The concept and evolution of mrp type systems


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The concept and evolution of mrp type systems

  1. 1. The Concept and Evolution of MRP-type SystemsAssistant Professor Dr. Mahmoud Abbas MahmoudDepartment of Production Engineering and MetallurgyUniversity of TechnologyBaghdad -
  2. 2. 1Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsThe Concept and Evolution of MRP-type SystemsAssistant Professor Dr. Mahmoud Abbas MahmoudDepartment of Production Engineering and MetallurgyUniversity of TechnologyBaghdad - IntroductionDetermining actual production requirements is difficult in the typicalfirms having large number of finished goods assembled from many thousands ofsubassemblies and piece parts. Some of the components may be purchased, andothers produced with many different lead times need to be considered.Material Requirements Planning (MRP), combined with computertechnology gave the most adequate successful computerized productionrequirement system.The early MRP systems were primarily inventory control application thatpresented a valid alternative to ROP, EOQ, and SIC approaches of inventorycontrol [1].No doubt, production requirements techniques always need a lot moredue to the competition in businesses and the growing requirements ofmanufacturing systems. Thus, MRP systems are developed with the time to becapable to cover these growing requirements.As a result, this led to generate a series of MRP-type systems through thefollowing five evolution stages:-1. Evolution stage I: Material Requirements Planning (MRP).2. Evolution stage II: Closed- loop MRP.3. Evolution stage III: Manufacturing Resource Planning (MRP II).4. Evolution stage IV: Enterprise Resource Planning (ERP).5. Evolution stage V: Enterprise Resource Planning Extended (ERP II).
  3. 3. 2Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsPractically, MRP is still in use as the core (central module) in all of MRP-type systems and the other modules in all of these systems are built around thiscore. The stages of MRP-type systems evolution can be represented as shown inFigure (1).In this chapter these systems and their developments are explainedconsequently according to their evolution stages.ERP IIERPMRP IIClosed-loop MRPMRPFigure (1) The Evolution Stages of MRP-type Systems.
  4. 4. 3Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems2- Evolution Stage I: Material Requirements PlanningMaterial Requirements Planning system is primarily designed to handleordering and scheduling of dependent demand inventories in terms of rawmaterials, component parts… etc. But ordering and scheduling of assembledproducts is not an easy process, it needs to maintain track of the enormousnumber of inventories, and to differentiate between "dependent" and"independent" demand [2], [3].2.1 Dependent and Independent Demand"Dependent demand" refers to the demand for subassemblies orcomponents, parts and raw materials to be used in the production of finishedproducts."Independent demand" refers to the demand of finished products, whichnot related to the demand of any other items.Practically, Independent demand tends to be continuous and fluctuatesbecause of random influences, whereas dependent demand is not random, buttends to occur in a "lumpy" manner at a specific point in time [4], [5].The lumpiness occurs because most manufacturing is in lots, and all theitems needed to produce the lots usually are withdrawn from inventory at thesame time instead of unit by unit [6].2.2 Objectives of MRPMRP was devised to answer the following key issues [7], [5], [8]:-1. What is needed?2. How much is needed?3. When is needed?
  5. 5. 4Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsObviously, MRP system is concerned with both production schedulingand inventory control. It provides a precise scheduling (priorities) system, anefficient material control system, and a rescheduling mechanism for revisingplans as changes occur [6].Production organizations adopt MRP for the following reasons [9]:-1. To improve customer service.2. To reduce inventory investment.3. To improve plant operating efficiency.2.3 Inputs to MRPThere are three component sources of data needed to feed the MRPsystem. These three sources (inputs) are [10], [11], [12]:-1. Master production schedule.2. Bill of materials.3. Inventory records.The above three inputs are shown in Figure (2). Without these inputsMRP system cannot function. The Master Production Schedule (MPS) outlinesthe production plan for all end items*. The Bill of Materials (BOM) containsinformation on all materials components, or assemblies required for each enditem. The inventory records contain information about inventory status of allinventory items.MRP system translates the master production demand into therequirements for all subassemblies, components, and raw materials needed toproduce the required "parent items"**.…………………………………………………………………………………………………...* The term end item is used in reference to the master schedule. The end item may be the finalproduct or a major assembly.** Parent is any product that manufactured from one or more components, whereascomponent is an item that may go through one or more operations to be transformed into partof one or more parents.
  6. 6. 5Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsThis process is called an "MRP explosion" because it converts therequirements of various final products into "material requirement plan" thatspecifies the replenishment schedule of all the subassemblies, components, andraw materials needed by the final products [4].2.3.1 Master Production ScheduleThe aggregate production plan specifies product groups. It does notspecify exact items. Master production schedule details how many end itemswill be produced within specified period of time. It breaks the aggregateproduction plan into specific product schedules [4].The master production schedule is the time-phased plan specifying howmany and when the firm plans to build each specific end item [12].Practically, master production schedule also uses other issues for thispurpose, including; forecast, known customers orders, demand for spares…etc,as shown in Figure (3).An MRP system is driven by the master production schedule whichrecords the independent demand for top level items [10].InventoryRecordsMasterProductionSchedule (MPS)Bill ofMaterials(BOM)MaterialRequirementsPlanning (MRP)Figure (2) Inputs to Material Requirements Planning
  7. 7. 6Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsFigure (3) Inputs into Master Production Schedule [13]Typically, with an MRP system, the "planning horizon" refers to the spanof time the master production schedule cover. The minimum length of masterproduction schedule should be equal to or greater than the longest lead time ofthe item in process. The master production schedule separates the planninghorizon into a series of time "periods" or time "buckets", which are oftenexpressed in weeks [5], [6]. Also, MRP can be set to plan everything daily oreven hourly instead of weekly [14], [15].ForecastDemandSister PlantDemandResearch andDevelopmentDemandExhibitions/PromotionRequirementsSafety StockRequirementsSparesDemandInventoryLevelsKey CapacityConstraintsKnownOrdersMasterProductionSchedule
  8. 8. 7Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems2.3.2 Bill of MaterialsBill of materials contains data for the complete description of a product.Listing not only the materials, parts, and components but also the sequence inwhich the product is created [12].The nature of this aspect of a bill of materials is clear when considering aproduct structure tree, which provides a visual depiction of the subassembliesand components, needed to assemble a product [5]. The product structurerecords contain the bills of materials for the end items in levels representing theway they are actually manufactured: from raw materials to subassemblies toassemblies to end items. Some times a product may not be assembled in the wayit is designed. For MRP it is necessary to generate a bill of materials thatrepresent the way in which the product is manufactured [6]."Indented bill of materials" show several levels of parts at the same time,but in "single-level bill of materials", the details of the relationships betweenparts and subassemblies are stored as one single level at a time.For example, the product structure tree with level coding of a Flashlight isshown in Figure (4), and its indented bill of materials is shown in Figure (5).It is clear that the finished product (Flashlight) is said to be at level (0),the parts and subassemblies that go into Flashlight are at level (1), the parts gointo subassemblies are at level (2), and so on.Practically, bill of materials is a tool which enables MRP to identify that,which part and how many or how much is required for any particular item. It iscommon that the required quantity is not written when it equals to one unit.In most manufacturing situations some component parts and many kindsof raw materials are used in two or more subassemblies and end products. Thus,their requirements are the sums of requirements being generated from two ormore sources. These several requirements for common use items often arecombined into single orders to vendors or manufacturing lots in order to save onordering and set-up costs [8].
