Material requirement planning
Introduction
Material planning is a technique for determining the requirements of raw materials, components and spares etc. required for the manufacturing of the product. If the delivery date of the finished product is known in advance, then the ordering time and quantity of other work-in-progress can be planned accurately with the help of mathematical calculations. This planning of work-in-progress of the finished goods is known as MRP.
Meaning
MRP is the simple system of calculating (arithmetically). The requirement of input materials at different points of time based on the plan or schedule for the production of the finished goods.
Or
MRP is the planning for materials so that right quantity of material is available at the right time for each component or subassembly of the product by taking into account MPS and other data.
Thus, in manufacturing a product the firm has to plan materials so that the right quantity of material is available at the right time for each component by taking MPS data and other details into account. This will smoothen the process of manufacturing the final product.
Features of MRP
o It is an inventory control system.
o It release manufacturing and purchase order at the time to support the master schedule.
o This system launched orders to control work-in-progress and raw material inventories through proper timing of order placement.
Elements/inputs in MRP
First four are the inputs to MRP and last one is the output for the MRP.
1. BOM (bill of material) product structure: - it identifies how each end product is manufactured, specifying all subcomponents items, their sequence of buildup, their quantity in each finished unit and work centers performing the build up sequence.
2. MPS: - the MPS gives particulars about demands of the final assembly for the periods in the planning horizon.
3. inventory status file: - it contains information on safety stocks, lead time, and stock in hand.
4. MRP processing logic: - quantitative relationship between input and output, management policies about safety stock, min/max norms etc, EOQ, lead time.
5. management information (reports): - projected requirements, scheduled receipts, stock on hand and planned order release.
MRP concept
In manufacturing a product, the firm has to plan materials so that the right quantity of material is available at the right time for each component/ subassembly of the product by taking the master production schedule data and other details into account. This will enable the firm to smooth out the process of manufacturing the final product.
Technologies of MRP concept
1. Projected requirements: - MPS gives particulars about demand of the final assembly for the periods in the planning horizons. This is known as projected requirement of the final assembly.
2. Planned order release: - it is a plan that is quantity and date to initiate the purchase and manufacture of materials so that they will be received on schedule after the lead time offset.
3. Economic order quantity: - it is calculated based on setup cost and carrying cost.
Scheduled receipt
4. Stock on hand: - level of inventory at the end of each period.
The MRP process
It is initiated once the customer orders for the finished goods from the supplier. Then the forecasting is done for the finished goods. A master plan is prepared for the production process. This master plan contains all the constituents of the production process that would finally lead to the resultant product. The master plan for production initiates the process of MRP. For MRP two other inputs are inventory which is already in hand and product design and development. Then we have to see whether the capacity is adequate for the production of requisite number of finished goods demanded by the customer. If the answer is negative, then again we have to reschedule our production plan. But if the answer is affirmative i.e, there is adequate capacity then we can go for the final master plan that would ultimately lead us to the MPS.
if u want get diagram of this then mail me himanshu143goel@gmail.com
Benefits of MRP
Inventory control by reduced levels of in-process inventories and raw materials.
Better inventory visibility: it is easy to track material requirements.
Ability to evaluate capacity requirements.
Improved delivery performance and meeting customer requirement.
Increase resource utilization.
Pre-requisites of MRP
• Top management support and commitment.
• Computer and necessary software.
• Computer awareness/literacy.
• Data discipline.
• Accurate and up-to-date information.
Problems in MRP
1. The data integrity is low. The quality of the solution is only as good as the data used for the computation. If the lead time data is wrong, organization may either have too much inventory or frequent shortages.
2. Users did not have the discipline of updating the required databases as and when changes were taking place elsewhere in the organization.
3. There are uncertainties associated with several issues that lie outside the control of the people and the system.
Introduction
Material planning is a technique for determining the requirements of raw materials, components and spares etc. required for the manufacturing of the product. If the delivery date of the finished product is known in advance, then the ordering time and quantity of other work-in-progress can be planned accurately with the help of mathematical calculations. This planning of work-in-progress of the finished goods is known as MRP.
Meaning
MRP is the simple system of calculating (arithmetically). The requirement of input materials at different points of time based on the plan or schedule for the production of the finished goods.
Or
MRP is the planning for materials so that right quantity of material is available at the right time for each component or subassembly of the product by taking into account MPS and other data.
Thus, in manufacturing a product the firm has to plan materials so that the right quantity of material is available at the right time for each component by taking MPS data and other details into account. This will smoothen the process of manufacturing the final product.
Features of MRP
o It is an inventory control system.
o It release manufacturing and purchase order at the time to support the master schedule.
o This system launched orders to control work-in-progress and raw material inventories through proper timing of order placement.
Elements/inputs in MRP
First four are the inputs to MRP and last one is the output for the MRP.
1. BOM (bill of material) product structure: - it identifies how each end product is manufactured, specifying all subcomponents items, their sequence of buildup, their quantity in each finished unit and work centers performing the build up sequence.
2. MPS: - the MPS gives particulars about demands of the final assembly for the periods in the planning horizon.
3. inventory status file: - it contains information on safety stocks, lead time, and stock in hand.
4. MRP processing logic: - quantitative relationship between input and output, management policies about safety stock, min/max norms etc, EOQ, lead time.
5. management information (reports): - projected requirements, scheduled receipts, stock on hand and planned order release.
MRP concept
In manufacturing a product, the firm has to plan materials so that the right quantity of material is available at the right time for each component/ subassembly of the product by taking the master production schedule data and other details into account. This will enable the firm to smooth out the process of manufacturing the final product.
Technologies of MRP concept
1. Projected requirements: - MPS gives particulars about demand of the final assembly for the periods in the planning horizons. This is known as projected requirement of the final assembly.
2. Planned order release: - it is a plan that is quantity and date to initiate the purchase and manufacture of materials so that they will be received on schedule after the lead time offset.
3. Economic order quantity: - it is calculated based on setup cost and carrying cost.
Scheduled receipt
4. Stock on hand: - level of inventory at the end of each period.
The MRP process
It is initiated once the customer orders for the finished goods from the supplier. Then the forecasting is done for the finished goods. A master plan is prepared for the production process. This master plan contains all the constituents of the production process that would finally lead to the resultant product. The master plan for production initiates the process of MRP. For MRP two other inputs are inventory which is already in hand and product design and development. Then we have to see whether the capacity is adequate for the production of requisite number of finished goods demanded by the customer. If the answer is negative, then again we have to reschedule our production plan. But if the answer is affirmative i.e, there is adequate capacity then we can go for the final master plan that would ultimately lead us to the MPS.
if u want get diagram of this then mail me himanshu143goel@gmail.com
Benefits of MRP
Inventory control by reduced levels of in-process inventories and raw materials.
Better inventory visibility: it is easy to track material requirements.
Ability to evaluate capacity requirements.
Improved delivery performance and meeting customer requirement.
Increase resource utilization.
Pre-requisites of MRP
• Top management support and commitment.
• Computer and necessary software.
• Computer awareness/literacy.
• Data discipline.
• Accurate and up-to-date information.
Problems in MRP
1. The data integrity is low. The quality of the solution is only as good as the data used for the computation. If the lead time data is wrong, organization may either have too much inventory or frequent shortages.
2. Users did not have the discipline of updating the required databases as and when changes were taking place elsewhere in the organization.
3. There are uncertainties associated with several issues that lie outside the control of the people and the system.
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