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Form a Company


To illustrate the concepts of MRP, we formed a com­pany in the classroom. The Great American Widget Works, GAWW, was modeled after our own company.


What we want to do is build a widget (or refurbish a widget). All we need are the component the shop...with the tools...and other material...and instructions...and, of course, we need to know when it is needed and how long it will take to build (refur­bish), so we know when to start. That's all. It would, of course, be a good idea to share this information with our vendor so they could help us achieve this objective.

So, what do we need to do with this new company? What departments and functions do we need to set in place to take advantage of this MRP system that we have purchased?

Master Schedule

For the planner to create a work order to build the wid­get for our customer, we need to know the part number of the widget, the quantity, and the date that the order is to completed and ready for customer delivery. Where does the planner find this data? The master schedule.

Where does that data come from? How do customer orders reach the master schedule and what is on the schedule if we do not have customer orders? With this information and tribal knowledge, the planner firm plans and releases the work order which creates a new part. The planner knows when the part is to be avail­able, and puts the due date into the work order. The start date is calculated by the system based on the lead time in the BOM data.

Bills of Material and Routings

Once the planner knows what to build and when to start and finish, the next questions are what component parts are required and what operational steps are necessary to assemble the widget. The planner may also be con­cerned with details such as lead time and safety time.


Timing is critical at this point. When the planner cre­ates a work order, the system copies the BOM data to a unique file under the work order number. This is the data that is necessary to make reservations for component parts, print the picklist, and produce the manufacturing material requirements. When the planner releases a work order, he/she decides which routing to use in the work order. That choice determines which routing is copied into the work order file. Changing the parts and routings after this point would be an exception and would only be done when absolutely necessary. For example, a change may be required to correct an unsafe condition.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 13


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