  9. 9. 8Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsBill of MaterialsItem: 0010 Flashlight Level: 0Part No. Description No. Level1001 Head Assembly 1 12001 Plastic Head 1 24001 Plastic Powder 2 42002 Lens 1 22003 Bulb Assembly 1 23001 Bulb 1 33002 Bulb Holder 1 32004 Reflector 1 21002 Batteries 2 11003 Body Assembly 1 12005 Shell Assembly 1 23003 On-off Switch 1 34002 Knob 1 44003 Metal Slides 2 43004 Connector Bars 2 33005 Plastic Shell 1 34001 Plastic Powder 3 42006 Spring 1 2Figure (5) Indented Bill of Materials of Flashlight [7]Plastic head Lens Bulb assembly SpringShell assemblyReflectorHead assembly Body assemblyBatteries(2)FlashlightPlastic powder(2)Bulb holder Plastic shellON-off switchBulbKnob Metal slides(2)Plastic powder(3)Connector bars(2)Figure (4) Product Structure Tree with Level Coding of Flashlight [7]Level 0Level 1Level 2Level 3Level 4
  10. 10. 9Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsHere it is important to pay attention to bring all identical items or partsdown to their lowest common level during constructing the structure tree of anyproduct. This is a rule referred to as "low-level coding". The low level codingrule is applied in Figure (4) by bringing down plastic powder from level (3) tolevel (4).From other side, according to Slack et al [13] four typical shapes ofproduct structure can be recognized, namely A-shaped, T- shaped, V- shaped,and X- shaped, Figure (6) shows these shapes.Figure (6) Different Shapes of Product StructuresIn the A-shape, a wide range of part variants is resulting in a few numberof end product variants. The previous Flashlight example represents an A- shapeproduct structure.T-shape describes a large amount of customized product variants,manufactured from a low number of part variants in relatively standardizedprocesses. The suitable example is producing different models of "PersonalComputers" (PC)s, by adding different internal cards to modify theircharacteristics.V-shape describes a situation similar to the T-shape with the differencethat the V-shape has less standardized processes. The best example of V-shapeis producing different petroleum products from crude oil.Finally, the X-shape describes a situation with modular products wheresmall numbers of module variants are assembled into a large amount of endFinished products…………...........Raw materials &/orparts…………………………T-shape V-shape X-shapeA-shape
  11. 11. 10Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systemsproduct variants. The modules are however manufactured from a wider range ofpart variants. The typical example of this type is manufacturing of cars withdifferent options may be its number in the thousands from much less number oforiginal models.2.3.3 Inventory RecordsThe inventory records in a computerized system can be quite lengthy.Each item in inventory is carried as a separate file, and the range of detailscarried about on item is almost limitless [12]. The inventory records filecontains three segments [3], [16]:-1. Item master data segment.2. Inventory status segment.3. Subsidiary data segment.The first segment is "item master" data segment includes the itemsidentification, part number, and other data, such as lead time, cost, and orderquantity. The second segment is "inventory status" segment provides a time-phased record of inventory status. In MRP it is important to know not only thecurrent level of inventory, but also the future changes that will occur against theinventory status. Therefore, the inventory status segment lists the grossrequirements for the item, scheduled receipts, on-hand status, and planned- orderreleases. The third file segment "subsidiary data" segment containsmiscellaneous information pertaining to purchase orders, scrap or rejects,engineering change actions, and so forth.However, the type of data contained in the records for a given item wouldtypically include the categories shown in Figure (7).
  12. 12. 11Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsItemMasterDataSegmentPart No. Description Lead time Std. cost Safety stockOrder quantity Set up Cycle Last years usage ClassScrap allowance Cutting data Pointers Etc.InventoryStatusSegmentAllocation Control balancePeriodTotals1 2 3 4 5 6 7 8Gross requirementsSchedule receiptsOn handPlanned order releasesSubsidiaryDataSegmentOrder detailsPending actionCountersKeeping trackFigure (7) The Inventory Records for an Item in Inventory [12]2.4 MRP LogicThe MRP system operates on the data contained in the three inputs(master production schedule, bill of materials, and inventory records), thatdiscussed previously. The master production schedule specifies a period-by-period list of end items required, and then derives MRP using the steps shown inFigure (8). All levels on the bill of materials are computed in turn whichdetermine component parts demand. The first step is to "explode" the bill ofmaterials to identify the lower level component being scheduled. After the partis identified, its gross requirements are determined by multiplying the previouslevels requirements by the number of those components that go into that level.Each level of bill of materials must be taken in turn, and no level may beskipped. The gross requirement may however not be what we must actuallyproduce or purchase, because we may have some in inventory or on order. Nextthen, the gross requirements are adjusted by any uncommitted item in inventoryto provide actual net requirements. The new quantity may additionally beadjusted by any lot sizing rules to determine actual order quantities (lot sizingwill be discussed in a subsequent section). This process is known as "MRPnetting" [13].
