Material Requirements Planning - Step by Step
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Q: FireKing Office Products, a manufacturer of fireproof file cabinets, uses MRP to schedule its production. Demand and inventory data for its "Signature Series Files" model are given in the table below.
Period 1 2 3 4 5
Demand 20 40 30 10 45
Ordering Cost = $100 per order
Holding Cost = $1 per file cabinet per week
Lead Time = 1 period
Beginning Inventory = 25
Complete an MRP matrix for the "Signature Series Files" model using:
a) No lot sizing
b) Minimum 75 lot sizing
c) Multiple 50 lot sizing
Which lot sizing rule do you recommend?
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Solution Summary
Detailed step by step guide with illustration on how to derive MRP requirements using lot for lot, minimum order and lot size policies. It shows which policy to select basis total cost.
Solution Preview
Please find attached step by step guide for solving MRP problems using various ordering policies. Detailed computations are provided. For your practice purpose some numbers are left blank, you can follow the guidance provided and derive the requirements.
You can implement these computations easily in excel using the formulae provided.
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There are five main fields in MRP. The description and computation for these fields are as given below.
1. Gross requirements - This is overall requirement or demand for product/part
2. Beginning inventory - On hand starting inventory for a period 'n'. Beginning inventory in period 'n' is computed as Maximum of (Beginning inventory in 'n-1' + Planned order receipts in 'n-1' - Gross requirements or Demand in 'n-1', 0). If the computation of the first term is less than 0 then beginning inventory is 0 for period 'n'. This is also called as closing inventory in period 'n-1'
3. Net requirements - This is ...
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