MRP Model

MRP Flow Sales Forecast Run MRP Review Planned Work Order Production Schedule Re-Run MRP Purchase Indent

Benefits of MRP Optimum Inventory Effective Inventory Management Reduced lead time of all the agencies involved in planning and scheduling Automated Planning by System (Accuracy) Future Planning information to the Supplier (Purchase Forecast) On line information about Production, Receipts Information on Inventory balance as of any point of time Information on Projected Inventory on hand for future commitments

Review Production Plan Steps in Running MRP Sales Forecast from Marketing Enter Sales Forecast In MFG/PRO Review Planning Parameters Run MRP 1 Month Firm & 2 Months Tentative 3 Months Forecast By Model Safety Stock, LT For FG & Comp Review Production Plan Revise PP (if required) Re-Run MRP Generate Material Requirement Report PP for FG & WIP Arrive at Materials Requirement Plan Prepare PO based on Material Requirement Report

Flow Demand Run MRP Demand Planned Manufacturing Orders Release Planned Orders Demand Run MRP Sales Forecast Planned Purchase Orders Planned Order Approval Prepare PO & Print PO Demand Sales Forecast issued by Marketing is considered as the Demand Demand to be entered as Sales Forecast in the system against each FG Three Months Forecast to be entered into the system First month forecast considered as Firm and the next two months plan considered as Tentative

MRP MRP Control File Purpose - To set up the MRP horizon, summary default and order Release horizon MRP Horizon - 90 days (Decided based on the Sales forecast entered into the system and the required Planning Horizon to be generated by the system) MRP/DRP Combined - No Summary Default - Monday (For the Default day in Reports)

MRP Item Planning Maintenance Purpose - To define the Planning Parameter for all the FGs, WIP and the Components. Plan Orders - Yes Order Policy - POQ - Period Order Quantity FOQ - Fixed Order Quantity OTO - One Time Only LFL - Lot for Lot Order Quantity - Works along with FOQ Order Period - Works along with POQ Safety Stock - Qty to be maintained in inventory as a protection against fluctuation in demand Safety Stock considered as demand Safety Time - Receive Material in advance as a protection against late deliveries Pur/Mfg - “P” -> Purchased Items “M” -> Manufactured Items

MRP Item Planning Maintenance Mfg LT - Number of days required to manufacture the Item Due date – Mfg LT = Work Order Release Date Pur LT - Number of days required to complete the Purchasing Cycle of the Item Due Date – Pur LT = Purchase Order Release Date Ins LT - Number of days required to Inspect the Material after receiving the Material in the stock Minimum Order - Minimum Order quantity to be ordered for an Item when there is a requirement Maximum Order - Maximum Order quantity can be set up to generate action messages Order Multiplier - To satisfy Supplier’s Packaging and Shipping volumes Considered while generating Planned Orders Yield% - % of an order expected to be in usable condition BOM/Formula - Alternate BOM to be specified in case of Consumption against alternate Bill

Inputs for MRP How does MRP work? Demand Requirement Sales Forecast Inter Site Request Requirement Demand – (QOH and Quantity on Order) QOH -> Sum of Inventory of a Material at all Nettable locations Qty On Order -> Open Purchase Orders of a Material

Accurate System Parameters Garbage In = Garbage Out MRP Requirements Accurate Demand Data Accurate Supply Data Stock on Hand In-transit Pending Orders Accurate System Parameters Garbage In = Garbage Out

Three options to Run MRP Running MRP Three options to Run MRP Net Change Requirement Items for which MRP Required flag is set to “yes” are selected for the Run Regenerate Material Requirement All the Items in the Item Master are selected for the Run Selective Material Requirement Only those items selected for Planning are planned

Item Planning Parameter Finished Goods Setup Item Planning Parameter Finished Goods Plan Orders - yes Order Policy - LFL / POQ Order Period - Safety Stock - Stock that needs to be maintained in the inventory at any point of time Pur/Mfg - M Mfg LT - no. of days required to manufacture (only for FA & PA) Order Multiplier- optional

Item Planning Parameter WIP Setup Item Planning Parameter WIP Plan Orders - yes Order Policy - LFL / POQ Order Period - Safety Stock - Stock that needs to be maintained in the inventory at any point of time Pur/Mfg - M Mfg LT - no. of days required to manufacture (at each section) Order Multiplier- optional

Setup Item Planning Parameter Sub-con Items (only for ONGKOS Items) Plan Orders - yes Order Policy - POQ Order Period - to combine no. of days requirement into one order Safety Stock - Stock that needs to be maintained in the inventory at any point of time Pur/Mfg - P Mfg LT - Pur LT - No. of days required to complete the Purchasing cycle Minimum Order - Minimum Order quantity Order Multiplier - optional

Setup Item Planning Parameter Purchased Items Plan Orders - yes Order Policy - POQ Order Period - to combine no. of days requirement into one order Safety Stock - Stock that needs to be maintained in the inventory at any point of time Pur/Mfg - P Mfg LT - Pur LT - No. of days required to complete the Purchasing cycle Minimum Order - Minimum Order quantity Order Multiplier - Satisfy Packaging/Volume constraints

Impact due to Planning Parameter Mfg / Pur LT - Order Release Date Safety time - Order Due Date Safety Stock - Demand Pending Order - Added to Projected QOH based on the Due Date Minimum Order- Works along with Order Policy & Order Period Order Multiplier- Works along with Order Policy & Order Period