Manufacturing resource planning, also known as MRP II, is a method for the effective planning of a manufacturer's resources. MRP II is composed of several linked functions, such as business planning, sales and operations planning, capacity requirements planning, and all related support systems. The output from these MRP II functions can be integrated into financial reports, such as the business plan, purchase commitment report, shipping budget, and inventory projections. It has the capability of specifically addressing operational planning and financial planning, and has simulation capability that allows its users to conduct sensitivity analyses (answering "what if" questions). The earliest form of manufacturing resource planning was known as material requirements planning (MRP). This system was vastly improved upon until it no longer resembled the original version. The newer version was so fundamentally different from MRP, that a new term seemed appropriate. Oliver Wight coined the acronym MRP II for manufacturing resource planning. In order to best understand MRP II, one must have a basic understanding of MRP, so we will begin with a look at MRP and then expand into MRP II. MATERIAL REQUIREMENTS PLANNING
Material requirements planning (MRP) is a computer-based, time-phased system for planning and controlling the production and inventory function of a firm from the purchase of materials to the shipment of finished goods. All MRP systems are computer based since the detail involved and the inherent burden of computation make manual use prohibitive. MRP is time phased because it not only determines what and how much needs to be made or purchased, but also when. MASTER PRODUCTION SCHEDULE.
The master production schedule (MPS) is basically the production schedule for finished goods. This schedule is usually derived from current orders, plus any forecast requirements. The MPS is divided into units of time called "buckets." While any time frame may be utilized, usually days or weeks is appropriate. The MPS is also said to be the aggregate plan "disaggregated." In other words, the plan for goods to be produced in aggregate is broken down into its individual units or finished goods. BILL-OF-MATERIALS.
The bill-of-materials is a file made up of bills-of-material (BOM). Each BOM is a hierarchical listing of the type and number of parts needed to produce one unit of finished goods. Other information, such as the routings (the route through the system that individual parts take on the way to becoming a finished good), alternate routings, or substitute materials may be also be contained with the BOM. A tool known as a product structure tree is used to clarify the relationship among the parts making up each unit of finished goods. Figure 1 details how a product structure tree for a rolling cart might appear on a bill-of-material. This cart consists of a top that is pressed from a sheet of steel; a frame formed from four steel bars; and a leg assembly consisting of four legs, each with a caster attached. Each caster is made up of a wheel, a ball bearing, an axle, and a caster frame.
The bill-of-material can be used to determine the gross number of component parts needed to manufacturer a given number of finished goods. Since a gross number is determined, safety stock can be reduced because component parts may be shared by any number of finished goods (this is known as commonality). The process of determining gross requirements of components is termed the "explosion" process, or "exploding" the bill-of-material. Assuming we need 100 rolling carts, we can use our example product structure tree to compute the gross requirements for each rolling cart component. We can easily see that in order to produce 100 rolling carts, we would need 100 tops, which would require 100 sheets of...