  13. 13. 12Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsFigure (8) MRP LogicMaster ProductionScheduleApply Lot SizingRulesNet Against On –hand plus On-orderRecommend WorkOrders and /orPurchase OrdersExplode Next Levelof Bill of MaterialsApply Lead TimeOffsetAny MoreLevel /s inBOM?NoYes
  14. 14. 13Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsAfter the order quantity is determined, it is scheduled by subtracting thelead time of the component from its due date. Its due date is the date it isrequired to produce its next higher level in bill of materials. Thus all dependentcomponent orders can be scheduled in turn by cycling each level through theMRP logic.2.5 MRP Planning Format and CalculationsThe planning format for a typical MRP is shown in Figure (9) below.LotsizeLeadtimeOnhandSafetystockAllocatedLowlevelcodeItemPeriod1 2 3 4 5 6 7 8Gross requirementsScheduled receiptsProjected on handNet requirementsPlanned orderreceiptsPlanned orderreleasesFigure (9) Typical MRP Planning Format [9]The columns are as explained in the previous sections, whereas the rowshave the following meanings:-Gross requirements: The total expected demand for an item or rawmaterial during each time period without regard to the amount on hand. For enditem, these quantities are shown in the master schedule, for components, thesequantities are derived from the planned order releases of their immediateparents, using the formula:
  15. 15. 14Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsGross requirementsfor componentIn period (t)=Planned orderreleases for parentIn period (t)×Quantity of thecomponent required toproduce parent..........( 1)Where (t) is period numberScheduled receipts: Material that is already ordered (from manufacturingorders or purchase orders) that is expected to arrive.Projected on hand: The expected quantity in inventory at the end of theperiod, available for demand in subsequent periods. This is calculated bysubtracting the gross requirements for the period from the scheduled receiptsand planned order receipts for the same period as well as the projected on handfrom the previous period, using the formula:Projected on handAt the end of period (t) =[ Scheduled receiptsIn period (t) +Planned order receiptsIn period (t) +Projected on handFrom period (t -1) -Gross requirementIn period (t)].........( 2)Net requirements: The actual amount needed in each time period. It is thereduction of gross requirements and safety stock by the scheduled receipts in theperiod plus the projected on hand in the previous period using the formula:Net requirementsIn period (t) =[GrossrequirementsIn period (t)+Safetystock -ScheduledreceiptsIn period (t)-Projected onhandIn period (t -1) ] .................................................( 3)
  16. 16. 15Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsPlanned order receipts: The size of the planned order and when it isneeded. This appears in the same time period as the net requirements, but thesize is modified by the appropriate lot sizing rules. Under lot-for-lot ordering,this quantity will equal net requirements. Under other lot-size ordering, thisquantity may exceed net requirements. Any excess is added to the projected onhand inventory.Planned order releases: When the order should be released so the itemsare available when needed by the parent. This is the same as the planned orderreceipts offset for lead times plus safety lead time, using the formula:Planned order releasesIn period (t -lead time - safety lead time) =Planned order receiptsIn period (t).................( 4)Planned order releases at one level generate material requirements atlower levels. When an order is executed, it is removed from planned orderreleases and entered in the scheduled receipts. Planned order releases show thewhat, how much, and when of MRP.2.6 MRP AlgorithmThe preceding two sections show that the logic and calculations requiredin the MRP process are not complicated. They involve only simple arithmetic.Practically, the logic and calculations of MRP process can be outlined bythe algorithm shown in Figure (10).The steps of MRP are relatively straightforward, but they clearly requirecomputers to apply for large numbers of products and subassemblies, in additionto the number of parts involved which can be in the thousands.Requirements generation, inventory control, time phasing of orders andcapacity requirements all clearly need to be coordinated. This job can be doneand controlled only by computers.
  17. 17. 16Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsSTARTn = 0Establish G (t) for all items exist in level n by time period(Level 0 items are from MPS and lower level items arederived from the planned order releases R(t) of their parentitem/s)Determine N(t) for all items exist in the level n for timeperiod tN(t) = G(t) + SS - H(t-1) - S(t)If N(t) < 0 then N(t) = 0Apply lot-sizing Q into P(t)If N(t) ≥Q then P(t)=N(t) If 0<N(t)<Q then P(t) =Q If N(t) = 0then P(t) = 0Calculate H(t) for all items exist in level n for time period tH(t) = S(t) + P(t) + H(t-1) - G(t)Have all timeperiods beencompleted?Replace twith t+1NoEstablish the planned order releases for all items exist inlevel nR(t-L-SL) =P(t)Have allBOM levelsbeenexploded?StopNoYesYesABFigure (10) Algorithm of MRP Process
  18. 18. 17Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsExplode planned order releases for all level n items (Theexplosion multiplies planned order releases quantities bythe quantities required for assembly of lower levelcomponents) this establish the G(t) for lower levelcomponentsG(t) component = R(t) parent × qReplace n with n+1(Iteration repeated until the lowest level is completed)ABKeyn = Level number in product structure treet = Period numberG(t) = Gross requirement for period tR(t) = Planned order releases for period tN(t) = Net requirement for period tSS = Safety stockH(t) = Projected on hand inventory for period tS(t) = Scheduled receiptsQ = Lot size quantityP(t) = Planned order receipts for period tL = Lead timeSL = Safety lead timeq = Quantity of the component required to produce the parent itemFigure (10) (Continued)
  19. 19. 18Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems2.7 Lot Sizing in MRPAn MRP system is an excellent way to determine production schedulesand net requirements. However, whenever we have a net requirement, a decisionmust be made about how much to order. This decision is called lot sizingdecision. Commercial MRP software usually includes the choice of several lotsizing rules. These rules are ranging from relatively simple procedure to verycomplicated algorithms.The selection of which rule to use is depends on the inventory policies ofthe individual firm, the value of the individual item, and managementphilosophy. Lot sizing procedures and calculations are well discussed in relevantliterature such as; [3], [4], [10], [14], [17]. However, the ten popular lot sizingrules are:1. Lot for Lot2. Fixed Order Quantity3. Economic Order Quantity4. Fixed Period Requirements5. Periodic Order Quantity6. Wagner-Whitin Algorithm7. Silver-Meal Heuristic Procedure8. Least Unit Cost9. Least Total Cost10. Part-Period BalancingHowever, the most applicable three rules - Lot for Lot, Fixed OrderQuantity, and Economic Order Quantity - will be reviewed in the followingthree sections;
  20. 20. 19Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems2.7.1 Lot for LotLot for lot (LFL) is the simplest of the lot sizing rules and involves thedirect translation of net requirements into order quantities. This rule ensures thatthe planned order is just large enough to prevent a shortage in the single periodit covers. The aim of this rule is to minimize inventory levels.2.7.2 Fixed Order QuantityFixed Order Quantity (FOQ) rule is quite frequently used in practice. Thisrule maintains the same order quantity each time an order is issued. The fixed lotsize quantity may be set for an item based on local constraints aroundpackaging, material handling or minimum purchase quantity.2.7.3 Economic Order QuantityLarge batch sizes result in high inventory levels which are, of course,expensive in terms of the cost of capital tied up in inventory. Small batchesimply a proportionately lower inventory cost. However, there is a set-up costincurred with the placing of an order or the start-up of a batch on a machine.This set-up cost (for manufactured items) or ordering cost (for purchased items)must be distributed over the batch or order size. If set-up or ordering costs arehigh then we may need to resort to larger batches to reduce the "per unit cost" ofset-up and thereby incur larger inventory costs. It is clear, therefore, that there isa tradeoff between order or set-up costs and inventory costs. The EconomicOrder Quantity (EOQ) rule is simply a mathematical expression of this tradeoffand reflects the minimum total cost of holding stock and set-up. The EOQ canbe calculated using the following formula [10]:
