Receipts 20 20 30 20
Lead Time 1 Planned Order Releases 20 20 30 20
Technique Gross Requirements 60 100 40 70 40 20

Allocated Qty Projected Avail. 200 200 200 140 40 50 10 110 110
Safety Stock B Net Requirements 70
Low Level 1 Planned Order Receipts 120 120
Lead Time 2 Planned Order Releases 120 120
Technique Gross Requirements 120 180 60 110 80 20

Allocated Qty 40 Projected Avail. 340 300 300 180 260 150 70 50 50
Safety Stock D Net Requirements 60
Low Level 1 Planned Order Receipts 320
Lead Time 1 Planned Order Releases 320
Technique: Lot for Gross Requirements 30 150 420 80 360 100 30 10

Allocated Qty Projected Avail. 240 240 210 60 240 160 100 300 270 260
Safety Stock 30 C Net Requirements 390 230 30
Low Level 2 Planned Order Receipts 600 300 300

Allocated Qty Projected Avail. 240 240 240 240 140 120 10 10 270 270
Safety Stock E Net Requirements 140 270 10
Low Level 2 Planned Order Receipts 280 280 280
Table 5 MRP Results: Gross requirements, net requirements and planned orders for all items

Unit 2
Summary
This lesson looked in detail at the logical processes involved in material requirements planning
(MRP). The system inputs and the processing required to calculate each MRP output were
explained.
You should be able to:
Identify components of an MRP spreadsheet
Detail initial requirements for the planning process
Perform the netting process for a given MRP record
Explode a set of MRP records to produce a complete material plan
Explain the characteristics and workings of a rolling schedule
Describe the necessity for low- level codes
Explain how low- level codes are used
Identify alternative techniques for handling various planning factors
Further Reading
Introduction to Materials Management,
JR Tony Arnold, CFPIM, CIRM and Stephen Chapman CFPIM
5th edition, 2004, Prentice Hall
APICS Dictionary
10th edition, 2002
Manufacturing Planning and Control Systems,

Vollmann, T.E.; W.L. Berry; and D.C. Whybark
5th edition, 2004, McGraw-Hill
Production & Inventory Management,

Fogarty, Donald W. CFPIM; Blackstone, John H. JR. CFPIM; and
Hoffmann, Thomas R. CFPIM
2nd edition, 1991, South-Western Publishing Co., Cincinnati, Ohio

Unit 2
Review
The following questions are designed to test your recall of the material covered in
lesson 2. The answers are available in the appendix of this workbook.
7. Which items are NOT included in the MRP grid?

A. Order quantity, safety stock, allocations, gross requirements, net requirement s
B. Forecast demand, actual demand, cumulative items available to promise
C. Low level codes, lead times
D. Scheduled receipts, planned order releases and receipts, on- hand inventory balance
8. Which of the following are requirements for MRP?

A. Inventory item identification and storage location
B. MPS and BOM information
C. Production Plan BOM information
D. RCCP and MRO lead times
9. Which is the most accurate definition of pegging?

A. A method of locking a planned order so that it will not be changed automatically by MRP
logic
B. A way of identifying the lowest BOM level an item appears on, to aid MRP netting
C. A method of tracing item requirements through the BOM structure to determine the
parent items that generated the demand
D. The computation of the total requirements for an item
10. Why are low level codes used?

A. To identify the length of the MRP planning horizon
B. To identify the total requirement for an item
C. To identify the parent items that generated the demand for a low- level item
D. To set the level at which all requirements for an item should be calculated in MRP

Unit 2
What’s Next?
Lesson 4 looked in detail at MRP logic. At this point you have completed 4 of the 9 lessons in
Unit 2.
You should review your work before progressing to the next lesson which is:
Detailed Scheduling and Planning – Lesson 5 Using Outputs of MRP

Unit 2
Appendix

Unit 2
Answers to Review Questions
1. C
MRP is required to plan and control inventories, work orders and purchase orders
and to provide accurate loading information for CRP. The scheduling of individual
operations is completed at a lower level of planning.
2. Planned order releases for item A are required in periods 3, 5, and 7 to

fulfill requirements in periods 5, 7, and 9 taking into account the 2 week lead
time.
1 2 3 4 5 6 7 8 9 Period
20 200 20 Planned Order release
3. Planned order releases for item F are required in periods 5, 6 and 8 to fulfill
requirements in periods 6, 7, and 9, accounting for a one week lead time
1 2 3 4 5 6 7 8 9 Period
Planned Order release
4. Item A requires 2 item Cs at level 1. Item F does not require any item Cs at
level 1. Note that orders for item B will increase gross requirements for its
components, items C and E. However, this is not calculated at this point.
1 2 3 4 5 6 7 8 9 Period
20 20 60 20 420 20 60 20 20 Gross Requirements
5. At level 1, each item F requires an item E. There are no level 1 requirements

for item E in the BOM for A. Note that gross requirements for item E will
change when level 2 requirements are calculated, as item E is a component of
item B.
1 2 3 4 5 6 7 8 9 Period
20 280 80 20 40 Gross Requirements

