1.2.1 Material Requirements Planning (MRP)
• This is one very popular approach to planning
• Uses Master Production Schedules to determine how much of each product should be produced within given periods. Master Production Schedules are based on customer, or projected demand.
• The elements used by MRP to plan are,
- Master Production Plan (Schedule)
- On-hand inventories
- Bill of Materials
- Current of Purchased and Manufactured Orders
- Rules for each part produced (including WIP)
• The rules about each step in production include,
- Lead time
- Order quantity per final part
- Scrap rate
- Buffer stock quantity
- etc.
• MRP then tries to determine quantities required using the data input from the users, and a set of rules, such as,
- Fixed Order Quantity - Product are produced as required using a prespecified lot size.
- Economic Order Quantity - The cost of carrying inventory is weighed off against the cost of setup for one production run.
- Lot for lot - Lots are produced as required, any batch size.
- Fixed-period Order Quantity - Produce parts to cover more than a single order.
• Lot sizes required are subtracted from available stocks.
• The required production quantities are used to order from suppliers, etc, while considering lead times, and delays.
• You should note that this approach is concerned more with inventory minimization than with utilization of machines.
• While this system can lead to easy production scheduling, it is susceptible to errors in BOMs, routings, etc.
• Advantages,
- improved Customer Service
- better Scheduling
- reduced inventory
- reduced component shortages
- reduced manufacturing costs
- reduced lead times
- higher production quality
- less scrap, and rework
- higher morale in production
- improved communication
- improved plant efficiency
- improved competitive position
- improved coordination of marketing and finance
• MRP II (Manufacturing Resources Planning) - A closed-loop MRP system that, at a minimum, includes detailed capacity analysis (see next section). Some MRP II systems include the business plan in the closed-loop system.
1.2.2 Capacity Planning
• While MRP is concerned with determining how much should be produced, it is not concerned with how to produce it.
• Capacity planners attempt to determine how to assign jobs to machines, people, etc.
• Information used by capacity planners includes,
- Planned orders (from MRP)
- Orders in process (order status)
- Routings, including setup and run time (from process plans)
- Available facilities
- Workforce availability
- Subcontracting potential
• There are some strategies used by the Capacity Planner to Assign jobs to machines,
- Splitting of lots (batches) across identical machines
- Splitting of lots to expedite a smaller quantity
- Sequencing of lots to minimize setup times
- Alternative routings that require different resources
- Loading a facility by weight, volume, etc. (eg. heat treating)
• After jobs have been assigned to machines, the capacity of the machines must be considered.