Manufacturing Resource Planning (MRP 2)

Historical Perspective

Mrp 1 – material requirements

planning

MRP II – ManufacturingResource Planning

ERP- Enterprise Resource Planning

MRP 2

Definition:

It is the basis of Enterprise Resource Planning (ERP).MRP 2 and ERP are connected with manufacturing aspects of the expanded model.

MRP II -- Manufacturing Resource Planning

“A method for the effective planning of all resources of a manufacturing company” (APICS def.)

Financial accounting incorporated Sales Operations Planning Simulate capacity requirements of different possible

Master Production Schedules

ERP Sales

Worldwide sales of top 10 vendors1995 $2.8 B1996 $4.2 B1997 $5.8 B $3.2 B SAP

Fortune survey: 44% reported spending at least 4 times as much on implementation as on software

3 Reasons for ERP

1. Legacy systems outdated and need replacing anyway

2. Desire for greater communication between locations

3. Reconfigure business to take advantage of current and future communications and computing breakthroughs

1605 Snow Shovel

1605 Snow Shovel

048Scoop-shaftconnector

13122 Top Handle Assy314 scoop assembly

118 Shaft (wood)

062 Nail (4)

14127 Rivet (4)

314 scoop assembly

314 scoop assembly

14127 Rivet (6)019 Blade (steel)

2142 Scoop (aluminum)

13122 Top Handle Assembly

1118Top handle

Coupling (steel)

11495 WeldedTop handle bracket

Assembly

13122 Top Handle Assembly

457 Top handle(wood)

129 Top HandleBracket (steel)

082 Nail (2)

BOM Explosion

Process of translating net requirements into components part requirementsTake into account existing inventoriesConsider also scheduled receipts

BOM Explosion Example

Need to make 100 shovelsWe are responsible for handle

assemblies.

Timing of Production

This tells us how many of each we needDoesn’t tell when to startStart as soon as possible?Dependent events (oh no, not that!)Front schedule Cutting approachBack schedule

Other considerations

Safety stock if uncertainty in demand or supply quantity Don’t let available go down to 0

Safety LT if uncertainty in arrival time of supplyPlace order earlier than necessary

Order quantitiesEOQ, Lot-For-Lot, Periodic Order quantity,

others

Assumptions

All requirements must be available at start of period

All future requirements must be met, and can’t be backordered

System operated on periodic basis (e.g. weekly)

Requirements properly offset for LTsParts used uniformly through a period

Use average inventory levels for holding cost

Simulation Experiments

What is best under real-world conditions?Multiple levels to be concerned aboutReal-time changes

ReferencesRussell, Roberta S., and Bernard W. Taylor III. Operations Management.

3rd Edition: Prentice Hall, 2000

Grubbstrom, Robert W. Material Requirements Planning and Manufacturing Resource Planning. 03/12/2002. http://www.itbp.com/opsmanagement/iebm/material_requirements.htm.

Vormittag Associates, Inc. System 2000 MRP. 03/12/2002. http://www.vaihome.com/s2000mrp.htm.

Inventory Solutions. What is MRP?. 03/12/2002. http://www.inventorysolutions.org/def_mrp.htm.

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