Unit 2
6. If the lot size for D is 100, an order of 400 would be required to cover
demand in period 4. A further order of 100 would be required for demand in
period 5. The rest of this order would cover demand in periods 6, 7 and 8.
1 2 3 4 5 6 7 8 9 Period
400 100 Planned Order release
7. B
Cumulative available to promise, forecast demand and actual demand are all elements of the
MPS grid which feeds into MRP. MRP grids show the order quantities, safety stock quantities,
allocations, lead time, gross requirements, net requirements, scheduled receipts, planned order
releases and receipts, and projected on- hand inventory.
8. B
MRP requirements include the following inputs: MPS, BOM for each product, inventory status,
lead times, scrap, lot sizes, and safety stock levels.
9. C
Pegging is used to identify the source of item requirements. It traces the requirements for an item
up to the originating requirement for the parent product. It is useful for identifying the effects of
late orders on finished goods inventory. This helps the planner prioritize orders.
10. D
The low- level code for an item is the lowest level at which it is used in any BOM. MRP
calculations for an item will not be netted until all gross requirements have been calculated down
to that level.

Unit 2
Glossary
Term Definition
bill of material A listing of all the subassemblies, intermediates, parts, and raw materials
(BOM) needed for a parent assembly, showing the required quantity of each. It is
used with the MPS to determine items that must be ordered. Also called
formula or recipe.
dependent Demand that is directly related to or derived from the bill of material
demand structure for another item or end product. Dependent demand should be
calculated rather than forecast. Some items may have both dependent and
independent demand at the same time.
independent Demand for an item that is unrelated to the demand for other items.
demand Examples include finished goods and service part requirements.
lead time Lead time is the span of time required to perform a process.
master The anticipated build schedule for those items assigned to the master
production scheduler. The master scheduler maintains this schedule and it drives
schedule (MPS) material requirements planning. It specifies configurations, quantities and
dates for production.
seasonality A repetitive pattern of demand from year to year or month to month (or other
time period) showing much higher demand in some periods than in others.
work order An order to the machine shop for tool manufacture or equipment
maintenance or an authorization to start work on an activity or product.
Material A set of methods that calculate material requirements by exploding the bill
Requirements of material data against the master production schedule requirements, taking
Planning (MRP) into account inventory on hand and other inventory information. It
recommends replenishment orders and dates for material and can suggest
reschedule open orders when due dates and need dates are not in phase. Time
phased MRP begins with the requirements of the MPS and determines the
quantity of all materials requires to produce those items and the date that
those materials will be required.
Inventory Stocks or items used to support production, activities that support

production, and customer service. Raw materials and work- in-process
inventories support production, MRO inventories are used for supporting
activities, and finished goods and spare parts inventories support customer
demand.
Planning horizon The amount of time a plan, such as the master schedule, extends into the
future. This is usually greater than the cumulative lead time and allows for
Unit 2
lot sizing of low level components. It may also allow for capacity changes at
key work centers or key suppliers.
Time bucket A single cell in a spreadsheet- like grid, which is equivalent to length of time,
for example, a day, or more usually a week. The cell contains all the relevant
data for the specified time period, such as the total net requirement for an
item in a given week.
Firm planned A planned order that is frozen in quantity and time and cannot be
order (FPO) automatically changed by the computer. FPOs are an aid for planners
working with MRP to respond to material and capacity issues by firming up
selected planned orders. Firm planned orders are often used to state the
master production schedule.
Pegging In MRP and MPS, pegging is the ability to identify the sources of gross
requirements and allocations for a given item. It is also called ‘where- used’
information
Low-level code A number attached to an item identifying the lowest level of any bill of
material at which that item appears. For example, if item F101 is required in
the production of G11 and G11 is required to make H28, then H28 is the
parent of G11 and has a low- level code of 0. G11 has a low level code of 1
and, as it is the parent of F101, F101 occurs at level 2.
Gross The total of independent and dependent demand for a component before the
requirements netting of on-hand inventory and scheduled receipts.
Net requirements In MRP, net requirements are calculated by subtracting the level of inventory
on hand and scheduled receipts from the total achieved by adding together
gross requirements, allocations and safety stock. Net requirements are
converted into planned orders by applying lot sizing and lead time
parameters.
Scheduled Open orders that have been assigned a due date

