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Material Requirement Planning (MRP-1) Types Of Techniques PUSH MRP1 MRP2 DRP1 DRP2 PULL JIT KANBAN
Major Problem
Dependent on Accurate Forecasting
Only Solution
Buy Just Enough Stock
MRP 1 - Functions
Forecasting Order, Planning and Control Priority Planning and Control Planning Capacity Requirement and Development of Broad Business Plans
Objectives
Ensure The Availability of Material Components and Products For Planned Production and Customer Delivery. Maintain The Lowest Possible Inventory Level. Plan Manufacturing Activities, Delivery Schedules and Purchasing Activities.
Example of MPS
Forecast requires 10 desks in May Material Required 880 screws 40 handles 240 planks 10 tops and 40 legs 5.55 tubes of glue 1760 screws 80 handles 480 planks 20 tops and 80 legs 11.1 tubes of glue
20 desks in June
Bills Of Material (BOM):BOM is the document generated at design stage. It gives the details of the structure of the product by dividing the final assembly into major assemblies and sub-assemblies. BOM provides details such as part name, part no., description, quantity required material, etc.
4 drawers Require
88 Metal Screws
4 Handles
24 Planks
1 top
4 legs
Inventory Status File (ISF):ISF reports the inventory on hand. It allows the company to subtract existing inventory from gross requirements, so net requirements can be ordered. The ISF also reports on safety stock needs and lead times for each item.
MRP Program:This is a computer software programme. First, it explodes the finish products demand into gross requirement for parts. Second, the package determines net requirements based on the ISF. Third, it place orders to meet the net quantities needed and lead times.
Customer orders
Demand forecast
Inventory records
Bill of materials
MRP
Material requirement planning Works orders
Purchase orders
Material plans
Outputs And Reports:The MRP 1 package generates many reports such as action notices, priority reports, inventory status information.
Advantages of MRP 1
Improved Business Results Improved Manufacturing Results More Accurate And Timely Information Less Inventory Less Materials Obsolescence Time Phased Ordering Of Materials
Disadvantages
Increase In Material Acquisition Cost Higher Transportation Costs And Higher Unit Cost Potential Hazard Of A Production Slowdown Or Shutdown
Does not Take Into Account Plant Capacity And Distribution Capacity High Stock-Out Costs.
Manufacturing Resource Planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer "what-if" questions and extension of closed-loop MRP.
MRP
Manufacturing-centric/Push mgt. Master production schedule Final production schedule Inventory management Bill of materials Gross requirement generation Net requirement generation Reorder point calculation Automatic replenishment
MRP I I
Capacity requirement. planning Production control Marketing interface Accounting interface Financial interface Personnel interface Supplier interface Customer interface
For Management
An accurate, consistent and effective way to run the whole business The ability to manage orderly growth The ability to cope with difficult economic conditions
For Production
Improved productivity and resource utilization Increased through output Better reliability of production plans
FOR
Long term planning tool for complex products
Against
File/database accuracy must be maintained
What is DRP?
DRP provides the basis for integrating supply chain inventory information and physical distribution activities with the Manufacturing Planning and Control system.
What is DRP?
Managing the flow of materials between firms, warehouses, distribution centers. DRP helps manage these material flows. Just like MRP did in Manufacturing. Links firms in the supply chain by providing planning records that carry demand information from receiving points to supply points and vice versa.
Purpose in DRP
Creates stock items and controlling elements of items, locations and policies that are used in the deployment process. Tracks inventory availability in all stock categories and supply and demand for an item.Also allows for the physical movement of inventory. Creates forecasts of customer demand which results in the creation of independent requirements at the distribution center.These independent requirements are later consumed by actual customer orders. Creates quota arrangements that control the supply relationships in the network. Determines net supply and demand resulting in a proposal for the transfer of inventory from the plant to the distribution center.
Inventory Management
Purchasing
Marketing Benefits
Increases service level and decrease customer complaints. Improve inventory coordination. Enhances ability to offer customer a coordinated inventory management service.
Logistical Benefits
Reduces freight costs. Reduces inventory level. Decreases warehousing space. Reduces customer freight cost. Enhances budgeting capitability.
Constraints of DRP
Inventory planning systems require accurate and coordinated forecasts for each distribution center. Integrated planning is subject to system nervousness and frequent rescheduling, because of production breakdowns and delivery delays. DRP is not the universal solution for inventory management.
Objectives Of DRP II
The objective of Distribution Resource Planning are,
To improve customer service levels by anticipating customer demand at distribution centers and providing finished products at the correct location when customer needs arise. To provide an accurate requirements plan for manufacturing. To optimize the distribution of available stock in the distribution network using the deployment function.
CUSTOMERS
DISTRIBUTION CENTER
DISTRIBUTION CENTER
REGIONAL WAREHOUSE
REGIONAL WAREHOUSE
PLANT WAREHOUSE
SUB ASSEMBLY B
SUB ASSEMBLY C
SUB ASSEMBLY D
SUB ASSEMBLY A
PART C
PART D
PART E
PART A
PART B
RAW MATERIALS
DRP Outbound logistics Guided by customer demand Not under control of the firm Operates in independent demand situation Coordinates demand between outlets & supply sources Controls inventory after manufacturing & assembly of finished goods Market[retailers] & warehouses
Stage of functioning