MODULE-4

Material Requirement Planning (MRP):

Material Requirements Planning (MRP) is a computer-based production planning and
inventory control system. MRP is concerned with both production scheduling and inventory
control. It is a material control system that attempts to keep adequate inventory levels to
assure that required materials are available when needed.
The main aim of MRP is getting right material at the right time to the right in the right
place.
Material Requirement Planning is a special technique to plan the requirements of
materials for production.

MRP consists of three basic steps: 

 Identifying the Quantity Requirements: Determine what quantity is on hand, in an

open purchase order, planned for manufacturing, already committed to existing
orders, and forecasted. These requirements are specific to each company and each
company location and change with the date.
 Running the MRP Calculations: Create suggestions for materials that you consider
critical, expedited, and delayed.
 Complete the Orders: Delineate the materials for the manufacturing orders, purchase
orders, and other reporting requirements. 

MRP STRUCTURE OR PROCESS:

The calculations that MRP performs are based on the data inputs. As shown in the diagram
above, these data inputs include:

 Customer Orders: This refers to the specific information you receive from

customers and includes one-offs and regular ordering patterns.
 Forecast Demand: This is a prediction from the marketplace about how much
probable demand there will be for a product or service. It is based on historic
accounting and current trend analysis. 
 Master Production Schedule (MPS): Both forecast demand and customer orders
feed into the master production schedule. The MPS is a plan that a company develops
for production, staffing, or inventory. It is the production future plan that includes the
quantities you need to produce the products in a specified time period. It also includes
inventory costs, production costs, inventory information, supply, lot size, lead time,
and development capacity.
 Bill of Materials (BOM): Also called a product structure file, this includes the details
and quantities of the raw materials, assemblies, and components that make up each
product.
 Inventory Records: These are the raw materials and the completed products that you
either have on hand or have already ordered. 

After MRP receives the input, it generates the output. There are four main outputs. These
include: 

 Purchase Orders (PO): This is the recommended purchasing schedule that includes

the order you give to suppliers to send the materials. The PO includes a schedule with
quantities and start and finish dates to meet the MPS.
 Material Plan: This details the raw materials, assembly items, and component needs
to make the end products with quantities and dates. We recommend that you use
attribute settings to set the time fences and to firm orders.
 Work Orders: This details the work that goes into producing the end product,
including which departments are responsible for what part, what materials are
necessary, and what the start and end dates are.
 Reports: MRP generates primary and secondary reports. The primary reports include
all three of the above — those that deal with production and inventory planning and
 control. Secondary reports are those that detail things, such as performance control,
exception data (e.g., errors or late orders), deviations, and predictors of future
inventories and contracts.

Advantages of MRP:
 To minimize inventory levels and the associated carrying costs,
 Track material requirements,
 Determine the most economical lot sizes for orders,
 Compute quantities needed as safety stock,
 Allocate production time among various products,
 And plan for future capacity needs.

Disadvantages of MRP:

 MRP relies upon accurate input information. If a small business has not maintained
good inventory records it may encounter serious problems with the outputs of its
MRP system.
 At a minimum, an MRP system must have an accurate master production schedule,
good lead-time estimates, and current inventory records in order to function
effectively and produce useful information.
 Another potential drawback associated with MRP is that the systems can be difficult,
time consuming, and costly to implement.
 MODULE-5
Scheduling is the process of arranging, controlling and optimizing work and workloads in a
production process. Companies use backward and forward scheduling to allocate plant and
machinery resources, plan human resources, plan production processes and purchase
materials. There are two types of scheduling. They are,

 Forward scheduling:
In this process, each task or operation is scheduled to happen at the earliest time that the
required material will be on hand and capacity will be available. It presumes that
procurement of material and operations starts as soon as the buyer/customer requirements
are known. Some buffer time could be added to estimate the target date and time for
dispatching the order to the buyer.  The benefits of production scheduling include:

 Backward scheduling:
This technique is normally utilized in assembly type industries where they commit in
advance to specific delivery time. After the determination of the essential schedule
dates for key sub-assemblies, the schedule utilities these dates for each component
and works backward to determine the proper dispatch date for each component
manufacturing order. The work or jobs start date is calculated by ‘setting back’ from
the finish date the processing time for the job.
 Advantages of Scheduling:

 Process change-over reduction

 Inventory reduction, levelling
 Reduced scheduling effort
 Increased production efficiency
 Labour load levelling
 Accurate delivery date quotes
 Real time information

Factors Affecting Scheduling:

 External Factors:

These are the factors which are not within the control of the organisation’s management.