receipts
Projected An estimate of inventory balance in the future. It is a running sum of on-

available balance hand inventory minus requirements plus scheduled receipts and planned
order receipts.
Planned order The quantity planned to be received at a particular time as a result of a

receipts planned order release. Planned order receipts are not scheduled receipts as
they have not been released.
Planned order The date at which a planned order will be released. This is calculated by
release MRP by processing net requirements against lot size and lead time
parameters. Planned orders are created by the computer and exist only in the
computer. They may be changed or deleted during subsequent MRP
processing or if circumstances change. Planned orders at one level become
the gross requirements for items at the next level.

Unit 2
Order quantity Order quantity or lot size is the amount of an item that is ordered or issued as
a standard quantity to the production process
Lot for lot A lot-sizing technique that generates planned orders equal in quantity to the
net requirement for each period.
Allocated The amount of an item that has been assigned to a specific order but has not
quantity yet been released from the stockroom to the production floor.
Safety stock An amount of stock that is held in inventory to protect against fluctuations of
demand or supply. In master production scheduling, it is the additional
inventory and capacity planned as protection against forecast errors.
Lead time The amount of time needed to perform a process. It is also considered to be
the amount of time between recognition of the need for an item and the
receipt of an order for that item. Lead time can include order preparation
time, queue time, processing time, move time and receiving and inspection
time.

Detailed Scheduling and Planning (Lesson 4)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Detailed Scheduling and Planning (Lesson 4)

Uploaded by

Copyright:

Available Formats

Detailed Scheduling and Planning

The Leading Edge Training Institute Limited

© Copyright Leading Edge Training Institute Limited ii

© Copyright Leading Edge Training Institute Limited iii

© Copyright Leading Edge Training Institute Limited 4

Material Planning Process

© Copyright Leading Edge Training Institute Limited 5

MRP Schedule of Planned Production

Planning Data Action Notices

MRP Design Features

© Copyright Leading Edge Training Institute Limited 6

Firm Planned Orders

© Copyright Leading Edge Training Institute Limited 7

1. Which of the following is NOT a function of MRP?

Review Q C. To schedule operations

Operation and Performance of Material Planning Process

© Copyright Leading Edge Training Institute Limited 8

© Copyright Leading Edge Training Institute Limited 9

© Copyright Leading Edge Training Institute Limited 10

Figure 1 Example of MPS

Figure 2 Example of a multilevel BOM

© Copyright Leading Edge Training Institute Limited 11

Figure 3 Level Bill of Material

© Copyright Leading Edge Training Institute Limited 12

Parent Part No: B Rocking Chair

Parent Part No: A Dresser

The low- level code of part 9 is 5. 4 7 8

© Copyright Leading Edge Training Institute Limited 13

Safety Scheduled period

Gross Net Planned Order Available Planned Order

Gross Requirements of Independent Demand from the MPS

© Copyright Leading Edge Training Institute Limited 14

Order Quantity Scheduled Receipts

Order Quantity Scheduled Receipts

Order Quantity 300 Scheduled Receipts

© Copyright Leading Edge Training Institute Limited 15

Parent Part No: A

Parent Part No: F

Gross Requirements of Independent Demand for Service Parts

© Copyright Leading Edge Training Institute Limited 16

Lower Level Gross Requirements – Level 1

Item B Gross Requirements

© Copyright Leading Edge Training Institute Limited 17

4. What is the gross requirement for item C in periods 7, 8, and 9?

Item D Gross Requirements

Item E Gross Requirements

5. What are the gross requirements for item E in each period?

© Copyright Leading Edge Training Institute Limited 18

Technique : Lot for lot Gross Requirements 20 200 20

Order Quantity Scheduled Receipts

Technique : Lot for lot Gross Requirements 40 40 20

Order Quantity Scheduled Receipts

Technique : Lot for lot Gross Requirements 20 240 40 20 20

Order Quantity Scheduled Receipts

Order Quantity 150 Scheduled Receipts

Order Quantity 300 Scheduled Receipts

Order Quantity 280 Scheduled Receipts

© Copyright Leading Edge Training Institute Limited 19

Figure 6 Graphical BOM for items A and F

Determining Level 1 Net Requirements and Planned Orders

Item B Net Requirements

© Copyright Leading Edge Training Institute Limited 20

Item D Net Requirements

© Copyright Leading Edge Training Institute Limited 21