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Manufacturing Resource Planning

MRP-2

Presented by
Abhijeet Karmakar
MT14IND001
Industrial Engineering
Historical perspective

Manufacturing resource planning evolved from


material requirement planning in the 1980s.
It abbreviated as MRP-ΙΙ to distinguish from
MRP.
Oliver Wight and Walter Goddard developed
manufacturing resource planning from MRP.
MRP MRP -ΙΙ ERP
Types of System
1. Dependent demand- are the component, parts, or sub
assemblies of finish goods.
2. Independent demand-Finish goods
EX-

Bikes(2000) Demand
forecast

Tyres(4000) Lights(4000)
MRP is a computerized inventory system for
inventory control-
Purpose of MRP
• Control inventory levels
• Assign operating priorities
• Plant capacity to load the production system

Purpose of
MRP

Inventori Priority capacities


es
Order-
Order-
• Right part Plan for-
• With due date
• Right quantity • Complete Load
• Keep due date
• Right Quality • Adequate Load
valid
• Future Load
MRP-(material requirement planning)

• Material requirement planning is a system used for


planning the future requirement of the dependent
demand items.
• Black and decker was the first company who used
MRP in 1964.
• Material requirement planning typically determine
“when to order” based on a average usage for a
planned replenishment lead time + safety stock to
protect the severer demand.
Inputs in MRP
The main objective of MRP system is to convert the MPS
into the detailed for raw material and components.
Following major inputs to the MRP-

1.Bill of Material
2. Master production schedule
3. Inventory Status
Bill of material
Bill of Material is a document which tell about an items product
structure, showing the sequence in which components are
assembled and their number.

Finish Product
Bike

Sub Wheel(2) Lights(2) Engine(1)


Assembly

Tyre(1)
components

Hub(1)
Master production schedule
MPS provide information about-
• What end product are to be produced
• How many o each type of product is to be produced
• When the product is likely to be dispatched.
The MPS is an extension of the aggregate production plan.
Example
Month No of Cars
Jan. 10000
Feb 12000
March 8000
April 5000
May 5000
MPS structure

Weeks Of 1 2 3 4 Total
Jan.

Santro 1200 2000 2500 700 6400

Accent 700 950 1300 250 3200

Sonata 100 50 200 50 400

Total 2000 3000 4000 1000 10000


Inventory status
• The inventory record file covers each item record separately
indicating its inventory status on a period by period basis.
• This file also keep information about supplier, lead time, lot
size etc.
Ex-
800 items of X
X

A(3)
B(2) 800×2=1600
LT=1
LT=2
Inventory=200
Complete MRP structure-

• Order
release
• MPS
report
PROBLEMS WITH MRP
• The user has to specify how long it takes a factory to make a
product from its components.
• This system assume lead time is constant.
• This system could not include resource planning in its system.
• MPS is only depends on Forecast value or firm order.
Why MRP-ΙΙ ?
Component Equipment Consumer Goods
Manufacturer Manufacturer Manufacturer
Labor 110 70 40
Material 280 430 250
Overhead 200 210 100
Factory Cost 590 710 390
Operating Cost 250 150 400
Total 840 860 790
Profit 160 140 210
Total Sales 1000/- 1000/- 1000/-
MRP-2
• A method for the effective planning of all resources of
manufacturing-
• Financial accounting incorporated
• Sales
• Operations Planning
• Simulate capacity requirements of different possible Master
Production Schedules.
• MRP 2 is the incremental information integration business
process strategy implemented using hardware and modular
software application linked to central database that store
business data and information.
MRP2 is a closed cycle MRP…!!
 Rough Cut capacity Planning
• Quick check on a few key resources required to implement the
MPS.
• Rough cut capacity plans are “Finite capacity plan” because
they have to operated within certain constrains.

Capacity Planning
• It provide more detailed information than Rough cut capacity
planning.
• It explode the manufacturing order through routine specified
in the shop floor control system.
• It provide information about what capacity is required in each
work center.
Features of MRP-2
• Fluctuation of forecast is taken into account by including
simulation of MPS.
• MRP2 is a total company management concept for using
more human resources effectively.
• The MRP2 is carried out by a synergistic combination of
computer and human resources.
• The integration extends from strategic to operational
level and encompasses long term planning up to short
term control.
A typical resource planning problem

Problem:
To schedule the resources for enabling uninterrupted
production of 100 units of product P 9 weeks from now.

Resource
Matl A Matl B Matl C
Bill Of Materials Requirement
Lead time
MATL – P 1 2 4
I UNIT (Wks)
Raw Matl Cost
2 5 5
(Rs)
MATL - A MATL - B MATL - C Labor Reqd
1 UNIT 2 UNITS 3 UNITS 10 10 2
(Hrs)
Machine Reqd
2 2 1
(Hrs)
Week-7 Week-8 Week-9

Units Of “P” 100

Lead Time(0) 100


Order Release date
Resource Estimation

Week
5 6 7 8
A. Units (lead time 1 week) 100
Labor: 10 hours each 1,000
Machine: 2 hours each 200
Payable: Rs 2 each 200
B. Units (lead time 2 weeks,
2 each required) 200
Labor: 10 hours each 2,000
Machine: 2 hours each 400
Payable: Raw material at Rs 5 each 1,000
C. Units (lead time 4 weeks,
3 each required) 300
Labor: 2 hours each 600 22
Machine: 1 hour each 300
Payable: Raw material at Rs 10 each 3,000
Benefits Of MRP-2
• Increased direct labor productivity
• High accuracy of inventory and manufacturing capacity
• Effective interaction between different functions due to
common databases and improved information flow
• Quicker implementation of engineering changes
• Simulation capability to test what-if scenarios in a risk
free environment
• Company focus shifts from crisis management to
process control 23
Benefits Of MRP-2
• For Manufacturing Functions:
• Better control of inventories
• Improved scheduling
• Productive relationships with suppliers
• For Financial and Costing Functions :
• Reduced working capital for inventory
• Improved cash flow through quicker deliveries
• Accurate inventory records
• Timely and valid cost and profitability information
• For Design / Engineering Functions :
• Improved design control
• Better quality and quality control
24
Limitation of MRP-2
• Capacity can be considered only after the MRP schedule has
been prepared.
• It may happen that insufficient time was allowed within the
MRP schedule for the individual operations to be completed,
thus leading to erroneous data.
• All the planning, if done on the basis of misleading data, will
slow down the production process.
• If unexpected input changes occur, the planning process has
to be recalculated from start. 25
Questionnaire?
• What is the difference between MRP-1 and
MRP-2?
• Explain the inputs and outputs of MRP?
• What are the various benefits and limitation of
MRP-2 over MRP-1?
• Which system is easy to implement MRP or
MRP-2?
• Differentiate between Independent and
dependent system?
• Define RCCP and capacity planning?
References
• Production management by Kanishka Bedi oxford university
publisher.
• http//www.slideshare.net/MRP2
• http//www.wikipedia.org/MRP2
Thank You