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An ARTICLE on MRP Presented By : Group-09 (Section - G)
MATERIAL REQUIREMENTS PLANNING MRP is a systematic planning-and-control methodology for production and inventory. 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.
<ul><li>Material Requirements Planning </li></ul>Master Production Schedule Material Requirements Planning Product Structure File Item Master file Planned Order Release Work orders Purchase Orders Rescheduling notices
<ul><li>INPUTS TO MRP </li></ul><ul><li>Master production schedule : A schedule of finished products that drives the MRP process. </li></ul><ul><li>Product structure file : A file that contains a computerized bill of material for every item produced (ingredients). </li></ul><ul><li>Item master file : A database of information on every item produced, ordered, or invented. </li></ul>
<ul><li>WHEN TO USE MRP? </li></ul><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>
<ul><li>Limitations of Order-point techniques… </li></ul><ul><li>As each part in inventory is managed separately & independently of all others. So even though these techniques can provide extremely high service level for individual parts, the service level for combination of parts (subassemblies) & for the complete end product can be low. </li></ul>
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 labor & equipment utilization </li></ul><ul><li>Better inventory planning & scheduling </li></ul><ul><li>Reduced inventory levels without reduced customer service </li></ul>
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>
How MRP works <ul><li>Example of Two-Drawer file cabinet </li></ul><ul><li>Master production schedule </li></ul>Week 1 2 3 4 5 6 quantity 10 15 20 5 25 30
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
<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>
<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. </li></ul>
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>
Just-in-time (JIT) <ul><li>A highly coordinated processing system in which goods move through the system, and services are performed, just as they are needed </li></ul><ul><li>In short, the just-in-time inventory system is all about having “the right material, at the right time, at the right place, and in the right quantity ” without the safety net of Inventory, the implications of which are broad for the implementers </li></ul>
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>
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>
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>
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 im 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>
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 competatative 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>