MATERIAL REQUIREMENT PLANNING
* MRP is a simple system of calculating arithmetically the requirements of the input materials at different points of time based on actual production plan. * MRP can also be defined as a planning and scheduling system to meet time-phased materials requirements for production operations. MRP Objectives
* Reduction in Inventory Cost: By providing the right quantity of material at right time to meet master production schedule, MRP tries to avoid the cost of excessive inventory. * Meeting Delivery Schedule: MRP helps avoid delays in production thereby meeting delivery schedules more consistently. * Improved Performance: MRP focuses on having all components available at right place in right quantity at right time. MRP System
* Master Production Schedule (MPS): MPS is designed to meet the market demand in future in the taken planning horizon. MPS mainly depicts the detailed delivery schedule of the end products. However, orders for replacement components can also be included in it to make it more comprehensive. * Bill of Materials (BOM) File: BOM represents the product structure. It encompasses information about all sub components. Information about the work centres performing build-up operations is also included in it. * Inventory Status File: It keeps an up-to-date record of each item in the inventory. E.g. quantity on hand, safety stock level, etc
After getting input from these sources, MRP logic processes the available information and gives information about the following: * Planned Orders Receipts: This is the order quantity of an item that is planned to be ordered so that it is received at the beginning of the period under consideration to meet the net requirements of that period. This order has not yet been placed and will be placed in future. * Planned Order Release: This is the order quantity of an item that is planned to be ordered in the planned time period for this order that will ensure that the item is received when needed. Planned order release is determined by offsetting the planned order receipt by procurement lead time of that item. * Order Rescheduling: This highlight the need of any expediting, de-expediting, and cancellation of open orders etc. in case of unexpected situations. Drawbacks of MRP
* Increased Ordering Costs: MRP do not lend to optimize materials acquisition costs. Because inventory levels are kept to a minimum, materials must be purchased more frequently and in smaller quantities. Ordering costs. * Higher Transportation Bills And Higher Unit Costs: The company must weigh the anticipated savings from reduced inventory costs against the greater acquisition costs resulting from smaller and more frequent orders. * Production Slowdown Or Shutdown: May arise because of factors such as unforeseen delivery problems and materials shortages. * Standardized Software Packages: Firms buying off-the-shelf software often will have to modify it, so that it meets their specific needs and requirements.
Manufacturing resource planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning, and has a simulation capability to answer "what-if" questions and extension of closed-loop MRP. This is not exclusively a software function, but a marriage of people skills, dedication to data base accuracy, and computer resources. It is a total company management concept for using human resources more productively. Objectives of MRP II:
1) Integrated System- MRPII is both incremental information integration business process strategies that are implemented using hardware and modular software applications linked to a central database that stores and delivers business data and information.
2) Closed Loop- MRPII is concerned with the coordination of the entire manufacturing production, including...
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