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2. MRP - Materials Requirements Planning is the scientific planning & usage of materials at various levels of production & monitoring the stocks during these transactions. MRP = Inventory control + Scheduling techniques

3. It is useful when 1. Final product is complex, several layers of assemblies, many parts, sub assemblies. 2. Procurement lead times for Components are long 3. Long Mfg cycle for finished products 4. Demand for product is known & desirable to make specific procurement 9 expensive products)

4. Steps in MRP : Aggr reqts of finished products Net reqts of finished products Develop a master plan schedule Explode BOM & det gross reqts Screen out B & C category Det net reqt of items Adjust reqt for scrap allowance Schedule planned orders

5. Explode next level Aggr reqts & det order quantities Write & place Purchase orders Maintain schedules

6. Vendor rating : Who should be evaluated – ABC analysis, only 70 to 75% of value of purchases, large no of buyers orders, critical parts, How often to evaluate How to evaluate : A. Categorical method B. Weighted Point method C. Cost ratio method

7. Financial stability Field service facility R & D facility Labour stability Geographic location Potential expansion of capacity Managerial capability Supplier reputation with existing customers.

9. Transportation & Traffic Mgt Under material Mgt, Transportation is a function Getting goods from Mgr to Customer Warehousing, Internal materials handling & Transportation Efficient handling of Transportaion materials for reducing costs to customers

10. Choice of mode of transport Route selection Rate verification & auditing Mgt of claims Application of Linear programming to minimize transportation costs.

11. Transport by Shipping – Imports, one region to another, foodgrians, oil, slow material handling at ports Rail transport – over 800 kms freight transportation within country, Quick transport service, Quick transit service, to compete with road transport, Road cum rail transport, parcel service Road transport : large no of transport orgn with a fleet of vehicles – 5 to 10 tonnes over 300 to 500 kms Routing & Delays Tracking