  21. 21. 20Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsEOQ =)())((2HcDSc.........................................( 5)Where EOQ = the economic batch or order sizeSc = set-up cost per batch or ordering cost per orderD = the annual demand for the itemHc = inventory holding cost, on annual basis per unit2.8 Shrinkage Allowances Calculations in MRPSometimes net requirement quantity needs to be modified to include anextra amount of material to cover the percentage of loss whenever it is expectedduring manufacturing operations due to any cause such as scrap or wastage. Thispercentage of loss is called "shrinkage factor". MRP systems do the requiredmodification by multiplying the net requirement by the outcome of One plusshrinkage factor. So, net requirements after modification can be calculated usingthe formula:NetrequirementsAftermodification=[NetrequirementsBeforemodification] ×[ 1 +Shrinkagefactor] ....( 6)Some MRP systems do the required modification by dividing the netrequirement by the outcome of subtracting shrinkage factor from One. So, netrequirements after modification can be calculated using the formula [13]:NetrequirementsAftermodification=[NetrequirementsBeforemodification] ÷[ 1 -Shrinkagefactor] ....( 7)Practically, the difference between the results generated from using thetwo formulas is very slight especially when the net requirement quantity issmall. However, in all cases, the extra amount which is included in planned
  22. 22. 21Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systemsorder releases is expected to be lost during manufacturing operations. Hence, theexpected quantity to be receipted is equal to the net requirement beforemodification.2.9 Outputs of MRPBasically, MRP system uses mainly the three inputs (MPS, BOM, andinventory records) to generate its outputs. The output from MRP calculations isthe determination of the amount of each bill of materials item required and thedates they are needed. This information is used to plan order releases for both;purchased items and in-house production of components. Hence, MRP generateoutputs of two type of orders; "purchase orders" for purchased items and "workorders" for manufactured items as shown in Figure (11).InventoryRecordsMasterProductionSchedule (MPS)Bill ofMaterials(BOM)MaterialRequirementsPlanning (MRP)PurchaseOrders Work OrdersMRP InputsMRP OutputsFigure (11) Material Requirements Planning Inputs and Outputs
  23. 23. 22Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsPractically, MRP output reports can take on an almost unlimited range offormat and content. These reports are classified as "primary" and "secondary"output reports as following [5], [12]:-1. Primary reports: Primary reports are the main or normal reports usedfor inventory and production control. These include:-a. "Planned orders" to be released at a future time.b. "Order release notice" to execute the planned orders.c. "Changes in due data" of open orders due to rescheduling.d. "Cancellations or suspensions" of open order due to cancellation orsuspension of orders on the MPS.e. "Inventory status data".2. Secondary reports: Additional reports, which are optional in an MRPprogram, fall into the following main categories:-a. "Planning reports" to be used, for example in forecasting inventoryand specifying requirements over some future time horizon.b. "Performance reports" for purposes of pointing out inactive itemsand determining the agreement between actual and programmeditem lead times and between actual and programmed quantity usageand costs.c. "Exceptions reports" that point out serious discrepancies, such aserrors, out-of-range situations, late or overdue orders, excessivescrape or nonexistent parts.Obviously, MRP system outputs are very accurate and effective tools inguiding production planning and management of manufacturing operations.
  24. 24. 23Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems2.10 Updating of MRPMRP is not a static type system. It is working in the dynamic situations. Itmust be able to effectively cope possible changes. These changes include [18]:-1. Changes in the master schedule or in direct external demand forcomponents.2. Identified discrepancies in inventory records.3. Change in machines availability (for example, due to breakdowns).4. Actual completion time or quantity different from planned.5. Engineering changes in product structure (bill of materials).6. Changes in costs, lead times, etc.Practically, there are two methods of updating the system. These are [9][10] [19]:-1. Regeneration.2. Net change.2.10.1 RegenerationRegeneration method, involves literally throwing away the previous planand starting over with a new master schedule and totally re-explodes it downthrough all the bills of materials to generate valid priorities, net requirements,and planned orders are completely regenerated at that time. In the regenerationmethod the entire MRP process is carried out once per period (typically oneweek) using batch processing computer technique [18].2.10.2 Net ChangesNet change method, involves rework the plan and introducing into themaster schedule only those changes which have occurred since the last plan was
  25. 25. 24Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systemsmade. The net change method tends to be preferred in most dynamicmanufacturing situations [10], [19].2.11 PeggingIf an item is used as a component of several other items then the use ofMRP will leads to gross requirements on this item that are generated from anumber of sources [18].In some circumstances, it may be important to know which itemsgenerated which amounts of these requirements.Pegging allows the users of MRP to identify the sources of demand for aparticular components gross requirements [10].These gross requirements are originate either from its parentsubassemblies or from independent demand in the master schedule, or from thedirect external demand for components.For example the gross requirements for the item X arise from a number ofsources as shown in Table (1) below.Table (1) Pegged Requirements for Item XRequirement SourceItemQuantityPeriodNumberParentParentQuantityQuantity perUnit ofParent30 4 B 10 3160 5 A 40 4210 7 B 70 3320 8 A 80 4A report such as in Table (1) allows the planner to retrace the steps ofMRP analysis and to understand the source of the total gross requirements forthe item.
  26. 26. 25Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsPegging is a selective "where-used" file and its information can be used totrace the impact of a material problem all the way up to the order it will effect[17], [20].Pegging technique is useful in the circumstances of an unexpected event,such as a supplier being unable to deliver in the planning lead time. By retracingthe original calculations the user can detect which orders are likely to beaffected then identify appropriate remedial action/s.2.12 Benefits of MRPMRP users reported many benefits among these [11]:-1. Reduction in inventory.2. Improved customer service.3. Quicker response to changes in demand and in the MPS.4. Reduce set-up and product changeover costs.5. Better machine utilization.6. Increased sales and reduction in sales price.2.13 Limitations of MRPIt is great that MRP is a super power computerized tool offering its usersthe benefits listed hereabove, but they faced the following limitations inPractice:-1. It assumed the infinite capacity is available, and that suppliers alwaysdelivered correctly and at time. It caused the MRP processor togenerate schedules and requirements that could not be accomplishedby the factory.2. It is an "open-loop" system that sent plans to purchasing and productionpersonnel but could not receive feed back. As a result, adjustmentcould not be made to plans in order to keep the schedules valid.
