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Material requirement planning presentation

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Material requirement planning presentation

  1. 1. Material Requirement Planning (MRP)
  2. 2. Contributors to MRP• Joseph Orlicky• George Plossl• Oliver Wight• American Production and Inventory Control Society
  3. 3. What is MRP?• Computerized Inventory Control• Production Planning System• Management Information System• Manufacturing Control System
  4. 4. When to use MRP• Job Shop Production• Complex Products• Assemble-to-Order Environments• Discrete and Dependent Demand Items
  5. 5. What can MRP do?• Reduce Inventory Levels • Reduce Purchasing Cost• Reduce Component • Improve Production Shortages Schedules• Improve Shipping • Reduce Manufacturing Performance Cost• Improve Customer • Reduce Lead Times Service • Less Scrap and Rework• Improve Productivity • Higher Production• Simplified and Accurate Quality Scheduling
  6. 6. What can MRP do?• Improve • Reduce Overtime Communication • Improve Supply• Improve Plant Schedules Efficiency • Improve Calculation of• Reduce Freight Cost Material Requirements• Reduction in Excess • Improve Competitive Inventory Position
  7. 7. Three Basic Steps of MRP• Identifying Requirements• Running MRP – Creating the Suggestions• Firming the Suggestions
  8. 8. Step 1: Identifying the Requirements• Quantity on Hand• Quantity on Open Purchase Order• Quantity in/or Planned for Manufacturing• Quantity Committed to Existing Orders• Quantity Forecasted
  9. 9. Step 1: Important Information MRP is…..• Company Sensitive• Location Sensitive• Date Sensitive
  10. 10. Step 2: Running MRP – Creating the Suggestions• Critical Items• Expedite Items• Delay Items
  11. 11. Step 3: Firming the Suggestions• Manufacturing Orders• Purchasing Orders• Various Reports
  12. 12. Overview of the MRP System Product Master Inventory Structure Production Master File File Schedule Material Requirements PlanningManufacturing Purchase Various Orders Orders Reports
  13. 13. MRP Inputs• Product Structure File• Master Production Schedule• Inventory Master File
  14. 14. Product Structure File• Bill of Materials
  15. 15. Master Production Schedule• Schedule of Finished Products• Represents Production, not Demand• Combination of Customer Orders and Demand Forecasts• What Needs to be Produced
  16. 16. Inventory Master File• On-Hand Quantities• On-Order Quantities• Lot Sizes• Safety Stock• Lead Time• Past-Usage Figures
  17. 17. MRP Process• 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
  18. 18. Terms Defined• 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
  19. 19. Terms Defined• 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
  20. 20. Example of the MRP ProcessItem: A Low-Level Code: 1Lot Size: 25 Lead Time: 1 PD 1 2 3 4 5Gross Requirements 10 15 25 25 30Scheduled Receipts 25Projected on Hand 20Net RequirementsPlanned Order ReceiptsPlanned Order Releases
  21. 21. Example of the MRP ProcessItem: A Low-Level Code: 1Lot Size: 25 min Lead Time: 1 PD 1 2 3 4 5Gross Requirements 10 15 25 25 30Scheduled Receipts 25Projected on Hand 20 10 2 20 20 15Net Requirements 5 5 10P 25 25 25
  22. 22. MRP Outputs• Manufacturing Orders• Purchasing Orders• Various Reports
  23. 23. Hubbell Lighting Case• Manufactures Industrial Lighting Products• Good-Quality Products• Poor at Meeting Due Dates• Work is Specialized for Each Customer• Job Shop Environment• Complex Products
  24. 24. Hubbell Lighting CaseBefore MRP Implementation After MRP Implementation• Less than 75% of orders • 97% of orders completed completed on time on time • 2% of orders completed with 1 to 2 days after due date
  25. 25. Summary of MRPMRP is a…..• Computerized Inventory Control• Production Planning Systemthat…..• Schedules Component Items as Neededwhich will…..• Track Inventory and…..• Help you in many other aspects of business
  26. 26. ReferencesRussell, Roberta S., and Bernard W. Taylor III. Operations Management. 3rd Edition: Prentice Hall, 2000Grubbstrom, Robert W. Material Requirements Planning and Manufacturing Resource Planning. 03/12/2002. http://www.itbp.com/opsmanagement/iebm/material_requirements.htm.Vormittag Associates, Inc. System 2000 MRP. 03/12/2002. http://www.vaihome.com/s2000mrp.htm.Inventory Solutions. What is MRP?. 03/12/2002. http://www.inventorysolutions.org/def_mrp.htm.

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