The MRP Generation Process

The MRP Generation process collects data relative to all material needs of manufacturing and distribution, and makes recommendations in the MRP Report. Depending on which modules are integrated with the MRP module, the system looks at data in up to six different modules (Inventory Management, Sales Order, Purchase Order, Bill of Materials, MRP, and Work Order).

The system looks at supply based on inventory stock levels, existing work orders, and open purchase orders; and at demand based on open sales orders, sales projections, and work order component requirements.

Product build times, lead times, and supply and demand functions are combined to estimate the need for an inventory item. MRP produces action suggestions based on an "action by" date that advises the material/purchasing manager of which orders to place, change, and cancel based on the last MRP Generation process. The system uses either the vendor lead time or the work order routing; therefore, suggested actions fall within the lead or build time. The required date for inventory level recommendations is based on the MRP accounting date plus the item's lead time.

During the MRP Generation process, MRP scans the relevant modules, disassembles the bill of materials, and calculates and stores the data in a temporary MRP work file prior to printing any selected reports. You can view the recommendations calculated from the MRP Generation process on the MRP Report or in the MRP Inquiry window.

BC Lines with no reference number represent an inventory level demand from a parent item.

Note MRP does not make a recommendation on the MRP Report if there is sufficient quantity on hand in inventory for work orders assigned to sales orders.

Bill Options entered during Sales Order Entry are supported if the work order was created for the sales order manually as the option's components would be exploded into the work order as components. If Options are entered for a bill on a sales order, MRP Generation will not see the components of the option as required for the work order.

If you are using bill revisions in the Bill of Materials module, MRP always uses the current revision of a bill when recommending a Make for a top level item. If a bill of material contains a subassembly this is not the current revision, MRP will use the revision specified in the bill of material lines.

If a work order exists for a revision other than the current revision or a bill contains a subassembly that is not the current revision, and the Use Bill Revisions check box is cleared in the Bill of Materials Options window, MRP uses revision 000 to process components. If revision 000 does not exist, components will not be exploded for the bill on a new Make recommendation.

The following example shows the MRP interactions between a bill of materials structure and the MRP Report. In its simplest form, a bill consists of one or more components used to manufacture an assembly or finished product. If such a bill does not contain any other assemblies as components, it is defined as a single-level bill.

This example shows how a single-level bill of materials with an attached sales order (demand) is transformed into the MRP actions by executing the MRP Generation process.

The parent bill consists of two separate component items. The number in parentheses indicates the quantity of each component item required to complete the bill. Assume that there is no inventory in stock and no existing purchase orders or work orders. There is a sales order for customer ABC for two BILL001s for delivery on 05/31/03.

BILL001 Build Time = 6 days

ITEM1 (Qty = 1) Lead Time = 4 days

ITEM2 (Qty = 2) Lead Time = 10 days

The MRP Generation process uses the bill of materials structure to disassemble all components into the lowest level items. If an item is listed as being a subcontract or buy item in the inventory, the disassembly goes no further. MRP Generation uses the lead time or build time to determine when an action needs to be initiated. It also considers all materials supplied from on-hand inventory, existing purchase orders, or work orders that are in process. Additional demands (not shown in this example) may come from projected demands.

The resulting MRP Report suggests a "make" action by 05/25/03 for BILL001 due to its 6-day build time. It also suggests purchase orders for the component items. The "action by" date for the components reflects the vendor lead times for each component.