Bill of Materials

A bill of material is a formally structured list for an object (semi­-finished or finished product or service) which lists all the component parts of the object with the name, reference number, quantity, and unit of measure of each component. It is a product data structure, which captures the end products, its assemblies, their quantities and relationships.

One can create a bill of materials where products are composed of other parts that the Production Optimizer must consider in its demand calculation. 

To Create a Relationship in the Bill of Material:

1. Open the Data Entry Pane on the left side of the User Interface
2. Select Bill of Materials and select the pen button
3. Select the arrow for the desired parent item
4. Select Add to create a new component relationship with the parent item
5. Select the component from the drop-down menu
6. Type in how many of the component will be required for the parent item
7. Continue until all necessary relationships have been captured
8. Select Close to exit the menu

To Edit an Existing Relationship in the Bill of Material:

1. Open the Data Entry Pane on the left side of the User Interface
2. Select Bill of Materials and select the pen button
3. Change the component by selecting a new component from the drop-down menu
4. Change the number of components required for the parent item by typing in a new value
5. Select the X button to delete the relationship

Tree Structure for a Bill of Material

The product structure tree provides a hierarchical classification of all component parts that form an end product. The following image depicts an assembly that is composed of two sub-assemblies and one Part C. Each sub-assembly is composed of Parts A and B. This product structure is captured within the Production Optimizer according to the image on the right of the structure. 

Total Demand Calculations from a Bill of Material

Setting up a bill of material impacts the calculation of demand for the final product and components. Returning to the example on the previous page, let us assume that we release 10 units of Assembly during the demand period. There are two types of demand: independent for outside demand and dependent for the demand that results from the BOM explosion. We enter the 10 units for Assembly in the “Average Number of Orders Per Period” field on the Item input menu. This represents the independent demand (we assume that each order size is one). The dependent demand for each component of Assembly will be calculated using the bill of material. The total demand for any item is the sum of the independent and dependent demands, but in our example, there are no items with both.  Therefore, the components of Assembly will have zero in the “Average Number of Orders Per Period” field.  Let’s assume that we have no yield loss at any process step.  Then the total demand for Assembly and all its components is as follows.

Parts A and B are not multiplied by the end item demand, but by the sub-assembly demand. Note that Part A is multiplied by the sub-assembly demand for both sub-assemblies. Sub-assemblies and Part C multiplied by the end item demand.