  27. 27. 26Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems3. It generates valid schedules in the sense that they follow logically fromthe demand. But practically after planned orders are lunched, some ofplanning factors may be changed.4. When any change in demand fed to the system, it became "nervous"and causes an excessive amount of re-planning.3- Evolution Stage II: Closed-loop MRPMRP was initially developed without any capacity checks or input fromother departments. Thus, the production plan often was not believable to anyoneoutside of production function. "Closed-loop MRP" is an enhancement thatincludes capacity checks. Which are used interactively with the masterproduction schedule and the component production plans (from MRP), togenerate feasible schedules [18].Closed-loop MRP made feedback possible by including schedule,rescheduling actions and "Shop Floor Control" (SFC)*, thus it "closed the loop"to overcome the fundamental weakness of "open-loop MRP".3.1 The Structure of Closed-loop MRPThe first closed loop diagram, is shown in Figure (12). That was drawn in1969, at the Markem Corporation in Keene, New Hampshire [21].Practically, the term "closed-loop" has two meanings. It means that themissing elements in a system were filled in, and that there must be a feedbackfrom purchasing, production, and other departments.……………………………………………………………………………..* Production Activity Control (PAC), is the term favored by the American [10]
  28. 28. 27Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsYesNoProduction PlanningMaster ProductionSchedulingMaterial RequirementsPlanningCapacity RequirementsPlanningRealistic?Executing CapacityPlansExecuting MaterialPlansFigure (12) The First Closed-loop MRP Diagram [21]
  29. 29. 28Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsA basic structure of closed-loop MRP with several additions to the open-loop MRP system can be developed as in Figure (13), which shows, howinformation and feedback flow through the system and loops generated inpractice. The most important additions are:-1. Rough Cut Capacity Planning.2. Capacity Requirement Planning.3.1.1 Rough Cut Capacity PlanningRough Cut Capacity Planning (RCCP) involves a relatively quick checkon a few key resources required to implement the MPS, in order to ensure that itis feasible from the capacity point of view. The MPS and the RCCP aredeveloped interactively [16], [10]. The technique determines the impact of theMPS on the key or aggregate resources, such as man hours and machine hours.Rough cut capacity plans are "finite capacity plans" because they have tooperate within certain constraints [13].3.1.2 Capacity Requirement PlanningCapacity Requirement Planning (CRP) generates amore detailed capacityprofile than that generated by RCCP. CRP is only performed after each MRPrun. This is done by exploding the manufacturing orders (planned and actual)through the routing specified in the shop floor control system. This generates adetailed profile of what capacity is required in each work center. The requiredcapacity is then compared with the available capacity and over load/ under loadconditions are identified.
  30. 30. 29Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsMasterProductionSchedule (MPS)Figure (13) The Basic Structure of Closed-Loop MRP with FeedbackLoopsBill ofMaterials(BOM)MaterialRequirementsPlanning (MRP)PurchaseOrdersWorkOrdersInventoryRecordsCapacityRequirementPlanning(CRP)AggregateProductionPlanningDemandManagementRough CutCapacityPlanning(RCCP)ExecutionPurchasingExecutionShop FloorControl (SFC)Routing &WorkCentersInformation
  31. 31. 30Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsPractically, CRP does not facilitate interactive planning and it is usedprimarily as a verification tool [10]. Capacity requirement plans are "infinitecapacity plans" insomuch as they do not take the capacity constraints of eachmachine or work center into account. If this load is lumpy it may be smoothedby re-planning to a "finite capacity" or by allocating temporary resources to thework center [13].3.2 How Closed-loop MRP WorkThe sequence of events that might take place in this type of MRP systemsis as follows:-1. The planner "master production scheduler" constructs the masterproduction schedule from the view of the aggregate productionplanning.2. The master production schedule passes information to the rough cutcapacity planning module for evaluation.3. The rough cut capacity planning gives feedback on therealism/achievability of the master production schedule.4. The master production scheduler continues to use this information loop,modifying the master production schedule until it is been achievable.5. The revised master production schedule then drives (MRP), whichcalculates/recalculates all purchasing and manufacturing needed tofulfill the master production schedule.6. All orders to be manufactured in-house are passed to capacityrequirement planning. Any mismatch between the required workloadand the ability to perform according to the available capacity is to bereported back to the planners, so that future plans can be suitablymodified.7. There is a similar feedback loop from the purchase order function,which might report that planned requirements cannot be met by a
  32. 32. 31Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systemssupplier and that action is required to resolve the problem. Such areport could lead to changes to the purchasing plan.8. The manufacturing process itself (the execution phase) may also fail togo to plan, and generates a new feedback.9. As a result of the feedback within the system, changes may be requiredeither to the master production schedule or to the resources required toexecute the plans. The aggregate plan must reflect any changes to themaster production schedule.4- Evolution Stage III: Manufacturing Resource PlanningManufacturing Resource Planning (MRP II) is essentially extended formof closed-loop MRP that also includes strategic planning processes, "businessplanning", and a number of other business functions such as human resourcesplanning, profit calculations and cash flow analysis [14],[5] .Obviously, the initial intent for MRP II was to plan and monitor allresources of a manufacturing organization; manufacturing, marketing, finance,and engineering, through a closed-loop system generating financial figures. Thesecond important intent of MRP II concept was that it "simulates" themanufacturing system [12].Practically, both above involved in new MRP II systems which representa company wide system.4.1 The Structure of MRP IIThe technical differences between closed-loop MRP and MRP II are smallcompared to the real significant functional difference. Figure (14) shows theschematic diagram of MRP II given by Wight [21].
  33. 33. 32Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsNOProduction PlanningMaster ProductionSchedulingMaterial RequirementsPlanningCapacity RequirementsPlanningRealistic?Executing CapacityPlansExecuting MaterialPlansYesFigure (14) Schematic Diagram of MRP II According to Wight [21]Business Planning
  34. 34. 33Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsPractically, MRP II requires several additions to the inputs of the system,the key one is bill of materials. MRP II requires to extend the bill of materials toinclude all the details of the resources needed to produce one unit of product.Those included are mainly; labor, machinery, tools, space and materials. In factit will be a "Bill of Resources" (BOR), which can be used by MRP II to projectshortages at specific times, giving departments advance notice of requiredremedial action, like need to hire or train labor, need for support resources.MRP II can keep track of machine loads and whether there is a need formore machines or subcontractors, or not. Also MRP II treats cash flow almostlike materials. The system calculates the cost of all planned order releases andcreating a cash flow forecast. This includes payments to suppliers, wages, powerand all other costs associated with production.The additional functions of MRP II, means it includes extra modules tothose included in closed-loop MRP. The extra modules generate extra feedbackloops. A basic structure of MRP II can be developed as in Figure (15).This structure includes the following extra feedback loops:-1. A feedback from the aggregate production planning and the overallbusiness planning (strategic planning).2. A feedback from profit calculations to check that the organization isgetting the profit it wants from its total manufacturing process.4.2 Characteristics of MRP IIThe characteristics of MRP II can be described as follows:-1. The operating and financial system is one and the same. They use thesame transactions, they use the same numbers. The financial figuresare merely extensions of the operating numbers.
