Material Resource Planning


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Material Resource Planning

  1. 1. Material Requirement Planning By GROUP-8 Debojit Roy – H66 Sritanu Das Mahapatra – H57 Abhisek Sahu – H3 Krishnakant Pandey – H25 Biswajit Ghosh – H12
  2. 2. Material Requirement Planning <ul><li>MRP is a systematic planning-and-control methodology for production and inventory. </li></ul><ul><li>Specifically, it is a procedure for planning and controlling the raw material, purchased parts, and work in progress (WIP) inventories required in manufacturing a product. </li></ul><ul><li>MRP is designed to answer three questions: what is needed, how much is needed, and when is it needed. </li></ul>
  3. 3. END PRODUCT COMPONENT OF END PRODUCT RAW MATERIAL Order Point Time LT LT Time LT Time LT Independent and Dependent Demand Inventory Order Point Order Point LT
  4. 4. The Benefits of MRP <ul><li>Inventory reduction. </li></ul><ul><li>Reduction in production & delivery time. </li></ul><ul><li>Increased efficiency. </li></ul><ul><li>Faster response to market changes. </li></ul><ul><li>Improved labour & equipment utilization. </li></ul><ul><li>Better inventory planning & scheduling. </li></ul><ul><li>Reduced inventory levels without reduced customer service. </li></ul>
  5. 5. WHEN TO USE MRP? <ul><li>It is useful for….. </li></ul><ul><li>Dependent Demand (table top, table leg). </li></ul><ul><li>Discrete Demand (demand for leg at last). </li></ul><ul><li>Complex Products (subassembly before final assembly). </li></ul><ul><li>Assemble-to-Order (major assemblies & sub assemblies is done in advance). </li></ul>
  6. 6. Limitations of Order-point techniques… <ul><li>As each part in inventory is managed separately & </li></ul><ul><li>independently of all others. So even though these </li></ul><ul><li>techniques can provide extremely high service level for </li></ul><ul><li>individual parts, the service level for combination of Parts </li></ul><ul><li>(subassemblies) & for the complete end product can be </li></ul><ul><li>low. </li></ul>
  7. 7. <ul><li>Overview of the MRP System </li></ul>Master Production Schedule Material Requirements Planning Product Structure File Item Master file Planned Order Release Work orders Purchase Orders Rescheduling notices
  8. 8. Information Needed for MRP <ul><li>It collects information through…. </li></ul><ul><li>Master Production Schedule (MPS), </li></ul><ul><li>The Bill of Material (BOM), ingredients for the end product, </li></ul><ul><li>Inventory Data, </li></ul><ul><li>Balance on Hand (BOH), </li></ul><ul><li>Scheduled receipts, </li></ul><ul><li>Purchasing/Fabrication lead times. </li></ul>
  9. 9. MRP Inputs <ul><li>Master Production Schedule </li></ul><ul><li>Product Structure File </li></ul><ul><li>Inventory Master File </li></ul>
  10. 10. Product Structure File <ul><li>Bill of Materials: </li></ul><ul><ul><ul><ul><ul><li>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 </li></ul></ul></ul></ul></ul>
  11. 11. Bill of material LEVEL PRODUCT LEAD TIME Level 0 Two -drawer file cabinet Level 1 Case (1) 2 weeks Level 2 Drawer slide (4) 3 weeks Formed case (1) 2 weeks Level 3 Sheet steel (1) 4 weeks Level 1 Drawers (2) 1 week Level 2 Formed drawer (1) 2 weeks Handle (1) 3 weeks Support rollers (2) 3 weeks Level 3 Sheet steel(1) 4 weeks
  12. 12. Master Production Schedule <ul><li>Schedule of Finished Products </li></ul><ul><li>Represents Production, not Demand </li></ul><ul><li>Combination of Customer Orders and Demand Forecasts </li></ul><ul><li>What Needs to be Produced </li></ul>
  13. 13. Inventory Master File <ul><li>On-Hand Quantities. </li></ul><ul><li>On-Order Quantities. </li></ul><ul><li>Lot Sizes. </li></ul><ul><li>Safety Stock. </li></ul><ul><li>Lead Time. </li></ul><ul><li>Past-Usage Figures. </li></ul>
  14. 14. Product structure tree Two-Drawer File Cabinet <ul><li>Level 0 </li></ul>Two drawer File cabinet Case(1) 2 week Drawers(2) 1 week Drawer slide(4) 3 week Formed case(1) 2 week Sheet steel(1) 4 week Formed Drawer(1) 2 week Handle(1) 3 week Support Rollers(2) 3 week Sheet steel(1) 4week Level 1 Level 2 Level 3 Level 0
  15. 15. Drawer Subassembly Requirement MPS for two-drawer file cabinet WEEK 1 2 3 4 5 6 GROSS REQUIREMENTS 20 30 40 10 50 60 SCHEDULED RECEIPTS 0 0 0 0 0 0 BALANCE ON HAND 90 70 40 0 -10 -50 -60 PLANNED-ORDER RELEASE 0 0 10 50 60 0 week 1 2 3 4 5 6 quantity 10 15 20 5 25 30
  16. 16. Description <ul><li>90 drawer subassemblies are currently in hand for requirement in first 3 week. </li></ul><ul><li>Ending balance on hand = beginning BOH + scheduled receipt – gross requirement. </li></ul><ul><li>In week 4 negative inventory balance indicates a net requirement for drawer subassemblies. </li></ul><ul><li>The net requirements will trigger planned-order releases for more drawer subassemblies in earlier period. </li></ul>
  17. 17. Description <ul><li>Lot for lot method – generating the planned quantities in each period value by value directly from the net requirements in subsequent period, with no economic batching of orders, is called “the lot for lot method. </li></ul><ul><li>Time phasing – the process of subtracting an item's lead time from its due date to determine when an order should be released. Time-phasing coordinates the quantity of parts and components held in inventory with assemble or final production needs as determined by the MPS. </li></ul>
