Re: Including Handling Allowances in MRP which is a fixed quantity, not a percentage

Alan
Easiest non-modification method is to do two things:

1. Ensure that Standard Lot Size (NOT Standard Batch size) is set to the
most common lot size produced for the item. If this cannot be determined,
you should not be using MRP.
2. Then use Yield value at the operations in the routing that consume the
'fixed' quantities, but you have to enter as a % of the standard lot size.


The result will automatically plan for the consumption of items scrapped
during the destructive testing in setting up the operations.

Example: Supposed that the standard lot size is 100, and there are 4
operations. Operation 2 consumes 2 units and Operation 3 consumes 5
units. This means that the net yield is 93% Assuming I start with enough
material to produce 100, but only get 93 as a result of losing 7 unites (2
+ 5) in the process.

At operation 2 the yield is 98% (100-2= 98 units)
At operation 3 the yield is 95% (98-5=93 93/98=5%)

The system will no plan for and recommend ordering enough material to
ensure the net result for the order will be 100.

So assuming that the item required 100 pieces to produce 100 pieces, with
the yield it would be adjusted to require 107 unites to produce 100 pieces.

Your Pick List requirements will be 107. Your net expected, quantity to
stock will be 100.

MRP will plan accordingly based on demand. Not if the demand is greater or
less than the standard batch size, the material requirements will be
adjusted accordingly and will adhere to the rules used in the Order Policy
Code.

Your costs will be adjusted to reflect the additional material required as
well.

Note: I used a simple example to keep the math simple. In the real world,
the standard lot sizes are rarely 100, and the yields are rarely only 2
operations.

Don't get caught up onto trying to over complicate. For example, I've seen
companies try to play with the standard lost size to try and 'fine' tune
it. Remember, if you consume more or less of the material than the
standard lot size adjusted by the yield factors, the next MRP run will
adjust for the overage or under use of the material.

Kevin Fox

On Thu, Feb 25, 2016 at 10:44 PM, Alan McKenzie <amckenzie@xxxxxxxxxxx>
wrote:

Hi,

Our industry seems to have a particular requirement.

In the cable manufacturing process, each steps consumes a fixed quantity
of the manufactured product in the start-up of the manufacturing cycle.
This excess demand must be included in the planned quantity as it cascades
down the indented Bill of Material. The issue is that this fixed quantity
per manufactured item, must somehow be added at each level in the BOM to
ensure sufficient component quantity is manufactured to cover all the
Allowance requirements in the levels above. Please note that this is a
fixed quantity and can not be a percentage.

In an example provided quickly in a recent discussion, it was determined
that there can be up to an 8% scrap quantity produced by these allowances
over the complete production processes. This is currently being handled
manually by the planners.

I have anticipated including the Allowance on the Item Warehouse, and
adding it to planned quantities during the MRP cycle. I'm not sure exactly
how and where to add the allowances. There are 3 User Exits in the
planning run which I suspect could be used. Where this is added depends on
when the projected planned quantities are initially created.

If you have any ideas, or would like more information, please contact me
through this facility.

Rgrds,

Alan
XA Consultant
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Office: +27 12 381 1405 | Switchboard: +27 12 381 1400
Mobile: +27 (0) 82 453 7990
E-mail: AMcKenzie@xxxxxxxxxxx

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