  35. 35. 34Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsMasterProductionSchedule (MPS)Figure (15) The Basic Structure of MRP II with its Extra Modules andFeedback LoopsIncomefromDeliveriesDemandManagementCost ofPurchasesCost ofWorkCost ofOverheadsProfitCalculationsBusinessPlanningBill ofMaterials(BOM)MaterialRequirementsPlanning (MRP)PurchaseOrdersWorkOrdersInventoryRecordsCapacityRequirementPlanning(CRP)AggregateProductionPlanningRough CutCapacityPlanning(RCCP)ExecutionPurchasingExecutionShop FloorControl (SFC)Routing &WorkCentersInformation
  36. 36. 35Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems2. It has a "what if" capability, since a good system is a simulation ofreality, it can be used to simulate what would happen if various policydecisions where implemented. This facility can be carried out at masterproduction scheduling stage.3. It is a whole company system now, involving every facet of thebusiness because the things that MRP II is concerned with (sales,production, inventories schedules, cash flow…etc) are the veryfundamentals of planning and controlling a manufacturing ordistribution business.These characteristics mean that MRP II effectively builds a computer-based planning model of the organization and gives it an opportunity to usesingle database, which is accessed and used by the whole company according toindividual functional requirements. This enables the various departments of theorganization, to effectively share information and communicate with each other.Figure (16) shows how the different departments connected to a single database,which means that the changes are available to everyone on the system as soon asthey are made, and everyone has access to the same data. The terminals on theshop floor provide a feedback loop that updates the files on the status of work inprocess [22].Furthermore, MRP II allows everyone in the company (marketing staff,production, accounting ……etc) to work with the same "game plan", using thesame valid numbers to run the business, and is capable of simulation to plan andtest alternative strategies [12], [21].MRP II software vendors kept adding modules, to stay ahead of computers.A finite scheduling module, capable of incorporating capacity constraints intothe planning mix is frequently available in some MRP II packages [15].In reality, many systems have been developed and sold by many softwareand consulting firms. Efforts continued in MRP II systems a long the lines ofmodification by adding and/or improving the existing modules [23].
  37. 37. 36Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsFigure (16) Different Departments Connected to a Single Database [22]4.3 Benefits of MRP IIMost of the companies that implement MRP II successfully have realizedmany significant benefits. In the narrow sense, the chief benefit of MRP II is itsability to generate valid schedules and keep them that way. A valid schedule hasdifferent benefits for the entire company, including the following [15].1. It improves on-time completions. Industry calls this improvingcustomer service, and on-time completion is one good way to measureit. MRPII companies typically achieve 95% or more on-timecompletion.2. It cuts inventories. With MRP II, inventories can be reduced at thesame time a customer service is improved. Stocks are cut because parts
  38. 38. 37Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systemsare not ordered if not needed to meet requirement for parent items.Typically gains are 20 to 35 %.3. It provides data (future orders) for planning work center capacityrequirements. This benefit is attainable because the basic MRP isenhanced by a capacity requirements planning.4. It improves direct-labor productivity. There is less lost time andovertime because of shortages and less need to west time due tostopping one job to set-up for a "shortage-list job" or "hot job".Reduction in lost time tends to be from 5 to 10% in fabrication andfrom 25 to 40% in assembly. Overtime cuts are grater, on the order of50 to 90%.5. It improves productivity of support staff. MRP II cuts expediting"firefighting", which allows more time for planning. Purchasing canspend time saving money and selecting good suppliers. Materialsmanagement can maintain valid records and better plan inventoryneeds. Production control can keep priorities up-to-date. Supervisorscan better plan capacity and assign jobs. In some cases, fewer supportstaff are needed.6. It facilitates closing the loop with total business planning. That includesplanning capacity and cash flow, which is the chief purpose andbenefit of MRPII.3.4.4 MRP II and Computer Integrated ManufacturingMRP II approach was extended in the 1980s towards the more technicalareas that cover the product development and production process, and that thesefunctions were named with various computer aided acronyms including"Computer Aided Design" (CAD), "Computer Aided Manufacturing" (CAM),and "Computer Aided Quality Assurance" (CAQA). This entire conceptualframework for the integration of all administrative and technical functions of a
  39. 39. 38Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systemscompany was named "Computer Integrated Manufacturing" (CIM) [9], [24],[25].There are five distinct "islands" in the framework of CIM that can beshown as in Figure (17). It is clear that the pivot and the heart of CIMframework is the center island, which includes MRP II, and the linkagesbetween other islands (the bridges) are almost exclusively to the MRP II island.This shows that MRPII is playing the key role in CIM programs andenvironments, since that an excellent business plan can not be achieved withoutan excellent supporting manufacturing resource plan [10], [16], [17].Financial Control Sales/MarketingQuality AssuranceEngineeringActivitiesManufacturingPlanning and ControlMRPIIPurchasingMRP SFCMPSInventorystatusManufacturingEngineeringDesignEngineeringCAMCADQualityControlSPC SQCFinancialReportingCost AccountingBudgetingSales and MarketPlanningSales MarketingDistributionFigure (17) The Framework of Computer Integrated Manufacturing
  40. 40. 39Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems5- Evolution Stage IV: Enterprise Resource PlanningThe term Enterprise Resource Planning (ERP) was coined in 1990s todescribe the latest developments in resource planning. In the light of theincreasingly complex requirements of a global manufacturing environment, ERPintroduced among other things, extensive multi-site management andcommunications functionality to the realm of resource planning [26].However, there is a tendency within the operations management filed toconsider ERP as a natural extension of MRP II [27]. ERP systems expands theconcept of MRP II, and the key difference between MRP II and ERP is thatwhile MRP II has traditionally focused on the planning and scheduling ofinternal resources, ERP strives to plan and schedule supplier resources as well,based on the dynamic customer demands and schedules [28]. Figure (18) showsMRP II and ERP, and how the information from the two systems is integratedwith other information system.The modular functionality commonly found in ERP system includesenhanced functionality of all of the modules of MRP II systems, as well as"Electronic Data Interchange" (EDI), Engineering change control, ProjectManagement and control, and service control [26]. The typical ERP system canbe called as an umbrella system [29].Practically, among the most important attributes of ERP is its ability to;automate and integrate an organizations business processes, share common dataand practices across the entire enterprise and produce and access information ina real-time environment [30].According to Yingjie [27] ERP systems have the followingcharacteristics:-1. ERP systems are packaged software designed for a "client/server"environment.2. ERP systems integrate the majority of a businesss process.