  18. 18. SUPPORT ROLLER REQUIREMENTS week quantity 1 2 3 4 5 6 0 0 10 50 60 0 Drawer subassemblies WEEK 1 2 3 4 5 6 GROOS REQUIREMENT 0 0 20 100 120 0 SCHEDULED RECEIPTS 0 40 0 0 0 0 BALANCED ON HAND 60 60 100 80 -20 -120 0 PLANNED-ORDER RELEASE 20 120 0 0 0 0
  19. 19. Two important concepts <ul><li>Planned order releases at higher levels generate gross requirements at lower levels. </li></ul><ul><li>Inventories of higher level subassemblies already include the necessary lower level components, and this fact is automatically allowed for by the net requirements calculation. </li></ul>
  20. 20. Regeneration vs. net change <ul><li>Regeneration </li></ul><ul><ul><ul><li>Complete replanning of requirements and update of inventory status for all items </li></ul></ul></ul><ul><ul><ul><li>High data processing efficiency </li></ul></ul></ul><ul><ul><ul><li>Usually initiated by weekly update of master schedule </li></ul></ul></ul><ul><li>Net change </li></ul><ul><ul><ul><li>Daily update based on inventory transactions </li></ul></ul></ul><ul><ul><ul><li>More responsive to changing conditions </li></ul></ul></ul><ul><ul><ul><li>Requires more discipline in file maintenance </li></ul></ul></ul>
  21. 21. Manufacturing Resource Planning ( MRP II ) <ul><li>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 in dollars, and has a simulation capability to answer &quot;what-if&quot; questions and extension of closed-loop MRP. </li></ul>
  22. 22. Business Planning Sales Planning Production Planning Resources OK? Master Scheduling Material Planning Capacity Planning Planning OK? Performance Measurement Shop Floor Control Purchasing Objectives Demands Routing Inventory Status Bills of Material Products Materials Capacity Parts Hours Accountability Objectives Top Management Planning OMP Operations Management Execution Yes No No Yes F E E D B A C K
  23. 23. Just-in-time (JIT) <ul><li>A highly coordinated processing system in which goods </li></ul><ul><li>move through the system, and services are performed, </li></ul><ul><li>just as they are needed. </li></ul><ul><li>In short, the just-in-time inventory system is all about </li></ul><ul><li>having “the right material, at the right time, at the right </li></ul><ul><li>place, and in the right quantity ” without the safety net of </li></ul><ul><li>Inventory, the implications of which are broad for the </li></ul><ul><li>Implementers. </li></ul>
  24. 24. History of JIT <ul><li>The technique was first used by the Ford Motor company as described explicitly by Henry Ford’s My Life and Work (1922) </li></ul><ul><li>The technique was subsequently adopted and publicised by Toyota Motor Corporation of Japan as part of its Toyota Production System (TPS). </li></ul>
  25. 25. Benefits of JIT <ul><li>The benefits of JIT are listed below. </li></ul><ul><li>Lower stock holding means a reduction in storage space which saves rent and insurance costs </li></ul><ul><li>As stock is only obtained when it is needed, less working capital is tied up in stock </li></ul><ul><li>There is less likelihood of stock perishing, becoming obsolete or out of date </li></ul><ul><li>Avoids the build-up of unsold finished product that can occur with sudden changes in demand </li></ul><ul><li>Less time is spent on checking and re-working the product of others as the emphasis is on getting the work right first time </li></ul>
  26. 26. Problems of JIT <ul><li>There is little room for mistakes as minimal stock is kept for re-working faulty product. </li></ul><ul><li>Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed . </li></ul><ul><li>There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders – however, JIT is a very responsive method of production. </li></ul>
  27. 28. MRP vs. JIT <ul><li>For a company which is small and just starting up I feel an MRP ordering system would be better suited – if you implemented JIT then as a small company you would be trying to break into a market, if the JIT system goes wrong (as I am sure we all agree this is very risky) then you’ll be un-able to get your product on the shelves for customers to buy and if this happened on a regular occasion then your reputation from consumers won’t be good – which is critical from a new companies point of view. </li></ul><ul><li>On the other hand – being a large reputable company with a solid reputation and brand image maybe the JIT system should be implemented as this type of company will be able to invest at making this system a success, as JIT dramatically reduces cost and waste these savings will influence the price of the product in order to compete with other competitors. </li></ul>
  28. 29. Summary <ul><li>In the era of computer and IT, it is necessary to use new technologies for fester growing organization. Any company wants to lead in the competetitive market by introducing qualitative product with in a short period of time. Like that in manufacturing organization MRP system helps to reduce the manufacturing time of a product by insuring the availability of materials for product assembly in the necessary quantities at the required time. It also help to reduce raw material purchasing ,purchases parts & working process inventory. So MRP uses reducing inventory cost, reducing completion time of manufacturing with maintaining quality. It provides customer, a greater return value of their money. </li></ul>