Question

What are the steps to find Gross Requirements for lot for lot ordering MRP schedule? Show give an example

Answer 1

Gross requirements for End item is determined based on the Master production schedule. The first step is preparation of demand forecast for the end item. Then the actual customers orders are documented. Based on demand forecast and actual customer orders, Master production schedule (MPS) is prepared. For example, MPS for an end item based on lot-for-lot ordering is as follows:

Week	0	1	2	3	4	5	6
Forecast		350	450	450	450	600	600
Customer Orders (CO)		150	350	500	600	240	200
Projected On Hand inventory	0	0	0	0	0	0	0
MPS quantity		350	450	500	600	600	600
Available-to-promise (ATP)		200	100	0	0	360	400

Following formulas are used in preparing MPS:

On-hand Inventory = Previous on hand inventory - MAX(Forecast, Customer Order)

ATP for week 1 = On hand inventory + MPS in week 1 - Cumulative Customer Orders before the next MPS receipt

ATP for subsequent weeks = MPS of the week - Cumulative Customer Orders before the next MPS receipt

Once, the MPS is prepared, the MPS quantity becomes the Gross requirement for the end item.

The gross requirement for the child item is based on the planned order release of the end item.

For example, if each unit of the end item X requires 2 units of a child item A. On-hand inventory of X is 800 units and that of A is 0. There are no scheduled receipts. And lead time for both items is 1 week.

Then resulting MRP of item X and A are following:

Item			0	1	2	3	4	5	6
X		Gross Requirement		350	450	500	600	600	600
SOR =	0	Scheduled Receipt		0	0	0	0	0	0
ss =	0	Projected on Hand	800	450	0	0	0	0	0
		Net Requirement		0	0	500	600	600	600
L =	1	Planned Order Receipt		0	0	500	600	600	600
Q =	L4L	Planned Order Release	X	0	500	600	600	600	0

Item			0	1	2	3	4	5	6
A		Gross Requirement		0	1000	1200	1200	1200	0
SOR =	0	Scheduled Receipt		0	0	0	0	0	0
ss =	0	Projected on Hand	0	0	0	0	0	0	0
		Net Requirement		0	1000	1200	1200	1200	0
L =	1	Planned Order Receipt		0	1000	1200	1200	1200	0
Q =	L4L	Planned Order Release	A	1000	1200	1200	1200	0	0

Following formulas is used to prepare the MRP

Gross Requirements (GR):	The total expected demand for an item or raw material during each time period without regard to the amotmt on hand. (For end items it is MPS; for components, these quantifies are derived from the planned-order releases of their immediate "parents."
Scheduled receipts (SR):	Open orders that have been placed and are scheduled to arrive from vendors or elsewhere in the pipeline by the beginning of a period.
Projected on hand (POH):	Expected inventory available on hand the beginning of each time period.
Net requirements (NR):	The actual amount needed in each time period.
Planned-order receipts (PORT):	The quantity expected to be received by the beginning of the period in which it is shown.
Planned-order releases (PORL):	Equals planned-order receipts offset by lead time. This amount generates gross requirements at the next level in the assembly or production chain. When an order is executed, it is removed from "planned-order releases" and enter under "scheduled receipts"

Gross requirement of item A is equal to the planned order release of item X multiplied by 2   (because 2 units of A are required to make one unit of X)