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*Computerized Inventory Control*Production Planning System*Management Information System*Manufacturing Control System     *
*This is the most comprehensive approach to manufacturing inventory and other dependents which demand an efficient invento...
*The MRP system determines item-by-item, what is to be processed and when, as well as what is to be manufactured when.*Thi...
An MRP system is intended to simultaneouslymeet three objectives:* Ensure materials and products are available for product...
*Forecasting*Order, Planning and Control*Priority Planning and Control*Planning Capacity Requirement and Development of Br...
* Manufacturing organizations, whatever their   products, face the same daily practicalproblem - that customers want produ...
Making a bad decision in any of these areas will make thecompany lose money. A few examples are given below:* If a company...
Independent demand: Demand for final products. Dependent demand: Demand fort items that are subassemblies or component par...
** Reduce Inventory Levels    * Reduce Purchasing Cost* Reduce Component           * Improve Production Shortages         ...
** Improve Communication      * Reduce Overtime* Improve Plant Efficiency   * Improve Supply Schedules* Reduce Freight Cos...
*Identifying Requirements*Running MRP – Creating theSuggestions*Firming the Suggestions          *
**Quantity on Hand*Quantity on Open Purchase Order*Quantity in/or Planned for Manufacturing*Quantity Committed to Existing...
**Company Sensitive*Location Sensitive*Date Sensitive
**Critical Items*Expedite Items*Delay Items
*Manufacturing Orders*Purchasing Orders*Various Reports     *
*                        Master       Product                         Inventory                      Production    Structu...
**Product Structure File*Master Production Schedule*Inventory Master File               18
*Bill of Materials:     * It is a materials list that provides      information useful to reconstruct the      manufacturi...
*Schedule of Finished Products*Represents Production, not Demand*Combination of Customer Orders and Demand Forecasts*What ...
**On-Hand Quantities*On-Order Quantities*Lot Sizes*Safety Stock*Lead Time*Past-Usage Figures
** Schedules the Production of all items using an MRP Matrix                                    MRP Matrix      Item:     ...
**Item – name or number for the item being scheduled*Low-Level Code – the lowest level of the item on the product structur...
**Gross Requirements – demand for an item by time period*Scheduled Receipts – material already ordered*Projected on Hand –...
**Gross requirements: (Forecasted)Demand period by period*Net requirements(t)  =Gross requirements(t)-Projected inventory(...
*Planned-order receipts is the production planned*Projected inventory(t)  =Projected inventory(t-1)+Scheduled receipt(t)  ...
*Periods                   0   1   2    3Gross requirements            6   11   7   InputsScheduled receipts            2 ...
*
**Safety Stock  *Not much for items with dependent demand*Lot sizing  *Lot-for-lot ordering  *Economic order quantity  *Fi...
*Periods                   0    1    2    3Gross requirements             6   11    9   InputsScheduled receipts          ...
*    32
*                      Marketing Production           Customer               Finance   Capacity           Demand          ...
*Production Plan        Master Production                           Schedule                           Material           ...
*Manufacturing Orders*Purchasing Orders*Various Reports       *
**Improved Business Results*Improved Manufacturing Results*More Accurate And Timely Information*Less Inventory*Less Materi...
* Increase In Material Acquisition Cost* Higher Transportation Costs And Higher Unit Cost* Potential Hazard Of A Productio...
Materials requirements planning
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Materials requirements planning

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  • Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost.
  • Transcript of "Materials requirements planning"

    1. 1. http://www.slideshare.net/anandsubramaniam/lot-sizing-techniques
    2. 2. *Computerized Inventory Control*Production Planning System*Management Information System*Manufacturing Control System *
    3. 3. *This is the most comprehensive approach to manufacturing inventory and other dependents which demand an efficient inventory management system. *
    4. 4. *The MRP system determines item-by-item, what is to be processed and when, as well as what is to be manufactured when.*This is based on order priorities and available capacities.
    5. 5. An MRP system is intended to simultaneouslymeet three objectives:* Ensure materials and products are available for production and delivery to customers.*Maintain the lowest possible level of inventory.*Plan manufacturing activities, delivery schedules and purchasing activities
    6. 6. *Forecasting*Order, Planning and Control*Priority Planning and Control*Planning Capacity Requirement and Development of Broad Business Plans *
    7. 7. * Manufacturing organizations, whatever their products, face the same daily practicalproblem - that customers want products to be available in a shorter time than it takes to make them. This means that some level of planning is required.
    8. 8. Making a bad decision in any of these areas will make thecompany lose money. A few examples are given below:* If a company purchases insufficient quantities of an item used in manufacturing, or the wrong item, they may be unable to meet contracts to supply products by the agreed date.* If a company purchases excessive quantities of an item, money is being wasted - the excess quantity ties up cash while it remains as stock and may never even be used at all. This is a particularly severe problem for food manufacturers and companies with very short product life cycles. However, some purchased items will have a minimum quantity that must be met, therefore, purchasing excess is necessary.* Beginning production of an order at the wrong time can cause customer deadlines to be missed.
