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4. materials requirement planning


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4. materials requirement planning

  2. 2. TECHNIQUES OF MATERIALS PLANNINGDirect Materials –• High value - (i) BOM / Explosion charts (ii) MRP (iii) Inventory Control• Low value - Inventory ControlIndirect Materials – (i) Past Consumption Analysis Technique (ii) Exponential Smoothing (iii) Inventory Control 2
  3. 3. FORECASTINGForecasting is a prelude to planning.Principles of Forecasting -• Forecasts attempt to look into the unknown future & except by sheer luck, will be wrong to some degree.• Every forecast should include an estimate of error, often expressed as a percentage of the forecast /as a range between maximum & minimum values.• Forecasts are more accurate for families/groups.• Forecasts are more accurate for nearer time periods.Forecasting Techniques –• Qualitative• Extrinsic• Intrinsic 3
  4. 4. MASTER PRODUCTION SCHEDULE (MPS)• It forms the link between production planning & what manufacturing will actually build• It forms the basis for calculating the capacity & resources needed• The MPS drives the material requirements plan.• It keeps priorities valid. The MPS is a priority plan for manufacturing. 4
  5. 5. MASTER PRODUCTION SCHEDULE (MPS)Information needed to develop an MPS –• The production plan• Forecasts for individual end items• Actual orders received from customers & for stock replenishment• Inventory levels for individual end items• Capacity restraints 5
  6. 6. MASTER PRODUCTION SCHEDULE (MPS)Objectives of MPS –• To maintain the desired level of customer service by maintaining finished-goods inventory levels or by scheduling to meet customer delivery requirements.• To make the best use of material, labor & equipment.• To maintain inventory investment at the required levels 6
  7. 7. MASTER REQUIREMENTS PLAN (MRP)MRP is the scientific technique for planning the ordering & usage of materials at various levels of production & for monitoring the stocks during these transactions.MRP, is both inventory control & scheduling technique.Objectives of MRP –• Determine requirements• Keep priorities current 7
  8. 8. MASTER REQUIREMENTS PLAN (MRP)Advantages of MRP over Conventional Planning –• Low levels of in-process inventories.• Ability to keep track of material requirements.• Ability to evaluate the capacity requirements generated by a given master schedule.• A means of allocating production time. 8
  9. 9. INPUT-OUTPUT OF MRP SYSTEMINPUT –1. Master Production Schedule2. Inventory Records3. Bill of MaterialOUTPUT –1. Primary Reports – planned orders, order releases, changes to planned orders2. Secondary Reports – (i) Performance-control reports (ii) Planning reports (iii) Exception reports 9
  10. 10. BILL OF MATERIALS (BOM)The Association for Operations Management (APICS) defines a bill of material as “a listing of all sub-assemblies, intermediates, parts & raw materials that go into making the parent assembly showing the quantities of each required to make an assembly.”BOM provides details such as part no., description, quantity required, material specifications etc. 10
  11. 11. BILL OF MATERIALS (BOM)BOM STRUCTURE –1. Product Tree2. Parent-component relationship3. Multilevel bill4. Multiple bill5. Single-level bill6. Indented bill7. Summarized parts bill8. Planning bill 11
  12. 12. BILL OF MATERIALS (BOM)Uses of BOM –1.Product definition2.Engineering change control3.Service parts4.Planning5.Manufacturing6.Costing 12
  13. 13. MRP FLOWCHARTSales OrdersForecasts Component parts & raw material inventory Scrap allowance No Have all levels been exploded? Yes 13
  14. 14. MANUFACTURING RESOURCE PLANNING (MRP II)• Provides the mechanism for coordinating the efforts of marketing, finance, production & other departments in the company.• A method for the effective planning of all resources of a manufacturing company 14
  15. 15. ENTERPRISE RESOURCE PLANNINGAmerican Production & Inventory Control Society (APICS) defines ERP as “Framework for organizing, defining & standardizing the business processes necessary to effectively plan & control an organization so the organization can use its internal knowledge to seek external advantage.”• allows the tracking of orders & other important planning• control information throughout the entire company• allows managers to share data between firms so that they can have visibility across the complete span of supply chain 15