Lot-Sizing Techniques and Adjustments—Extended Exercises

Basic Data Setup

MRP Extended Data Setup

Purpose: The purpose of this exercise is to set up the required prerequisite data needed for the extended MRP exercises. You must do this exercise once to support the extended MRP exercises in the current database. (If the database has been refreshed since the time you set up the data for the MRP extended exercises, you will need to set up the data again.)

1. If you haven't done so already, create your own site and set up the extended MRP data (for extended exercises) in that site. 

General exercise for Overview of Extended MRP Data

Main Exercise

Purpose: The purpose of these exercises is to perform MRP on the parts that you have already defined and evaluate the result.

Windows:
Perform MRP
Background Jobs
MRP Material Plan
MRP Part Information

Performing MRP

1. Open the Perform MRP window and start the MRP process on your primary site.
2. Check the process from the Background Jobs window.
3. Go to the next section when the process is done.

Evaluating MRP Result

1. Open MRP Material Plan window and query for parts in your primary site.
2. When the query results display, notice that the 90-210, 90-272, 90-273, and 90-274 parts are not listed because those parts are defined with aplanning method of either B (order point planning), C (replenishment level), or N (next level demand), and MRP does not handle parts with those planning methods.
3. Select the 90-220 part from the Part Number list. This part is defined with planning method D (fixed lot size) and has a multiple lot size of 5. In the product structure, the quantity per assembly of this part is 2 because there is a customer order demand of 3 pieces for the 90-200 parent part. This demand will require 6 pieces of the 90-220 part. To supply this demand, MRP will look at the multiple lot size setting and create a plan receipt of 10 pieces.
4. Select the 90-230 part from the Part Number list. This part is defined with planning method E (least unit cost) and has an ordering cost of 100, inventory interest of 3%, and a material cost of 200. The calculated stock-keeping cost per day will be 200 x 0.03 / 220 = 0.027. 

Note: The calculation above assumes that the number of stock keeping days per year is 220 days, which is the default value specified at installation.

5. MRP will look at the demands for 90-230 part as in the table below: 

6. On the first day, the system will see a demand of 103 pieces from the customer order(s) and the material requisition(s). At this point MRP will first determine whether it should create supply for future demand so it can obtain least unit cost. As calculated, there are 32 days between demand numbers 2 and 3, and 33 days between demands numbers 3 and 4. After comparing setup costs against stock-keeping costs, MRP determines that it would be best to create supply only for the future demands of demand numbers 2 and 3, so a shop order requisition for 203 pieces is created. This shop order requisition will supply the demand number 1 (3 pieces), demand number 2 (100 pieces), and demand number 3 (100 pieces). Demand number 4 exists 3 months ahead and will be supplied later because it will increase inventory cost too much.

Note: You may find that your exact results differ from what is described above because the number of days between each demand affects the inventory cost. 

7. Select the 90-231 part from the Part Number list. This part is defined with a maximum lot size of 10 pieces. Demand from the parent part is 203 pieces and the supply cannot be ordered as one requisition because that would exceed the maximum lot size. Instead MRP will break up the order into twenty requisitions for 10 pieces each and one requisition for 3 pieces. The same situation occurs with demand number 2, which is for 100 pieces. MRP will supply that demand by creating ten requisition with 10 pieces each.
8. Select the 90-240 part from the Part Number list. This part is defined with planning method F ( Part Period Balancing ), and has an ordering cost of 100, inventory interest of 0.5%, and a material cost of 200. The calculated stock-keeping cost per day will be  200 x 0.005 / 220 = 1/220. This will obtain the optimal quotient:  100 /(1/ 220) = 22000. 

Note: The calculation above assumes that number of stockkeeping days per year is 220 days which is the default value specified at installation.

9. Then MRP will look at the demands for 90-240 part as in the table below 

10. When demand number 1 for 6 pieces is processed, MRP will first determine whether it needs to create supply for future demand to find the optimal relationship between order overhead and stock-keeping costs using the optimum quotient. MRP determines that it is best to supply the future demands of numbers 2, 3, and 4 along with the demand of number 1. Therefore as calculated, MRP creates supply for 306 pieces on the demand number 1 date.

Note: You may find that your exact results differ from what is described above because the number of days between each demand affects the inventory cost. 

11. Select the 90-250 part from the Part Number list. This part is defined with planning method G (order cover time) and has the order cover time set to 5 days. With this setting, when MRP finds the first demand it also will look to supply any other demand 5 days ahead. The first shop order requisition for this part is created with a quantity of 56 pieces. This supplies the first demand of 6 pieces and the material requisition of 50 pieces. The third demand for 5 pieces is supplied separately because it is outside the order cover time. 

12. Select the 90-251 part from the Part Number list. This part is defined with a Manufactured/Acquired Split percentage, indicating a percentage to be manufactured within the site and the remainder to be purchased.  The part has a Manufactured Supply Type of Schedule, which means the manufacturing portion of demands are supplied by creating production schedules instead of shop order requisitions.  The part has an Acquired Supply Type of Requisition, which means the purchasing portion of demands are supplied via purchase order requisitions.
13. Select the 90-260 part from the Part Number list. This part is defined with planning method K (blow through), which means that when MRP finds any demands for this part, it will not create supply for them. Instead it will pass demand to its components. Check the created demands for 90-261 part, which is a component part. 
14. Select the 90-270 part from the Part Number list. This part is defined with planning method M (manufacturing cell), which means that MRP will create a requisition to supply demands but it will not break down the demand for its components. Check to see if there are any demands created for 90-271 part, which is the component. Demands for the component should not be created.)
15. Select the 90-280 part from the Part Number list. This part is defined with planning method P (phantom), which means that the net requirements will be passed to its components but no supply will be created for this part. The existing supplies and quantity on hand will be used to calculate the net requirement.