MERU UNIVERSITY OF TECHNOLOGY
BACHELOR OF PURCHASING AND SUPPLIES MANAGEMENT
SCHOOL OF BUSINESS AND ECONOMICS
JEFF KENNETH KAMAU
Describe material requirement planning and how it affects inventory management of capital goods
Material requirement planning is a product- oriented computerized technique aimed at minimizing inventory and maintaining delivery schedules. Material requirements planning is the logic for determining the number of parts, components, and materials needed to produce a product.MRP1 provides time scheduling information specifying when each of the materials, parts and components should be ordered or produced. Based on a master production schedule, a material requirements planning system: Creates schedules identifying the specific parts and materials required to produce end items. Determines exact unit numbers needed.
Determines the dates when orders for those materials should be released based on lead times. MRP is concerned with both production scheduling and inventory control. It is a material control system that attempts to keep adequate inventory levels to assure that required materials are available when needed. The major objectives of an MRP system are to simultaneously: 1. Ensure the availability of materials, components, and products for planned production and for customer delivery, 2. Maintain the lowest possible level of inventory,
3. Plan manufacturing activities, delivery schedules, and purchasing activities.
INVENTORY MANAGEMENT AND CAPITAL GOODS
Capital goods are those that are used in the production of other goods or commodities. They include factories, machinery, tools, equipment and various buildings which are used to produce other products for consumption. Also raw materials in bulky amounts are capital...
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