    9. 9. Independent demand: Demand for final products. Dependent demand: Demand fort items that are subassemblies or component parts to be used in production of finished goods. A Independent Demand B(4) C(2) Dependent Demand D(2) E(1) D(3) F(2) *Independent demand is uncertain.Dependent demand is certain.
    10. 10. ** Reduce Inventory Levels * Reduce Purchasing Cost* Reduce Component * Improve Production Shortages Schedules* Improve Shipping * Reduce Manufacturing Cost Performance * Reduce Lead Times* Improve Customer Service * Less Scrap and Rework* Improve Productivity * Higher Production Quality* Simplified and Accurate Scheduling
    11. 11. ** Improve Communication * Reduce Overtime* Improve Plant Efficiency * Improve Supply Schedules* Reduce Freight Cost * Improve Calculation of* Reduction in Excess Material Requirements Inventory * Improve Competitive Position
    12. 12. *Identifying Requirements*Running MRP – Creating theSuggestions*Firming the Suggestions *
    13. 13. **Quantity on Hand*Quantity on Open Purchase Order*Quantity in/or Planned for Manufacturing*Quantity Committed to Existing Orders*Quantity Forecasted
    14. 14. **Company Sensitive*Location Sensitive*Date Sensitive
    15. 15. **Critical Items*Expedite Items*Delay Items
    16. 16. *Manufacturing Orders*Purchasing Orders*Various Reports *
    17. 17. * Master Product Inventory Production Structure File Master File Schedule Material Requirements Planning Manufacturing Purchase Various Reports Orders Orders
    18. 18. **Product Structure File*Master Production Schedule*Inventory Master File 18
    19. 19. *Bill of Materials: * It is a materials list that provides information useful to reconstruct the manufacturing process. It is the master product definition that contains “as designed” information. * 19
    20. 20. *Schedule of Finished Products*Represents Production, not Demand*Combination of Customer Orders and Demand Forecasts*What Needs to be Produced * 21
    21. 21. **On-Hand Quantities*On-Order Quantities*Lot Sizes*Safety Stock*Lead Time*Past-Usage Figures
    22. 22. ** Schedules the Production of all items using an MRP Matrix MRP Matrix Item: Low-Level Code: Lot Size: Lead Time: PD 1 2 3 4 5 Gross Requirements Scheduled Receipts Projected on Hand Net Requirements Planned Order Receipts Planned Order Releases
    23. 23. **Item – name or number for the item being scheduled*Low-Level Code – the lowest level of the item on the product structure file*Lot Size – order multiples of quantity*Lead Time – the time from when an order is placed to when it is received*PD – Past Due Time Bucket, orders behind schedule
    24. 24. **Gross Requirements – demand for an item by time period*Scheduled Receipts – material already ordered*Projected on Hand – expected ending inventory*Net Requirements – number of items to be provided and when*Planned Order Receipts – net requirements adjusted for lot size*Planned Order Releases – planned order receipts offset for lead times
    25. 25. **Gross requirements: (Forecasted)Demand period by period*Net requirements(t) =Gross requirements(t)-Projected inventory(t-1) -Scheduled receipt(t)*If Net requirement(t) > 0 set Planned order receipts(t)>=Net requirement(t) 26
    26. 26. *Planned-order receipts is the production planned*Projected inventory(t) =Projected inventory(t-1)+Scheduled receipt(t) +Planned order receipts(t)-Gross requirements(t)*Planned order release(t-LT)=Planned-order receipts(t)
    27. 27. *Periods 0 1 2 3Gross requirements 6 11 7 InputsScheduled receipts 2 3 0Projected on hand 10 6 0 0Net requirements 0 2 7 OutputsPlanned order receipts 2 7Planned order releases 2 7
    28. 28. *
    29. 29. **Safety Stock *Not much for items with dependent demand*Lot sizing *Lot-for-lot ordering *Economic order quantity *Fixed-period ordering *Part-period model
    30. 30. *Periods 0 1 2 3Gross requirements 6 11 9 InputsScheduled receipts 2 3 0Projected on hand 10 6 3 4Net requirements 5 10 OutputsPlanned order receipts 5 10Planned order releases 5 10
    31. 31. * 32
    32. 32. * Marketing Production Customer Finance Capacity Demand Cash Flow Inventory Aggregate HumanProcurement Production Plan Resources Supplier ManpowerPerformance Planning Management Engineering Return on Design Investment Completion Capital
    33. 33. *Production Plan Master Production Schedule Material Requirements Plan Capacity Requirements Plan No Realistic?? Yes Execute Capacity Plans Execute Material Plans
    34. 34. *Manufacturing Orders*Purchasing Orders*Various Reports *
    35. 35. **Improved Business Results*Improved Manufacturing Results*More Accurate And Timely Information*Less Inventory*Less Materials Obsolescence*Time Phased Ordering Of Materials*Higher Reliability*More Responsiveness To Market Demand*Reduced Production Cost
    36. 36. * Increase In Material Acquisition Cost* Higher Transportation Costs And Higher Unit Cost* Potential Hazard Of A Production Slowdown Or Shutdown* Use Of Standardized Software Packages* Does not Take Into Account Plant Capacity And Distribution Capacity* High Stock-Out Costs. *
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