material requirement and planning

INDUSTRIAL ECONOMICS AND MANGEMENT

MUHAMMAD ASIM

14ME127

SECTION-A

INTRODUCTION

Production Planning and Control(PPC)

has three phases namely

• Planning Phase

• Action Phase

• Control Phase

“Getting the right materials to the right place at the right time”.

WHAT IS MATERIAL REQUIREMENT PLANNING??

“Materials Requirement Planning (MRP) is a technique for determining the quantity and timing for the acquisition of dependent demand items needed to satisfy master production schedule requirements.”

MATERIAL REQUIREMENT PLANNING(MRP)• Material Requirements Planning (MRP) is a production planning,

 scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are Software-based, but it is possible to conduct MRP by hand as well.

• It is a planning and scheduling technique with fixed lead time.

• It is a technique used to plan and control manufacturing inventories (these manufacturing inventories support the production process).

• It is computerized inventory system.

• Material Requirement Planning (MRP) is a system of planning and scheduling the time phased material requirements for releasing materials and receiving materials that enable the master production schedule to be implemented.

HISTORY

• In 1964, as a response to the Toyota Manufacturing Program(TMP), Joseph Orlicky developed Material Requirements Planning (MRP). The first company to use MRP was Black & Decker in 1964, with Dick Alban as project leader.

WHEN IT IS REQUIRED

• Manufacturing industries generally face the problems that demand is high than production. This requires some level of planning.

• Information Technology plays a major role in designing and implementing. Material Requirements Planning systems and processes provides information about manufacturing needs and also about inventory

OBJECTIVES

The MRP system should have at least these objectives.

• To assure that the materials and components are available for planned production.

• Maintain the lowest possible level of inventory.

• Plan manufacturing activities, delivery schedules and purchasing activities

• Reduction in the manufacturing and delivery lead times

• Realistic delivery commitments

• Increased efficiency

• Specifically organizational objectives of MRP are identified among three main dimensions, as

follows.

MRP SYSTEM

The inputs to the MRP system are

• A master production schedule

• An inventory status file

• Bill of materials (BOM).

The output of MRP system are

• Orders to be placed.

• Order rescheduling.

• Planned orders for future.

CLASSES OF MRP USER/COMPANIES

MRP systems fall into four categories, in terms of use and organizational implementation. • Class A represents full implementation of MRP. System is tied up with company’s

financial system as well as capacity planning etc.• Class B represents a less than full implementation. MRP system is confined in

the manufacturing area.• 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.

ADVANTAGES OF MRP

• Improved Business Results

• Improved Manufacturing Results

• More Accurate And Timely Information

• Less Inventory

• Material wastage is less

• Higher Reliability

• More Responsiveness To Market Demand

DISADVANTAGES OF MRP

• Increase In Material Acquisition Cost

• Higher Transportation Costs And Higher Unit Cost

• Potential Hazard Of A Production Slowdown Or Shutdown

• Use Of Standardized Software Packages

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