MATERIAL REQUIREMENT PLANNING

PRESENTATION BY

SURYAKUMAR T

VIT BS

MRP

Developed by Joseph orlicky in 1964. Time phased priority-planning technique that calculates material requirement and schedules

supply. A Production planning, scheduling and inventory control system, manages manufacturing

process. Has drawn attention and support as computer power has become increasingly available at low

price Inventory control is accomplished using order point system for independent demand. Order point system – Inventory control based on Re-order point and fixed order level

DEPENDENT VS INDEPENDENT DEMAND

INDEPENDENT Demand for an item is independent of the

demand for other items. These demands are typically determined by outside customers and are end-item demands

Example : Bicycle Computers

DEPENDENT Demand for a component (raw material,

part, sub-assembly) is dependent on the demand for the end-item into which the component goes.

Example : Tyres, Microchip

OBJECTIVES

OBJECTIVES Ensures availability of materials for production and delivery to customers. Maintains lowest possible material in the store. Plans manufacturing activities and delivery schedule.

NECESSITIES

To avoid over ordering and under ordering of materials for production. To reduce unwanted expenses due to ordering at the last minute. To reduce capital locked up in excess. To have material ready for production. To avoid stoppage of production due to lack of inventory.

FUNCTIONS OF MRP

Forecasting - Accurate Material Forecasting. Reducing waste - Changes in production can trigger automatic responses in BOM handling. Floor control and scheduling - Data integration is key here. Material receipts is compared

to data from customer demand that ensures customer demands are met without shortage. ADDITIONAL FEATURES: Cost estimates Order entry Vendor relationship Management Reduces Lead Time

CLASSES OF MRP USER/COMPANIES

MRP systems fall into four categories, often identified as ABCD, in terms of use and organizational implementation.

CLASS A represents full implementation of MRP. MRP system is tied up with company’s financial system and includes capacity planning, shop floor dispatching, and vendor scheduling as well as links with human resource planning.

CLASS B represents a less than full implementation. MRP system is confined in the manufacturing area; however, it encompasses master production scheduling.

CLASS C represents a classical MRP approach in which the system is confined to management of inventories.

CLASS D represents a data processing application of MRP. System is used for keeping track of data rather than as decision-making tool.

MRP INPUTS

Master production schedule Aggregate production planning is a capacity of generic product to be produced. Expressed in terms of Time buckets. Ex: No of gallons of paint to be produced , MPS converts this number to time-phased plan. Order promising – sales dept. making a delivery date commitment to customers. Bills of Materials Product structure and list of components for each products. Ex: BOM for a Dinner party is cook’s shopping List. (Formula, Recipe and Ingredients list) Single/Multi-level/Modular level Inventory status file – Time phased record of Inventory status (stock in hand & supplier

lead time)

TYPICAL PRODUCT STRUCTURE

SOURCE : MICHEL P GROOVER

EXAMPLE FOR PRODUCT STRUCTURE

MRP OUTPUTS

Primary reports Work orders Purchase orders Action notices

Secondary reports Exception report Planning report Performance control report Inventory Transaction

MRP OPERATIONS

PROCESS FLOW FOR MRP

Exploding the requirements - process of multiplying the requirements by the usage quantity and recording the appropriate requirements throughout the product tree.

Gross and Net Requirements - Often inventory is available and must be included when calculating quantities to be produced.

Releasing an order - means that authorization is given to purchasing to buy the necessary material or to manufacturing to make the component.

Capacity Requirements Planning

CAPACITY REQUIREMENT PLANNING

The MRP priority plan must be checked against available capacity. At the MRP planning level, the process is called capacity requirements planning (CRP). If the capacity is available, the plan can proceed. If not, either capacity has to be made available or the priority plans changed.

PROBLEM

The following table shows a resource bill for a company that makes tables, chairs, and stools as a three-product family. If the firm planned to make 500 tables, 300 chairs, and 1500 stools in a particular period, calculate the quantity of wood and labor that will be needed

PRODUCT WOOD (FEET)

LABOUR (STD HOURS)

TABLE 20 1.31CHAIR 10 0.85STOOL 5 0.55

Calculation of wood required Table - 500*20 = 10,000 Chair - 300*10 = 3,000 Tool - 1500*5 = 7,500 Total Required = 20,500 Feet

Calculation of required Labour Table - 500*1.31 = 655 Chair - 300*0.85 = 255 Tool - 1500*0.55 = 825 Total Required = 1735 Hours

EVOLUTION OF MRP

EXAMPLE - HUBBELL LIGHTING CASE

Manufacturers of Lighting products Good Quality Product Poor at meeting due dates Work is specialised for each customer

Before MRP Implementation Less than 75% of orders completed on timeAfter Implementation of MRP 97% of orders completed on time

MRP VS JIT

MRP Planning Tool that is “Forward Thinking” Focuses on “Projected Usage”

JIT

Toyota Motors adopted the concept System of supplying goods as close as

possible to when they are actually needed. Focuses on “Real usage” Eg : Royal Enfield Manufacturing Car Repairing service!

BENEFITS OF MRP

Keep inventory levels to a cost – effective minimum. Keeps track of Inventory. Set safety stock levels for emergencies. Determine the best lot sizes to fulfil orders. Better machine utilization

DRAWBACKS OF MRP

Inaccurate information can result in mis-planning, over-stock, under-stock MRP system can be costly and time- consuming to set up.