A production planning, scheduling and inventory control system, manages manufacturing process.
Ensures availability of materials for production and delivery to customers.
Maintains lowest possible material in the store.
Plans manufacturing activities and delivery schedule.
2. MRP
Developed by Joseph orlicky in 1964.
Time phased priority-planning technique that calculates material requirement and schedules supply.
A Production planning, scheduling and inventory control system, manages manufacturing process.
Has drawn attention and support as computer power has become increasingly available at low price
Inventory control is accomplished using order point system for independent demand.
Order point system – Inventory control based on Re-order point and fixed order level
3. DEPENDENT VS INDEPENDENT
DEMAND
INDEPENDENT
Demand for an item is independent of the
demand for other items. These demands are
typically determined by outside customers and
are end-item demands
Example : Bicycle
Computers
DEPENDENT
Demand for a component (raw material, part,
sub-assembly) is dependent on the demand for
the end-item into which the component goes.
Example : Tyres,
Microchip
4. OBJECTIVES
OBJECTIVES
Ensures availability of materials for production and delivery to customers.
Maintains lowest possible material in the store.
Plans manufacturing activities and delivery schedule.
5. NECESSITIES
To avoid over ordering and under ordering of materials for production.
To reduce unwanted expenses due to ordering at the last minute.
To reduce capital locked up in excess.
To have material ready for production.
To avoid stoppage of production due to lack of inventory.
6. FUNCTIONS OF MRP
Forecasting - Accurate Material Forecasting.
Reducing waste - Changes in production can trigger automatic responses in BOM handling.
Floor control and scheduling - Data integration is key here. Material receipts is compared to data from
customer demand that ensures customer demands are met without shortage.
ADDITIONAL FEATURES:
Cost estimates
Order entry
Vendor relationship Management
Reduces Lead Time
7. CLASSES OF MRP USER/COMPANIES
MRP systems fall into four categories, often identified as ABCD, in terms of use and organizational
implementation.
CLASS A represents full implementation of MRP. MRP system is tied up with company’s financial
system and includes capacity planning, shop floor dispatching, and vendor scheduling as well as
links with human resource planning.
CLASS B represents a less than full implementation. MRP system is confined in the manufacturing
area; however, it encompasses master production scheduling.
CLASS C represents a classical MRP approach in which the system is confined to management of
inventories.
CLASS D represents a data processing application of MRP. System is used for keeping track of data
rather than as decision-making tool.
8. MRP INPUTS
Master production schedule
Aggregate production planning is a capacity of generic product to be produced.
Expressed in terms of Time buckets.
Ex: No of gallons of paint to be produced , MPS converts this number to time-phased plan.
Order promising – sales dept. making a delivery date commitment to customers.
Bills of Materials
Product structure and list of components for each products.
Ex: BOM for a Dinner party is cook’s shopping List. (Formula, Recipe and Ingredients list)
Single/Multi-level/Modular level
Inventory status file – Time phased record of Inventory status (stock in hand & supplier lead time)
13. PROCESS FLOW FOR MRP
Exploding the requirements - process of multiplying the requirements by the usage quantity and
recording the appropriate requirements throughout the product tree.
Gross and Net Requirements - Often inventory is available and must be included when calculating
quantities to be produced.
Releasing an order - means that authorization is given to purchasing to buy the necessary material or to
manufacturing to make the component.
Capacity Requirements Planning
14. CAPACITY REQUIREMENT PLANNING
The MRP priority plan must be checked against available capacity. At the MRP planning level, the process is
called capacity requirements planning (CRP). If the capacity is available, the plan can proceed. If not, either
capacity has to be made available or the priority plans changed.
15. PROBLEM
The following table shows a resource bill for a company that makes tables, chairs, and stools as a three-
product family. If the firm planned to make 500 tables, 300 chairs, and 1500 stools in a particular period,
calculate the quantity of wood and labor that will be needed
PRODUCT WOOD
(FEET)
LABOUR
(STD
HOURS)
TABLE 20 1.31
CHAIR 10 0.85
STOOL 5 0.55
18. EXAMPLE - HUBBELL LIGHTING CASE
Manufacturers of Lighting products
Good Quality Product
Poor at meeting due dates
Work is specialised for each customer
Before MRP Implementation
Less than 75% of orders completed on time
After Implementation of MRP
97% of orders completed on time
19. MRP VS JIT
MRP
Planning Tool that is “Forward Thinking”
Focuses on “Projected Usage”
JIT
Toyota Motors adopted the concept
System of supplying goods as close as possible to
when they are actually needed.
Focuses on “Real usage”
Eg : Royal Enfield Manufacturing
Car Repairing service!
20. BENEFITS OF MRP
Keep inventory levels to a cost – effective minimum.
Keeps track of Inventory.
Set safety stock levels for emergencies.
Determine the best lot sizes to fulfil orders.
Better machine utilization
21. DRAWBACKS OF MRP
Inaccurate information can result in mis-planning, over-stock, under-stock
MRP system can be costly and time- consuming to set up.
Hinweis der Redaktion
For example, if a company plans to produce 200 cars in a day, it would need 800 wheels, 400 windshield wipers, and 200 braking systems. The number of wheels, windshield wipers, braking systems, and other component parts is dependent upon the quantity of the independent demand item from which it is derived.