  41. 41. 40Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsInvoicingSales Order (order entry,product configurations, salesmanagements)MasterproductionScheduleInventoryManagementBill ofMaterialsWorkOrdersRouting andLead TimesPurchasing andLead TimesAccountsReceivableGeneralLedgerAccountPayableVendor Communication (schedules, EDI,advanced shipping notice ........etc.ERPMRPIIFigure (18) MRP II and ERP, Information Flows Integrated withOther Organization Systems [29]
  42. 42. 41Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems3. ERP systems process a large majority of an organizations transactions.4. ERP systems use an enterprise-wide database that typically stores eachpiece of data once.5. ERP systems allow access to the data at real timeHowever, client/server environment means that users have personalcomputers with functional modules of ERP system on their desks, while thelarge database is kept centrally. Client/server system can be expandedreasonably easily at low cost [18]. This computer network system has the abilityto link data from different server types. The information access linkages alsoconnect database from different server types. In addition client/server systemcan also link servers in distant locations [23]. ERP use "Local Area Network"(LAN) technology to local servers and "Wide Area Network" (WAN) technologyto wide distance locations. Figure (19) shows an Enterprise client/server model.Figure (19) The Enterprise Client/ Server Model [23]
  43. 43. 42Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsThe popularity of ERP systems started to soar when SAP, a German basedcompany, released its next generation software known as R/3 [28]. SAP is oneof the major providers of ERP systems, like Oracle, People Soft, J.D.Edwards,and Bann. The distribution of market share percent of leading ERP softwarecompanies is shown in Figure (20).The adoption of ERP systems by major corporations was accelerated in1998 and 1999 by possible "Y2K (year 2000) problems" that exist in olderlegacy computer systems that data back to 1970s. For many firms, the cost ofinstalling new ERP systems was comparable to fixing the old legacy systems.The total sales of ERP software reached $3.9 billion in 1995 alone, a 68%increase over 1994 [18] and the total 1999 ERP software and service is $18.2billion [12]. The main reason for this growth is the rapid development and theincrease in the applications and use of internet.Figure (20) The Distribution of Market Share Percent of Leading ERP SoftwareCompanies for Year 1999 [12]
  44. 44. 43Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems6- Evolution Stage V: Enterprise Resource Planning ExtendedEnterprise Resource Planning Extended (ERP II) is the last generation ofMRP-type systems. It is a development or an extension of ERP systems. Thenew systems included extra modules which gave ERP II systems the followingcharacteristics [31]:-1. Integrated systems that cover the firms entire value by transition froman internal view of the firm to business network vision.2. "Electronic commerce" by developing "HTML"* interfaces for theinternet/internet and supporting complete commercial transactions.3. Applications with an object-oriented structure by transition from ahighly integrated structure to modules with a higher complementarityand "plug and play" facilities.Figure (21) shows the Evolution of ERP II and Table (2) gives acomparison between ERP and ERP II.However, most of the literature loosely uses the term "ERP systems" for(ERP and ERP II) systems, referring to their origin. Therefore in the rest of thisstudy the same term "ERP systems" will be used for both.6.1 Reasons to Implement ERP SystemsOrganizations decide to adopt and implement ERP systems when thereare convincing reasons. The main reason is to fulfill the need of manufacturersto a system that combines information used by different departments of anorganization, which is growing out of the scope of MRP II systems, especiallyas they expand across production lines and across global borders.…………………………………………………………………………………….*HTML (Hypertext Mark-up Language) that formats documents and links documents andpictures in the same or remote computers [32].
  45. 45. 44Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsIntegratedPlantSystemsCollaborativeProductCommercePrivateMarketplaceCustomerRelation shipManagement SupplyChainExecutionE-ProcurementPartnerRelationshipManagementSupplyChainPlanningSalesMRP IIProductionMonitoringand ControlFinancialsHumanResourcesPurchasingDistributionERPPackageComponentsERP IIPackageComponentsFigure (21) Evolution of ERP II from ERP [31]
  46. 46. 45Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type SystemsTable (2) Comparison of ERP vs. ERP II [31]Other reasons of demand for ERP application, according to Somers andNelson [33] are; competition pressures to become a low cost producer,expectations of revenue growth, ability to compete globally, Y2K-relatedreplacements, and the desire to re-engineer the business to respond to marketchallenges.Although the properly selected and implemented ERP systems can beleading to many benefits, but if that has not been carefully considered may bringdisaster rather than benefits. For example Fox Meyer Drug a $5 billionpharmaceutical company, recently filed for bankruptcy. Fox Meyer argued thatmajor problems were generated by a failed ERP system, which created excessshipments resulting from incorrect orders and costing Fox Meyer millions ofdollars. Recent ERP failures also include Dell Computer, Boeing, DowChemical, Mobile Europe, Applied Materials, Hershey, and Kelloggs [28].
  47. 47. 46Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems6.2 Feasibility of Implementing ERP Systems in Iraqi ManufacturingIndustriesPractically, in the present situation of Iraqi manufacturing industries it isclear that bypassing MRP II systems and adopting ERP systems is not thesuitable decision, due to the lack of convincing reasons to implement suchsophisticated systems. Furthermore, we expect a great chance of bringing a lotof extensive problems especially when taking the following notes of ERPimplementation into consideration:-1. The difficulties and the high failure rate of implementing ERP systems[30]. ERP, implementation success rate is only about 23% in westerncountries and the rate is extremely low in other countries for exampleit is about 10% in China [34]. Chen [28] indicated that 40% of all ERPinstallations only achieve partial implementation and 20% ofattempted ERP adoptions are scrapped as total failure.2. The process of implementing ERP systems is very costly and takes along time. An ERP system is a complex set of software programs sothat it takes several years and many millions of dollars to implement[9]. According to Koch [35] Meta Group surveyed 63 companies andfound that the average "Total Cost of Ownership" (TCO)* of ERP is $15 million (the highest was $ 300 million and the lowest was400,000) and the average implementation takes 31 months beforebenefits of any kind were realized. And according to Chen [28] a newERP implementation can range anywhere from $2 to $4 million for asmall firm and to over $1 billion for large companies. Parr and Shanks[36] indicated that comprehensive implementation takes more then 7years and costs of tens of millions of dollars.………………………………………………………………………………………………......* TCO Include all hardware, software, professional services, and internal costs, as well as thecost of optimizing, maintaining, and upgrading the system [35].
