1. PRESENTATION
ON
MRP OF HERO-HONDA MOTORS LTD
Presented By:
Amrit Kumar
Neha Sutar
Piyush Sonkar
Ravi Kumar ranjan
Sarthak Srivastava
Sunil Kumar Verma
Vijay Yadav
Presented To:
Ms. Habiba Abassi
2. In April 1984, Hero Cycles of India and Honda Motor Company of
Japan started their joint venture to form Hero Honda Motors
Limited.
In a little over two decades, Hero Honda has become the world's
single largest motorcycle company & has retained this position
for the last 6 years.
Hero Honda has two world-class manufacturing facilities at
Dharuhera and Gurgaon in Haryana, which now churn out over 3
million motorcycles per year.
3. PLANT LAYOUT
The plant layout has been designed in such a way that there is a
unidirectional flow of processes wherein machined parts are sent
directly to the engine assembly area & frame parts are sent
directly to the final vehicle assembly area.
Hero Honda’s Direct-on-line (DOL) system ensures that self-
certified parts supplied by the vendors are fed directly to the
assembly line with only 2.5 hour inventory.
4. MRP
Material Requirements Planning (MRP) is a software-based
production planning and inventory control system used to
manage manufacturing processes.
Material requirements’ planning is a technique that uses the bill
of material, inventory data and a master schedule to calculate
requirements for material.
5. IMPLEMENTATION OF MRP IN HERO
HONDA
The supplies from the vendors
The inventory in the plant lasts maximum 2-3 hours during
production
The robotized machining lines
Standard operating processes
A u-shaped manufacturing cell
The engine assembly
The process tool operation
Machine
6. CONT….
The SMED process is used for exchange of dies in the pressing
The robots used for precise welding
The fabrication of body frame through welding
The painting process
The tools inventory automated warehouse
Tables used for comparison with standard production
The part-feed carriers
7. CONT….
The single piece flow
The final assembly line
The quality check posts
The visual inspection
The ride-mode inspection
The emission inspection
The finished goods inventory
9. MRP SYSTEM
Master Production Schedule (MPS)
Bill of Materials (BOM)
Inventory Status File
10. BENEFITS
It Reduces
Inventory Levels
Component Shortages
Purchasing Cost
Lead Time
Manufacturing Cost
Freight Cost
and reduce Overtime
11. CONT….
It Improves
Shipping Performance
Customer Service
Productivity
Production Schedules
Communication
Plant Efficiency
Supply Schedules
Calculation of Material Requirements
12. MRP USES
MRP system calculates net requirements for all the requirement
quantities that are to be planned.
MRP system calculates the quantity recorded in the procurement
proposal according to the lot-sizing procedure that you specified
in the material master.
The procurement proposal is also scheduled.
For materials produced in-house, the dependent requirements of
the components are determined during the BOM explosion.
Additional requirements (unplanned goods issues, excess
consumption of components in production, and so on) can be
covered by using the materials forecast within MRP.
13. PROBLEMS
Integrity of Data
Lead Time
Integrated ERP system over a geographical area
Inventory Coding
No account of capacity
14. Problems
The annual demand for this end item is estimated to be 30000 units
over a 50 week per year schedule or an average of 600 units per week .
It costs 500 to change over the machines in the final assembly
department to this end item when a production lot is begun it cost 0.50
per unit when one unit of this product is must carried in inventory from
one week to another there fore when one unite of this product is in
ending inventory it must be carried over as beginning inventory in the
next week and incurs 0.50 per unit carrying cost . Determine which of
these lot sizing method result in the least carrying and changeover (or
ordering) costs for the eight week schedule:
1. LOT –FOR –LOT (LFL)
2. ECONOMIC ORDER QUANTITY (EOQ)
3. PERIOD ORDER QUANTITY
15. A) Develop the total carrying and ordering costs over the eight-week schedule
for the lot-for-lot method. Lot-for –lot (LFL) production lots equal the net
net requirements in each period.
Week Costs
1 2 3 4 5 6 7 8 Carrying Ordering Total
Net requirements 300 500 1,000 600 300 300 300 1,500
Beginning Inventory 0 0 0 0 0 0 0 0
Production Lots 300 500 1,000 600 300 300 300 1,500 Rs 0 Rs 4000 Rs 4000
Ending Inventory 0 0 0 0 0 0 0 0 0
Ordering Cost = Number of orders * Rs 500= 8 * Rs 500= Rs 4,000
16. B) Develop the total carrying and ordering costs over the eight- week schedule for
the EOQ lot- sizing method. EOQ production lots eqaul the computed EOQ.
First, computed the EOQ .
Annual carrying cost is computed as C = Rs 0.50 per unit per
EOQ = √(2DS/C = √2 (30,000)(500)/[(0.50)(50)] = 1,095.4 or 1,095 units
Week Costs
1 2 3 4 5 6 7 8 Carrying Ordering Total
Net requirements 300 500 1,000 600 300 300 300 1,500
Beginning Inventory 0 795 295 390 885 585 285 1080
Production Lots 1,095 --- 1,095 1,095 --- --- 1,095 1,095 Rs 2,495 Rs 2,500 Rs 4995
Ending Inventory 795 295 390 885 585 285 1,080 675
Carrying costs = Sum of ending inventory * Rs 0.50 = 4.990 * Rs 0.50 = Rs 2,495
Ordering Cost = Number of orders * Rs 500= 5 * Rs 500= Rs 2,500
17. C) Develop the total carrying and ordering cost over the eight week schedule for the POQ lot
sizing method POQ production lots equal the net requirement for POQ computed periods
First, compute the POQ
POQ= number of week per year/number of order per year
50/D/EOQ=50/30000/1095
=1.83 or 2 week per year
WEEK COSTS
--------------------------------------------------- -------------------------------------
1 2 3 4 5 6 7 8 carrying order total
--------------------------------------------------- -------------------------------------
Net requirements 300 500 1000 600 300 300 300 1500
Beginning inventory 0 500 0 600 0 300 0 1500 1450 2000 3450
Production lots 800 - 1600 - 600 - 1800 -
Ending inventory 500 0 600 0 300 0 1500 0
Carrying costs = Sum of ending inventory * Rs 0.50 = 2.900 * Rs 0.50 = Rs 1,450
Ordering Cost = Number of orders * Rs 500= 4 * Rs 500= Rs 2,000
18. Among the lot-sizing methods considered for this data the ,
the POQ method exhibits the least carrying costs for the
eight-week net requirements schedual
19. CONCLUSION
Through the use of MRP system, Hero Honda group has been
able to achieve cost reduction in the management of inventory
and forecasting of inventory required
It has led to better use of inventory and an enhanced inventory
management
MRP system has enhanced production, performance and
efficiency of the plant resulting in higher profit margin through
cost reduction and increased production
Thus we like to conclude that, it is very important to implement
MRP system in the company as it helps the company to utilize its
inventory to optimum level and achieve the objectives of the firm
in a better way
