What is MRP?
• Computerized Inventory Control
• Production Planning System
• Management Information System
• Manufacturing Control System
• This is the most comprehensive approach to manufacturing inventory and other dependents which demand an efficient inventory management system.
• The MRP system determines item-by-item, what is to be processed and when, as well as what is to be manufactured when.
• This is based on order priorities and available capacities.
When to use MRP
• Job Shop Production
• Complex Products
• Assemble-to-Order Environments
• Discrete and Dependent Demand Items
What can MRP do?
• Reduce Inventory Levels
• Reduce Component Shortages
• Improve Shipping Performance
• Improve Customer Service
• Improve Productivity
• Simplified and Accurate Scheduling
• Reduce Purchasing Cost
• Improve Production Schedules
• Reduce Manufacturing Cost
• Reduce Lead Times
• Less Scrap and Rework
• Higher Production Quality
• Improve Communication
• Improve Plant Efficiency
• Reduce Freight Cost
• Reduction in Excess Inventory
• Reduce Overtime
• Improve Supply Schedules
• Improve Calculation of Material Requirements
• Improve Competitive Position
Three Basic Steps of MRP
• Identifying Requirements
• Running MRP – Creating the Suggestions
• Firming the Suggestions
Step 1: Identifying the Requirements
• Quantity on Hand
• Quantity on Open Purchase Order
• Quantity in/or Planned for Manufacturing
• Quantity Committed to Existing Orders
• Quantity Forecasted
Step 1: Important Information
MRP is…..
• Company Sensitive
• Location Sensitive
• Date Sensitive
Step 2: Running MRP – Creating the Suggestions
• Critical Items
• Expedite Items
• Delay Items
Step 3: Firming the Suggestions
• Manufacturing Orders
• Purchasing Orders
• Various Reports
Overview of the MRP System
MRP Inputs
• Product Structure File
• Master Production Schedule
• Inventory Master File
Product Structure File
• Bill of Materials: It is a materials list that provides information useful to reconstruct the manufacturing process. It is the master product definition that contains “as designed” information.
• Bill-of-Material
Product Structure Tree
Master Production Schedule
• Schedule of Finished Products
• Represents Production, not Demand
• Combination of Customer Orders and Demand Forecasts
• What Needs to be Produced
Inventory Master File
• On-Hand Quantities
• On-Order Quantities
• Lot Sizes
• Safety Stock
• Lead Time
• Past-Usage Figures
MRP Process
• Schedules the Production of all items using an MRP Matrix
Terms Defined
• Item – name or number for the item being scheduled
• Low-Level Code – the lowest level of the item on the product structure file
• Lot Size – order multiples of quantity
• Lead Time – the time from when an order is placed to when it is received
• PD – Past Due Time Bucket, orders behind schedule
• Gross Requirements – demand for an item by time period
• Scheduled Receipts – material already ordered
• Projected on Hand – expected ending inventory
• Net Requirements – number of items to be provided and when
• Planned Order Receipts – net requirements adjusted for lot size
• Planned Order Releases – planned order receipts offset for lead times
• Inputs to the
Production Plan
• The Planning Process
• MRP Outputs
• Manufacturing Orders
• Purchasing Orders
• Various Reports
Kampala xxx Ltd
• Manufactures Industrial Lighting Products
• Good-Quality Products
• Poor at Meeting Due Dates
• Work is Specialized for Each Customer
• Job Shop Environment
• Complex Products
Kampala xxx Ltd
Before MRP Implementation
• Less than 75% of orders completed on time
After MRP Implementation
• 97% of orders completed on time
• 2% of orders completed with 1 to 2 days after due date
• Summary of MRP
MRP is a…..
• Computerized Inventory Control
• Production Planning System
that…..
• Schedules Component Items as Needed
which will…..
• Track Inventory and…..
• Help you in many other aspects of business