Material Requirement Planning 2013

Materials Requirement Planning

Materials Requirement Planning It is the logic for determining the number of parts, components, and materials needed to produce a product.

MRP provides time scheduling information specifying when each of the materials, parts, and components should be ordered or produced.

MRP is a software system/ computer program which generate outputs to control the material and other resources quickly and accurately.

Objectives of MRPMRP is adopted to achieve

1.Timely availability of material and components.2.Maintain level of inventory as low as possible.3.Planning of manufacturing activities.4.Improve operational efficiency of the plant.5.Reduces wastage and scrap.6.Reduce ideal time and increase efficiency and use of the resources.7.Avoid confusion and hold ups in production.

Elements of MRP

1. Master production Schedule (MPS) – It is a list of items to be produced to replenish the inventory of finished goods or to meet special orders. MPS is tested by material requirement plant and capacity requirement plant.

2. Bill of Material (BOM) – it is a file listing of materials and their quantities that are required to produce one unit of product. it helps in breaking down MPS into assemblies, subassemblies, parts and raw material requirement.

3. Inventory status file – It gives details of •Material code

•Unit of measure

•Maximum level

•Minimum level

•Reorder level

•Unit price

•Stock on hand on a particular date of run

•Order status of the items

•Reservation status of the item if any

•Material in transit or in inspection

Factors affecting MRP Implementation

•Acceptability of Management•Participation of MRP using Personnel•Training of involved Personnel•Decision about selection of MRP system•Accuracy of Data•Practical Orientation of MPS

Problems faced during Designing, Managing and Using the MRP Systems

1.Integrity and accuracy of the data

2.Specification of the time duration

3.Need of individual factory

4.Functioning of other systems

5.Incompetent and inadequate software

6.Incompetent manpower to handle MRP

7.Timing of information generation

8.Market uncertainities

Primary MRP ReportsPlanned orders to be released at a future time.

Order release notices to execute the planned orders.

Changes in due dates of open orders due to rescheduling.

Cancellations or suspensions of open orders due to cancellation or suspension of orders on the master production schedule.

Inventory status data

Secondary MRP Reports

Planning reports, for example, forecasting inventory requirements over a period of time.

Performance reports used to determine agreement between actual and programmed usage and costs.

Exception reports used to point out serious discrepancies, such as late or overdue orders.

Lot sizing techniques used in MRP systems

1.Lot-for-lot (L4L) – most used

2.Economic order quantity (EOQ)

3. Periodic order quantity (POQ)

4. Least unit cost (LUC)

5. Least total cost ( LTC)

Lot-for-lot (L4L) - It consists of

•Plan order exactly to meet the net requirement.

•Produce exactly what is needed in each week

with no carry over to future.

•Minimize carrying cost

•It do not consider the set up cost or the capacity

limitations.

Economic Order Quantity EOQ•It uses the estimate of annual demad•It consists of two cost•Setup cost / Ordering cost•Carrying cost / holding cost

•It is calculated using formula

EOQ = 2 DS/ HWhere D = Annual DemandS = Setup or ordering costH = Annual holding cost

•

Periodic Order Quantity • Here an order is placed so that it covers the requirement of period P

•If an order is placed it should cover the order of P successive period.

•Number of Periods = EOQ Average demand during planning Phase

= EOQ / Demand /N

Lest Unit Cost (LUC)

•It is a dynamic lot sizing technique

Calculate Ordering cost and Carrying Cost for different lot size.

Select a lot size for which Ordering cost ≈ Carrying Cost

Lest Total Cost (LTC)

•It is also a dynamic lot sizing technique

LTC = Ordering cost + Carrying Cost Number of units

Question •Consider an item that has projected demand as shown in the table below and a beginning inventory of 30 units. The carrying cost per unit per week is Rs 2.50. the cost per setup is Rs 250. the least time to assemble the item is one week.

a.Develop an EOQ solution and calculate total relevant costb.Develop a POQ solution and calculate total relevant costc.Develop a LUC solution and calculate total relevant costd.Develop a LTC solution and calculate total relevant cost

Period 0 1 2 3 4 5 6 7 8 9 10 11 12

Projected requirement

- 30 50 40 - 15 20 20 - 10 - 15 50