" The best example of a materials requirement planning system is the human brain, or any other brain for that matter, not only does it provide the action link to `the knee bone is connected to the thigh bone, etc', it brings in the blood and nutrients to produce the final product of movement, intention and communication. "
* MRP is simply materials management of input items to the production process where demand is relatively even over time.
* MRP comes in many forms but is primarily a computer-based integrated system with varying degrees of complexity and scope.
~ Independent demand inventory is the final demand goods. That is the goods that will be consumed or used up by the customer as finished goods. Determined only by customer demand.
~ Dependent demand inventory is items that are used in the manufacture of a finished product e.g. raw materials and component parts.
- although demand for raw materials etc is dependent on customer demand, in the short-term the demand is dependent on lot-size or batch.
~ Permits the operations management system to function.
- assemblers must have component parts to assemble.
- manufacturers must have raw materials to convert into component parts or finished products.
~ Permits continuous operations.
- particularly where short-term demand is inconsistent with production rates.
- allows work to continue when there are bottlenecks in assembly-lines.
- safeguard from late deliveries from suppliers.
* Permits lower acquisition costs.
- quantity discounts.
- hedge against inflation.
* Dependent demand inventory systems and production planning:
[see overhead 1 - Figure 7.2]
[see overhead 2 - Figure 7.3]
* Refer overhead above - prerequisite information:
These are customer orders that have been contracted for future delivery and open orders (unfinished orders) that must be completed in the production period being planned.
This is a detailed forecast of each product that defines the number of units needed and when they will be required over the planning horizon.
This optional plan provides general capacity information that can be used to anticipate and correct resource shortages as well as provide the general guidelines necessary to complete the master production schedule.
This information provides a detailed file of the dependent demand inventory items in the various stages or levels of the transformation process. This file of information defines the steps by which dependent demand inventory items come together to create a finished product.
This information defines possible changes in inventory requirements caused by product design changes expected during the planning horizon.
This information defines the existing or available inventory levels at the beginning of the planning horizon.
This information defines the amounts of ordered, purchased or contracted inventory items that an organisation expects to receive during the planning horizon.
- When and how many production units required.
- Lead-time requirements.
- MRP iterative process with MPF until feasible.
- All raw materials and components requirements (type and quantity) for given item (re: parent item).
- [see overhead 3 - Figure 12.9]
- Exploding the BOM - determine quantity, and lead-time for each item.
- for common components at different levels treat as individual items.
- what will be level of inventory at beginning of the planning horizon.
- what are the scheduled receipts of inventory during period.
- other info such as supplier names & addresses, lead-times and purchase quantities.
~ Descriptive use of info - data entered, programs run and output used to schedule operations for the next planning horizon.
~ Prescriptive use of info - run a series of alternative inventory requirement situations to prescribe best course of action.
- net-change - program generates new information on only those products affected by change.
- regenerative - program generates a whole new basic plan each time the system is run.
Detailed printout defining orders and inventory requirements and reports are presented by inventory name and number and define the time-phased quantities by period over the planning horizon.
These are short-term order releases which authorise a department such as purchasing to acquire a specific amount of inventory for use in a specific period.
These advise when planned orders cannot be achieved in the time and quantities originally stated in the master schedule. Can include revisions to order due dates, order quantities, order delays or expediters and order cancellation.
Statistical reports on inventory level status including:
- averages.
- late inventory receipts.
- stockouts.
- costs.
Various including:
- cost of inventory purchase trends.
- capacity planning.
- safety stock levels.
* Issue of how much to order.
* Lot-for-lot order policy:
~ based on order one period what is needed in the next. That is a produce-to-order basis.
~ The lot-for-lot ordering system entails inventory requirements equalling the demand requirements that were not satisfied by existing inventory levels.
~ Lot-for-lot minimises inventory but precludes quantity discounts.
~ requires a complex iterative cost-comparing approach.
* Alternative approach is a fixed order quantity policy:
~ organisations that schedule production to allow buildup of finished goods production.
~ approach is known as produce-to-stock (also EOQ approach).
* MRP II stands for "Manufacturing Resource Planning".
* MRP II includes MRP but can also include purchasing functions, sales order, costing, accounts receivable and payable and general ledger, etc.
* MRP II is concerned with the manufacturing aspects of the expanded model rather than a total integrated package, usually known as business requirements planning.