1. Facility Inventory Old Facilities Modern Facilities Classroom Size
Furniture
Supplies

2. Material Requirement Planning

3. Material Requirement Planning
MRP is a systematic planning-and-control methodology for production and inventory.
Specifically, it is a procedure for planning and controlling the raw material, purchased parts, and work in progress (WIP) inventories required in manufacturing a product.
MRP is designed to answer three questions: what is needed, how much is needed, and when is it needed.

4. Independent and Dependent Demand Inventory
END PRODUCT
Order Point
Time LT LT LT
COMPONENT OF END PRODUCT
Order Point
Time LT
RAW MATERIAL
Order Point
Time LT

5. The Benefits of MRP Inventory reduction.
Reduction in production & delivery time.
Increased efficiency.
Faster response to market changes.
Improved labour & equipment utilization.
Better inventory planning & scheduling.
Reduced inventory levels without reduced customer service.

6. WHEN TO USE MRP? It is useful for…..
Dependent Demand (table top, table leg).
Discrete Demand (demand for leg at last).
Complex Products (subassembly before final assembly).
Assemble-to-Order (major assemblies & sub assemblies is done in advance).

7. Limitations of Order-point techniques…
As each part in inventory is managed separately &
independently of all others. So even though these
techniques can provide extremely high service level for individual parts, the service level for combination of Parts
(subassemblies) & for the complete end product can be low.

8. Overview of the MRP System
Master
Production
Schedule
Product
Structure
File
Material
Requirements
Planning
Item
Master
file
Planned
Order
Release
Work
orders
Purchase
Orders
Rescheduling
notices

9. Information Needed for MRP
Master Production Schedule (MPS),
The Bill of Material (BOM), ingredients for the end product,
Inventory Data,
Balance on Hand (BOH),
Scheduled receipts,
Purchasing/Fabrication lead times.

10. MRP Inputs Master Production Schedule Product Structure File
Inventory Master File

11. Product Structure File
Bill of Materials:
It is a materials list that provides information useful to reconstruct the manufacturing process. It is the master product definition that contains “as designed” information

12. Bill of material LEVEL PRODUCT LEAD TIME Level 0
Two -drawer file cabinet
Level 1
Case (1)
2 weeks
Level 2
Drawer slide (4)
3 weeks
Formed case (1)
Level 3
Sheet steel (1)
4 weeks
Drawers (2)
1 week
Formed drawer (1)
Handle (1)
Support rollers (2)
Sheet steel(1)

13. Master Production Schedule
Schedule of Finished Products
Represents Production, not Demand
Combination of Customer Orders and Demand Forecasts
What Needs to be Produced

14. Inventory Master File On-Hand Quantities. On-Order Quantities.
Lot Sizes.
Safety Stock.
Lead Time.
Past-Usage Figures.

15. Description
Lot for lot method – generating the planned quantities in each period value by value directly from the net requirements in subsequent period, with no economic batching of orders, is called “the lot for lot method.
Time phasing – the process of subtracting an item's lead time from its due date to determine when an order should be released. Time-phasing coordinates the quantity of parts and components held in inventory with assemble or final production needs as determined by the MPS.

16. Two important concepts
Planned order releases at higher levels generate gross requirements at lower levels.
Inventories of higher level subassemblies already include the necessary lower level components, and this fact is automatically allowed for by the net requirements calculation.

17. Regeneration vs. net change
Complete replanning of requirements and update of inventory status for all items
High data processing efficiency
Usually initiated by weekly update of master schedule
Net change
Daily update based on inventory transactions
More responsive to changing conditions
Requires more discipline in file maintenance

18. Manufacturing Resource Planning (MRP II)
Manufacturing Resource Planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer "what-if" questions and extension of closed-loop MRP.

19. Performance Measurement
Business Planning
Objectives
Top Management
Planning
Sales Planning
Demands
Production Planning
Objectives
Resources
OK? No
OMP F E D B A C K
Yes
Products
Bills of Material
Master Scheduling
Materials
Inventory Status
Material Planning
Routing
Capacity Planning
Capacity
Planning
OK? No
Yes
Parts
Operations
Management
Execution
Purchasing
Hours
Shop Floor Control
Accountability
Performance Measurement

20. Just-in-time (JIT)
A highly coordinated processing system in which goods move through the system, and services are performed, just as they are needed. In short, the just-in-time inventory system is all about having “the right material, at the right time, at the right place, and in the right quantity ” without the safety net of Inventory, the implications of which are broad for the Implementers.