  48. 48. 47Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems3. Unlike the implementation of less sophisticated technologicalinnovations such as CAD/CAM and MRP II, "Business Process Re-engineering" (BPR) is a unique planning activity in ERP projects [28].BPR means that all the processes in a company must conform to theERP model, but not all companies wish to make massive changes totheir business processes [36].4. Each of the different ERP software package has its particular strengthsand weakness [12]. So they do not meet all the needs of anorganization. Al-Mashari [37] states the fact that even the best productavailable can only fit 70% of an organizations needs.7- ConclusionUntil the 1960s many manufacturing organizations used ROP method.ROP treats all subassemblies and raw materials demand as independent of enditem demand.MRP is primarily designed to handle ordering and scheduling ofdependent demand inventories and to differentiate between dependent andindependent demand. MRP has the ability to answer the key issues; "what","how much", and "when" a material is needed.MRP systems has evolved dramatically and its logic has been extendedwith the time in order to be capable to cover the growing requirements ofmanufacturing organizations, by adding modules around the original MRPsystem which is still in the core of all of MRP-type systems.Generally, most of the companies that adopted and implement MRP-typesystems successfully have achieved significant benefits.Implementing ERP systems is not recommended when there are noconvincing reasons for that.Obviously, the degree of success of implementing MRP-type systemsdepends on the existence of many requirements and on the environments of the
  49. 49. 48Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systemsindustry in which these systems to be implemented. Therefore, these subjectsmust be studied in depth in order to achieve a successful implementation and getthe maximum benefits of these systems.References[1]. More, S.M., "MRP and the Least Total Cost Method of Lot-Sizing"Production and Inventory Management, Vol. 15, No.2, PP. 47-55, 1974.[2]. McLeavey, D.W., and Narasimhan, S.L., "Production Planning andInventory Control" Allyn and Bacon Inc., 1985.[3]. Orlicky, J., "Material Requirements Planning" McGraw-Hill Inc., 1975.[4]. Krajewski, L.J, and Ritzman, L.P., "Operations Management; Processes andValue Chains" Pearson Prentice Hall, 2005.[5]. Stevenson, W.J., "Production /Operations Management" Irwin /McGraw-Hill, 1999.[6]. Tersine, R.J., "Production/Operations Management; Concepts, Structure,and Analysis" Elsevier Science Publishing Co., Inc., 1985.[7]. Monks, J.G., "Operations Management; Theory and Problems" McGraw-Hill International Editions, 1987.[8]. Moore, F.G., and Hendrick, T.E., "Production/Operations Management"Richard D. Irwin Inc., 1980.[9]. Gaither, N., and Fraizer, G., "Operations Management" South-WesternThomson Learning, 2002.[10]. Browne, J., Harden, J., and Shivnan, J., "Production Management System:An Integrated Perspective" Addison Wesley, 1996.[11]. Groover, M.P., and Zimmer, JR.E.W., "CAD/CAM; Computer- AidedDesign and Manufacturing" Prantic-Hall International,Inc., 1984.[12]. Davis, M.M., Aquilano, N.J., and Chase, R.B., "Fundamentals ofOperations Management" McGraw- Hill /Irwin, 2003.[13]. Slack, N., Chambers, S., and Johnston, R., "Operations Management"Prentice Hall, 2004.
  50. 50. 49Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems[14]. Vonderembse, M.A., and White, G.P., "Operations Management:Concepts, Methods, and Strategies" West Publishing Company, 1988.[15]. Knod, E.M., and Schonberger, R.J., "Operations Management: MeetingCustomers Demands" McGraw-Hill/Irwin, 2001.[16]. Bedworth, D.D., Henderson, M.R., and Wolfe, P.M., "Computer IntegratedDesign and Manufacturing" McGraw-Hill Inc., 1991.[17]. Vollmann, T.E., Berry, W.L., and Whybark, D.C., "ManufacturingPlanning and Control Systems" Richard D. Irwin Inc., 1988.[18]. Silver, E.A., Pyke, D.F., and Peterson, R., "Inventory Management andProduction Planning and Scheduling" John Willy and Sons Inc., 1998.[19]. Krajewski, L.J, and Ritzman, L.P., "Operations Management; Strategyand Analysis" Addison-Wesley Publishing Company, 1996.[20]. Askin, R.G. and Goldberg, J.B., "Design and Analysis of Lean ProductionSystem" John Wiley and Sons Inc., 2002.[21]. Wight, O., "MRP II: Unlocking Americas Productivity Potential" OliverWight Limited Publications Inc., 1983.[22]. Zaner, J.A., "Production and Inventory Control" Department ofTechnology, University of Southern Mine, 2003.[23]. Cheng, P.W., "Effective Use of MRP-Type Computer Systems to SupportManufacturing" M.Sc. Thesis Submitted to the Faculty of VirginiaPolytechnic Institute and State University, 1997.[24]. Johnasson, L., and Soderberg, K., "MPC Systems and Small Companies"M.Sc. Thesis Submitted to "Vaxjo University" Sweden, 1999.[25]. Sarpola, S., "Enterprise Resource Planning (ERP) Software Selection andSuccess of Acquisition Process in Wholesale Companies" M.Sc. ThesisSubmitted to Helsinki School of Economics, 2003.[26]. Eric, M., "ERP; Planning for Tomorrow" (
  51. 51. 50Dr. Mahmoud Abbas MahmoudThe Concept and Evolution of MRP-type Systems[27]. Yingjie, J., "Critical Success Factors in ERP implementation in Finland"M.Sc. Thesis Submitted to the Swedish School of Economics andBusinesses Administration, 2005.[28]. Chen, I.J., "Planning for ERP Systems; Analysis and Future Trend"Business Process Management Journal, Vol.7, No. 5, PP. 374-386, 2001.[29]. Heizer, J., and Render, B., "Operations Management" Prentice Hall, 2001.[30]. Nah, F.F., Lau, J.I., and Kuang, J., "Critical Factors for SuccessfulImplementation of Enterprise Systems" Business Process ManagementJournal, Vol. 7, No. 3, PP. 285-296, 2001.[31]. Andreu, R., Sieber, S., and Valor, J., "Introduction to ERP" IESE BusinessSchool. University of Navarra, Spain, (,2003.[32]. Waller, D.L., "Operations Management: A Supply Chain Approach"International Thomson Business Press, 1999.[33]. Somers, T.M., and Nelson, K., "The Impact of Critical Success FactorsAcross the Stages of Enterprise Resource Planning Implementations"Proceedings of the 34thHawaii International Conference on SystemSciences, 2001.[34]. Zhang, L., Lee, M.K.O., Zhang, Z., and Banerjee, P., "Critical SuccessFactors of Enterprise Resource Planning Implementation in China"Proceedings of the 36thHawaii International Conference on SystemSciences, 2003.[35]. Koch, C., "The ABCs of ERP", CIO Magazine,CXO Media, , 2002.[36]. Parr, A.N. and Shanks, G., "A Taxonomy of ERP ImplementationApproaches" Proceedings of the 33rdHawaii International Conference onSystem Sciences, 2000.[37]. Al-Mshari, M., "Process Orientation Trough Enterprise Resource Planning(ERP): A Review of Critical Issues" Knowledge and Process Management,Vol. 8, No. 3, PP. 175-185, 2001.