Manufacturing Resource PlanningMRP-2

Presented byAbhijeet Karmakar

MT14IND001Industrial 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.

ERPMRP -ΙΙMRP

Types of System

1. Dependent demand- are the component, parts, or sub assemblies of finish goods.

2. Independent demand-Finish goods

EX-

Bikes(2000)

Tyres(4000) Lights(4000)

Demand forecast

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

Inventories

Priority capacities

Order-• Right part• Right quantity• Right Quality

Order-• With due date• Keep due date

valid

Plan for-• Complete Load• Adequate Load• 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.

Bike

Wheel(2)

Tyre(1)

Hub(1)

Lights(2) Engine(1)

Finish Product

Sub Assembly

components

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 Jan.

1 2 3 4 Total

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-

X

A(3)LT=1

Inventory=200

B(2)LT=2

800 items of X

800×2=1600

Complete MRP structure-

BOM

• MPS

Inventory

File

Planned

Order

Report

• Order release report

Order Changes 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 Manufacturer

Equipment Manufacturer

Consumer Goods 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.

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

MATL - A1 UNIT

MATL – PI UNIT

MATL - C3 UNITS

MATL - B2 UNITS

Resource Requirement Matl A Matl B Matl C

Lead time (Wks) 1 2 4

Raw Matl Cost (Rs) 2 5 5

Labor Reqd (Hrs) 10 10 2

Machine Reqd (Hrs) 2 2 1

Bill Of Materials

A typical resource planning problem

Week-7 Week-8 Week-9

Units Of “P” 100

Lead Time(0) Order Release date

100

Week5 6 7 8

A. Units (lead time 1 week) 100Labor: 10 hours each 1,000Machine: 2 hours each 200Payable: Rs 2 each 200

B. Units (lead time 2 weeks, 2 each required) 200Labor: 10 hours each 2,000Machine: 2 hours each 400Payable: Raw material at Rs 5 each 1,000

C. Units (lead time 4 weeks, 3 each required) 300Labor: 2 hours each600Machine: 1 hour each 300Payable: Raw material at Rs 10 each 3,000

22

Resource Estimation

• 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

Benefits 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

Limitation of MRP-2

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