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CHAPTER 10: MATERIAL REQUIREMENTS (4 WHAT CAN MRP DO? (Reduce inventory…
CHAPTER 10:
MATERIAL REQUIREMENTS
1. WHAT IS MRP?
Computerized inventory control
Production planning system
Management information system
Manufacturing control system
2. OBJECTIVES OF MRP
Ensure materials and products are available for production and delivery to customers
Maintain the lowest possible level of inventory
Plan manufacturing activities, delivery schedule and purchasing activities
3. FUNCTIONS OF MRP
Forecasting
Order, planning and control
Priority planning and control
Planning capacity requirements and development of broad business plan
4 WHAT CAN MRP DO?
Reduce inventory levels
Reduce component shortages
Improve shipping performance
Improve customer service
Improve productivity
Reduce purchasing cost
5. BASIC STEPS OF MRP
STEP 1: Identifying requirements
:pen: Quantity on hand
:pen: Quantity on open purchase order
:pen: Quantity in / or planned for manufacturing
:pen: Quantity commited to existing orders
:pen: Quantity forecasted : :
STEP 2: Running MRP- creating the suggestions
:pen: Critical items
:pen: Expedite items
:pen: Delay items
STEP 3: Forming the suggestions
:pen: Manufacturing orders
:pen: Purchasing orders
:pen: Various reports
6. ADVANTAGES OF MRP
Improve business results
Less inventory
Reduced production cost
Improve manufacturing results
Less materials Obsolesscence
High reliability
7. DISADVANTAGES OF MRP
Increase in material acquisition cost
Higher transportation cost and unit cost
High stock-out costs
Potential hazards of a production slowdown or shutdown
Use of standardized software packages