APICS Operations Management Body of Knowledge Framework, Third Edition

5.6 Material requirements planning (MRP)

MRP is a set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. MRP makes recommendations to release replenishment orders for material.

5.6.1 Data requirements (upstream and downstream integration)

MRP calculates requirements based on higher-level requirements derived from sales and operations planning and master production schedule processes. This facilitates increased communication and coordination between all parties to identify and fulfill resource requirements based on established plans.

5.6.2 Explosion

Explosion, or requirements explosion, is the process of calculating demand for the components of a parent item by multiplying the parent item's requirements by the component usage quantity specified in the bill of material.

5.6.3 Pegging

Pegging is the ability to identify the sources of an item's gross requirements and 
allocations. Pegging is considered active, where-used information.

5.6.4 Lot-sizing models

Lot-sizing models are the techniques used in determining order or production run sizes.

Fixed order. Fixed order is a lot-sizing technique that generates planned or actual orders for a predetermined fixed quantity.

Discrete lot sizing. Discrete lot sizing is an order quantity with an integer number of periods of demand. Examples of these techniques include period order quantity, part period balancing, lot-for-lot, least total cost, and fixed-period requirements.

5.6.5 Production activity control (PAC)

PAC is the function of routing and dispatching work to be accomplished through the production facility and of performing supplier control. PAC encompasses the principles, approaches, and techniques needed to schedule, control, measure, and evaluate the effectiveness of production operations.

.1 Short-interval scheduling

Short-interval scheduling is a method of monitoring order quantity to minimize the queue, move, and wait times at a work center. It uses detailed operation time analysis to reduce production time and minimize batch size.

5.6.6 MRP/Just-in-Time (JIT) integration

.1 JIT planning

Integrating JIT with MRP requires an approach by which the ordering of components and parts is planned based on production rates to estimate future requirements. These plans would be executed using kanban or a similar pull system.

.2 Backflush

In backflush, component parts, material, and subassemblies are deducted from the inventory on hand by exploding the bill of material and multiplying the quantities of each required by the number of assemblies produced. Backflushing reduces the amount of data capturing and processing needed, but it requires system integrity, accurate reporting of completed items, accurate measuring of yield, and special reporting of unusual situations. Backflushing is especially appropriate for JIT environments, where pull systems are used.