Learn from Experts -- Manufacturing and MRP

Production Planning

• Production planning is a process used by manufacturing companies to optimize the efficiency of their processes

• Effectively utilize limited resources in the production of goods so as to satisfy customer demands and create a profit for investors.

• Resources include the production facilities, labor and materials.

• Constraints include the availability of resources, delivery times for the products, and management policies.

Material Resources Planning (MRP)

• A computer-based information system that translates Master Production Schedule (MPS) requirements for end items into time-phased requirements for subassemblies, components, and raw materials.

• Material requirements planning (MRP) is a dependent demand production planning and inventory control system.

• MRP integrates data from production schedules (MPS) with inventory records, scheduled receipts and the bill of materials (BOM) to determine purchasing and production schedules for the components required to build a product.

Bills of Material (BOM)

• List of components, ingredients, and materials needed to make product, Provides product structure ,Items above given level are called parents , Items below given level are called children

Lead Times

• The time required to purchase, produce, or assemble an item For production – the sum of the order, wait, move, set-up, store, and run times

• For purchased items – the time between the recognition of a need and the availability of the item for production

Safety Stock

• Theoretically, MRP systems should not require safety stock, Variability may necessitate the strategic use of safety stock

• A bottleneck process or late delivery of raw materials may cause shortages in downstream operations When lead times are variable, the concept of safety time is often used

• Safety time: Scheduling orders for arrival or completions sufficiently ahead of their need so that the probability of shortage is eliminated or significantly reduced

Lot Sizing Rules

• Lot-for-Lot (L4L) ordering - The order or run size is set equal to the demand for that period - Minimizes investment in inventory - It results in variable order quantities A new setup is required for each run

• Economic Order Quantity (EOQ) - Can lead to minimum costs if usage of item is fairly uniform - This may be the case for some lower-level items that are common to different ‘parents'

• Periodic Order Quantity (POQ)- Provides coverage for some predetermined number of periods



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