University of Phoenix
January 11, 2010
Corporations are moving forward with almost any move directed at removing the man in the middle. An important factor stems from companies gaining a competitive by integrating processes through an effective operations information system. Maintaining an efficient flow of services and materials from suppliers and managing internal activities relating to materials and other resources remain essential to the smooth operations of value chains. The order fulfillment process ensures that all resources necessary for the production of finished services or products are available at the right time. For manufacturers, this task means keeping track of the subassemblies, components, and raw materials as well as the capacities. The process at currently in place with Riordan Manufacturing (RM) requires developing a proposal for the material requirements planning (MRP) concerning for the manufacturing of the Riordan electric fans, a new process design for the production of the Riordan electric fans; developing a supply chain that takes advantage of global opportunities and lowers labor cost, establishing a production forecast, an implementation plan, including a Gantt chart of the design process. Material Requirements Planning
Material Requirement planning (MRP) refers to computerized information systems developed specifically in aiding companies in managing demand inventory and scheduling replenishment orders, from this aspect alone, the MRP system proves beneficial to many companies. Dependent Demand
Chase, F., Jacobs, F., and Aquilano, N., (2005, p. 630) reflect that MRP relates to dependent demand for a higher level item. Tires, wheels, and engines are dependent demand items based on the demand for automobiles; whereas demand for a product relates to independent demand, because the market conditions influence a specific type of product, rather any other product in the inventory. RM maintains maintain adequate quantities of electric motors in stock to meet all its order requirements, its on-time deliveries over the past year have averaged only 93% (University of Phoenix, 2009). Benefits of MRP
According to Krajewski, L., and Ritzman, L., (2005, p. 726) mention how “companies would manage production and delivery of dependent demand inventories with independent demand systems, but the outcome was seldom satisfactory.” The important factor at this point is how MRP recognizes dependent demands, enabling businesses to reduce inventory levels, using labor and facilities as well as improving customer services. These successes reflect three distinctive advantages definitively by Krajewski and Ritzman (2005, p. 726) as the following: 1. Statistical forecasting for components demand results in large forecasting errors; compensating for such errors by increasing safety stock remains costly, however MRP calculations for the dependent demand of components from production schedules provides a better forecast of component requirements. 2. MRP systems provide managers with information essential for planning capacities and estimating financial requirements. Production schedules and materials purchases translate into capacity requirements and dollar amounts forecasting information when they will appear. Planners use this information on parent item schedules identifying times when the unavailability of needed components because of capacity shortages and supplier delays. 3. MRP systems automatically update the dependent demand and inventory replenishment schedules of when the production schedule of parent items change, this process results in alerting the planner for implementing immediate action for any component. University of Phoenix (20090 mentions RMs China plant currently “operates as a decentralized unit of Riordan Manufacturing, preparing their own forecast of electric fan sales throughout the world,...