Ch. 6: Material Requirements Planning Production Systems MRP

Independent Demand

• Managed separately from other items

• Demand occurs at constant rate

• Managed based on demand forecasts

• : Cars

• Ensure materials are available at the right place and the right time

Dependant Demand

• Inventory managed to support product of other items

• Based on plans

• Demand occurs in lumps

• : Raw materials

MRP Systems

• Computerized info system that creates planned orders

• : Raw materials

MRP

• Material Requirements Planning to assisted in inventory and production management

• Dependant demand

Benefits of MRP System

• Better lead time

• Productivity

• High quality products

• Efficient

• Reduced inventory level and manufacturing cost

MRP Input

• Product structure

  • BOM

• Schedule of finished products

• Inventory Records

  • On hand

  • Safety stock

  • Lead time

MRP Output

• Time phased requirement plans

• Manufacturing orders

• Purchasing orders

Steps of MRP

1. Identify requirements

• Quantity on hand

• Quantity on open purchase order

• Forecasted

• Committed to existing orders

1. Running MRP (suggestions)

• Critical items

• Expedite

• Delayed items

1. Firming Suggestions

• Reports

• Purchasing orders

MRP Output: Primary Reports

• Gross requirement

• Projected available

• Scheduled receipts

• Net requirements

Design Decisions

• Time bucket six

• Material plan regeneration frequency

• Location and size of safety stocks

• Buffer inventory

• Lot sizing methods

Limitations of MRP

• Lack of top management commitments

• Resistance from inside company

• Can’t provide MRP program data

• Expensive

MRP II

• Planning of everything in a manufacturing company

• Operation planning in units, financial planning, and can provide simulation for “what ifs”

• Multiplanning, single entity

• AKA closed loop

• : Master planing, capacity requirements, production activity control

Benefits of MRP II

• Better control of inventories

• Improved scheduling

• Productive relationships with suppliers

• Simulations

• Better decision making

ERP

• Enterprise wide information management syste used to integrate org’s different processes

• Streamline

• Incl.

  • Manufacturing

  • Finance accounting

  • HR

  • Sales

  • Customer management

Disadvantage ERP

• Expensive

• Implementation difficulty

• High maintenance

• Commitment to single vendor

• Hard training

AI in MRP

• Turns into dynamic

• Real time and predictive

• Increased demand forecasting, higher accuracy and optimizes inventory levels

• Automation

  • Procurement

  • Production schedule

  • Supplier collabs