MRP and ERP  Material Requirements Planning (MRP) is a software based production planning and inventory control system used to manage manufacturing processes. softwareinventorymanagemanufacturingsoftwareinventorymanagemanufacturing  An MRP system is intended to simultaneously meet three objectives: 1.Ensure materials and products are available for production and delivery to customers. 2.Maintain the lowest possible level of inventory. 3.Plan manufacturing activities, delivery schedules and purchasing activities. MRP

MRP and ERP MPR Processing  Gross requirements Total expected demand.Total expected demand.  Scheduled receipts Open orders scheduled to arrive.Open orders scheduled to arrive.  Planned on hand Expected inventory on hand at the beginning of each time period.Expected inventory on hand at the beginning of each time period.

MRP and ERP MPR Processing  Net requirements Actual amount needed in each time period.Actual amount needed in each time period.  Planned-order receipts Quantity expected to be received at the beginning of the period.Quantity expected to be received at the beginning of the period. Offset by lead time.Offset by lead time.  Planned-order releases Planned amount to order in each time period.Planned amount to order in each time period.

MRP and ERP Updating the System  Regenerative system Updates MRP records periodically.Updates MRP records periodically.  Net-change system Updates MPR records continuously.Updates MPR records continuously.

MRP and ERP MRP Outputs  Planned orders - schedule indicating the amount and timing of future orders.  Order releases - Authorization for the execution of planned orders.  Changes - revisions of due dates or order quantities, or cancellations of orders.

MRP and ERP MRP Secondary Reports  Performance-control reports  Planning reports  Exception reports

MRP and ERP Requirements of MRP  Computer and necessary software  Accurate and up-to-date Master schedules Master schedules Bills of materials Bills of materials Inventory records Inventory records  Integrity of data

MRP and ERP Bill of Materials A listing of all raw materials, parts, subassemblies, and assemblies needed to produce one unit Product structure Tree for an Item X X F(2)E(2)ED(3) CB(2) Level

MRP and ERP Capacity Planning Capacity requirements planning: The process of determining short-range capacity. requirements. The necessary inputs are:  Planned order releases for MRP  The current shop load  Routing information  Job times Outputs include load reports for each work center.

MRP and ERP Capacity Planning Load reports: Department or work center reports that compare known and expected future capacity requirements with projected capacity availability. An organization generates a Master Schedule in terms of what is needed and not in terms of what is possible or available.

MRP and ERP Capacity Planning The initial schedule may or may not be feasible given the limits of production or availability of materials.

MRP and ERP Capacity Planning Time fences: Series of time intervals during which order changes are allowed or restricted.

MRP and ERP Capacity Planning Develop a tentative master production schedule Use MRP to simulate material requirements Convert material requirements to resource requirements Firm up a portion of the MPS Is shop capacity adequate? Can capacity be changed to meet requirements Revise tentative master production schedule Change capacity Yes No Yes No

MRP and ERP Capacity Planning  An over view of the capacity planning process.  The Master schedule is first tested for feasibility and possibly adjusted before it becomes permanent.  The proposed schedule is processed using MRP to ascertain the materials requirements the schedule would generate.  These are then translated into capacity requirements in the form of load reports for each departments or work centers.

MRP and ERP  Manufacturing Resource Planning (MRP II) is defined and accepted by professionals as a method for the effective planning of all resources of a manufacturing company.  Ideally, it should answer operational planning in units, financial planning in rupees, and has a simulation capability to answer "what-if" questions. and extension of closed-loop MRP. MRP  This is not exclusively a software function, but a merger of people skills, dedication to data base accuracy, and computer resources. It is a total company management concept for using human resources more productively. MRP II

MRP and ERP  Accounting and finance departments get accurate costs, and predict cash flow. Engineering dept must audit and feed in accurate data on production methods in detail, such as: Accountingfinancecostscash flowEngineeringAccountingfinancecostscash flowEngineering bill of material bill of materialbill of materialbill of material Quality ControlQuality ControlQuality ControlQuality Control MRP II

MRP and ERP MarketDemand Productionplan Problems? Rough-cut capacity planning Yes No Yes No Finance Marketing Manufacturing Adjust production plan Master production schedule MRP Capacityplanning Problems? Requirementsschedules Adjust master schedule MRP II

MRP and ERP  Enterprise resource planning (ERP): Integration of financial, manufacturing, and human resources on a single computer system.Integration of financial, manufacturing, and human resources on a single computer system. ERP

MRP and ERP ERP Strategy Considerations  High initial cost  Training  High cost to maintain  Future upgrades