Actual statistics for component X
1.10 MANUFACTURING RESOURCES PLANNING(MRP I&II)
It is a part of production operation system. Management has to develop a lot of strategies for production plan. In early 1960’s a material acquisition plan was first introduced known as Material Requirement Plan ( MRP-I ). MRP-2 is latest all-round development of that plan.
A brief history of MRP –1
Material requirement planning is a computerized production scheduling system which takes the forward schedule of final product requirements (the master production schedule) and translates it progressively into the numbers of sub-assemblies, components and raw materials required at each stage of the manufacturing cycle.
It is a management information system providing a basis for production decisions when what is manufactured has a composite structure and when lead items are important features. Obviously, the ability of the system to deliver what is required in the correct place at the correct time will be dependent on the quality of information which is put into the computer model.
1.10.1 Aims of material requirement planning:
1. Determine for final products namely, what should be produced and at what time.
2. Ascertaining the required units of production of sub-assemblies.
3. Determining the requirement for materials based on an up-to-date bill of materials file (BOM).
4. Computing inventories, WIP, batch sizes and manufacturing and packaging lead times.
5. Controlling inventory by ordering bought-in components and raw materials in relation to the orders received or forecast rather than the more usual practice of ordering from stock-level indicators.
Benefits : Detailed forecast of the inventory position is highlighted period by period.
1.10.2 Data requirements to operate material requirement planning system:
1. The master Production schedule: This schedule specifies the quantity of each finished unit of products to be produced, and the time at which each unit will be required.
2. The Bill of material file: The bill of material file specifies the sub-assemblies, components and materials required for each finished good.
3. The inventory file: This file maintains details of items in hand for each sub-assemblies, components and materials required for each finished goods.
4. The routing file: This file specifies the sequence of operations required to manufacture components, sub-assemblies and finished goods.
5. The master parts file: This file contains information on the production time of sub- assemblies and components produced internally and lead times for externally acquired items.
1.10.3 Method of operation of material requirement planning system:
A material requirements planning (MRP) system is a computer based inventory information system which is used to plan and control raw material and component parts inventories.
Like all computer-based information system, MRP systems can be divided into following:
i) Pre-requisite information ii) System input
iii) System processing, iv) System output.
1.10.4 Pre-requisite information and system input:
1. The master production schedule (MPS) file states the production goal, generally for a week time, in terms of desired units of production. MRP system first focuses on the forecasted units of production and timing of finished goods demand and the determines the demand for materials, components and sub-assemblies at each stages of production. This makes MRP a push system in which once the scheduled production starts, the output of each department is pushed through the system to the next department for processing or into inventory to be retrieved later.
2. The bill of materials (BOM) file contains information about how the production of the finished goods is undertaken. A bill of material structure is used:
a. To assess all of the raw materials and component parts required to complete a product and b. to describe the multiple levels of assembly or manufacturing necessary to complete a unit
of finished product.
In a figure given below a typical BOM structure file is presented for three and products FG1, FG2 and FG3. The MRP system breaks the requirements for each product by working into its primary sub-components (SC)/sub-assemblies (SA), and these in turn are further separated into second, third and so on levels of sub-components, until at the lower level in the hierarchy only purchased items (i.e. backward each end products direct material DM) exist. It is apparent from the figure below that four direct material (DM1, DM2, DM3 and DM4) are purchased for finished goods. For both FG1 and FG2 the materials are used to manufacture the components that are assembled into the end product. For FG3 no intermediary components are produced:
3. The inventory records files of the MRP system defines current levels of finished goods, raw materials, and component parts inventory at the beginning of some planning period. During the planning period, the organization may receive units of raw materials, components parts, sub- assemblies, and even finished goods inventory from suppliers, vendors, and subcontractors.
These planned inventory receipts and delivery lead times are included in the inventory records file so that their addition can be appropriately considered in the time bucket of their arrival.
1.10.5 Pre-requisites for successful operation of MRP:
1. Strict adherence to the schedule : The successful operation of MRP system requires a strict adherence to the latest production and purchasing schedules. Workers must be
educated to understand the importance of schedule adherence, and controls should be in place to ensure this adherence.
2. Accurate data base : Data accuracy is vital to the system. If a plan is based on inaccurate data it may be impossible to adhere to the schedule. For example, if the bill of materials file is not updated to reflect any changes in product composition it will be impossible to adhere to the schedule.
1.10.6 MRP- II
When the scope of MRP-1 is developed further which includes 1. Planning of raw material
2. planning of component & sub- assemblies
3. Compute the other resources e.g. machine or labour capacity 4. to create a full integrated plan for management
then it is known as Manufacturing resources planning ( MRP – 2)
MRPII (also written MRP-2 ) adds the MRP schedule into a capacity planning system and then builds the information into a production schedule. It is also seen as a link between strategic planning and manufacturing control. The sequence of events is as follows :
From that document, a manufacturing, plan is developed based upon inputs from purchasing
& production. Adjustments may be necessary to allow for production rates. Possible inventory levels in seasonal trades & the size of the workforce. The manufacturing plan leads into a detailed master production schedule which is akin to the original philosophy of MRP already outlined.
If correctly applied, MRPII provides a common data base for the different function units such as manufacturing, purchasing and finance within a firm.