Management Science 2 Material Requirements Planning (MRP)

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Presentation transcript:

Management Science 2 Material Requirements Planning (MRP) PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458

Inventory Classifications Process stage Number & Value Demand Type Other Raw Material WIP Finished Goods A Items B Items C Items Maintenance Dependent Operating Independent Dependent PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458

Dependent versus Independent Demand Item Materials With Independent Demand Dependent Demand Demand Source Company Customers Parent Items Material Type Finished Goods WIP & Raw Materials Method of Estimating Forecast & Booked Customer Orders Calculated Planning Method EOQ & ROP MRP We start this chapter by linking Dependent Demand Inventory back to Independent Demand Inventory. You might note to students that independent demand is created external to the company, dependent demand, internally. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458

Inputs to the Production Plan Marketing Customer Demand Production Capacity Inventory Finance Cash Flow Aggregate Production Plan Human Resources Manpower Planning Procurement Supplier Performance Management Return on Investment Capital Engineering Design Completion PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458

Requirements for Effective Use of Dependent Demand Inventory Models Effective use of dependent demand inventory models requires that the operations manager know the: master production schedule specifications or bills-of-material inventory availability purchase orders outstanding lead times You might add to this list that the operations manager must know that inventory records, bill-of-materials, etc., are accurate. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458

MRP Benefits Increased customer satisfaction due to meeting delivery schedules Faster response to market changes Improved labor & equipment utilization Better inventory planning & scheduling Reduced inventory levels without reduced customer service While MRP certainly can produce these benefits, it is useful to discuss the problems faced in establishing an MRP system. A number of companies have given up on the task - the necessary transformation of old processes has simply proven too difficult. PowerPoint presentation to accompany Operations Management, 6E (Heizer & Render) © 2001 by Prentice Hall, Inc. Upper Saddle River, N.J. 07458