Systems2win Materials Planning
for Systems Improvement
Revised March 6, 2002. material_planning.doc Author: Dean Ziegler, CPIM
Table of Contents
Material Requirements Plan ................................................................................................................................... 1
Sample Material Requirements Plan...................................................................................................................... 2
Definitions ............................................................................................................................................................... 2
Material Requirements Plan
What is being planned?
All dependent demands (driven by master scheduled items)
Purchased items
Manufactured items
Sub-contracted items
Interplant demands
Maybe even documents
Typical time horizon
Now to longest lead time or more.
Typical time buckets
Days or weeks
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Sample Material Requirements Plan
Item: A component used to make one or more higher-level items.
Lot size: 50 Allocations: 5 Lead time: 3 periods
On hand: 140 Safety stock: 8
Planning period Past due 1 2 3 4 5 6 7
Gross requirements 40 10 30 50 50 20 30 40
Scheduled receipts 50
Projected on-hand 95 85 105 55 5 -15 -45 -85
Projected available 95 85 105 55 55 35 55 15
Net requirement 3 3
Planned order receipt 50 50
Planned order release 50 50
Definitions
Lot size: The normal quantity to make (or order) per batch.
Allocations: Quantity earmarked to fulfill specific demand orders. (Some software packages allow "hard
allocations" and others don't. If there is a shortage of an item during a time period, the demand orders with "hard
allocations" will not be at risk of "not having a chair when the music stops".)
Safety Stock: MRP will recommend always keeping at least this much available for emergencies.
Lead Time: MRP will plan to release orders this many periods before the needed period.
Past Due: Many MRP packages lump all past due requirements into the current planning period. The better ones
provide clearer visibility.
Gross Requirements: Requirements from all sources of demand. Some packages have three separate lines for:
Unconsumed Forecast Demands
Independent Demands (e.g. spare parts, engineering orders, marketing samples)
Dependent Demands (e.g. work orders, repetitive schedules)
Scheduled Receipts: Open order quantities due to be received. (i.e. In Transit, or soon to be in transit. Does not
include Planned Order Receipts.)
Projected On-hand: "What would happen if we didn't place any more new orders?" Previous period on-hand -
gross requirements + scheduled receipts. In the first period, you also subtract allocations.
Projected Available: What will be available assuming that our planned orders arrive on time? Previous period
projected available - gross requirements + scheduled receipts + planned order receipts. In the first period, you
start with on-hand minus allocations.
Net Requirement: The minimum quantity required in a period. (Also considers safety stock.)
Planned Order Receipt: The net requirement adjusted for lot size. (Does not include Scheduled Receipts.)
Planned Order Release: Planned order receipt offset by lead time. If the human Planner changes the suggested
Planned Order Release, (by creating a Firm Planned Order), then everything gets recalculated to display the
expected results of the decision.
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