They are dictated by the outside forces to which the management adjusts.

Such important factors are as follows:

(i) Customer’s demand:

This demand is estimated by the sales forecasting deptt. Scheduling is based on the forecasts

of the expected sales of specific products in the continuous production. The forecast is made

on the basis of expected volume of business in case of intermittent production.

(ii) Delivery dates of customer’s:

In a continuous or mass production with seasonal demand, the scheduling should be decided

in such a way that there is a balanced production throughout the year reducing the stock of

inventories with a constant level of production. In case of the intermittent production with the

seasonal demand, it may be adjusted by giving delivery on agreeable delivery dates to the

consumer orders.

(iii) Stock of goods already lying with dealers and retailers:

This situation arises in case of continuous production of standardized goods. Usually the

dealers and retailers are maintaining certain stock levels with them. The scheduling should be

based on the stock position with the retailers and dealers.

 Internal Factors:

The factors within the control of management should be manipulated in such a way that

objectives of the production function can be achieved most efficiently and economically.

Some important such factors are as follows:

1. Stock of Finished Products with the Enterprise:

Where the production is made to stock, the scheduling should be adjusted to the stock of

finished products with the dealers. The new sales forecast should be made, and the scheduling

should be done in the light of the fluctuations in the stock holding.

2. Time Interval to Process Finished Products from Raw Material:

This is the time required to process every sub assembly, and the finished product from the

raw materials.

3. Availability of Machines and Equipment:

The various machines and equipment have varying production capacities. Moreover, their

occupancy scheduling can be prepared with the help of machine load charts.

4. Availability of Manpower:

The scheduling should be done in the light of the availability of the manpower. The

production rush should be adjusted to overtime working or hiring of the temporary labour.

5. Availability of Materials:

Sometimes stock out conditions interrupts the production flow. Proper stock levels should be

maintained to facilitate scheduling in continuous production. In case of probable stock out of

strategic goods, extra efforts should be made to procure them as far as possible and the

limited stock in hand should be issued only for critical operations.

6. Manufacturing Facilities:

The manufacturing facilities in terms of power requirements, material handling services, store

keeping, and such other facilities should be provided in accurate quantities so that it may not

affect the smooth production flow adversely and facilitate the scheduling function.

7. Feasibility of Economic Production Runs:

Under the economic lot production, the two costs i.e. set up cost and the carrying cost are

equated.

8. Types of Manufacturing a Product

 MODULE: 6
SCM - SUPPLY CHAIN MANAGEMENT:

Supply chain management is the management of the flow of goods and services and includes

all processes that transform raw materials into final products. It involves the active

streamlining of a business's supply-side activities to maximize customer value and gain a

competitive advantage in the marketplace. The 5 principles are mentioned below

How Supply Chain Management Works?

SCM attempts to centrally control or link the production, shipment, and distribution of a
product. By managing the supply chain, companies are able to cut excess costs and deliver
products to the consumer faster. This is done by keeping tighter control of internal
inventories, internal production, distribution, sales, and the inventories of company vendors.
ERP:
JIT – Just In Time:
JIT is a philosophy that focuses attention on eliminating waste by purchasing or

manufacturing just enough of the right items just in time. It is a Japanese production

management philosophy since 1970s, which involves having the right items of the

right quality and quantity, in the right place and at the right time. This is hand to mouth

approach to production. The primary goal of JIT is to achieve zero inventories within the

organization as well as throughout the entire supply chain. The concept of JIT is extended to

the whole system of production –

 To produce and deliver finished goods just in time to be sold.

 Sub-assemblies just in time to be assembled into finished goods.

 Fabricate parts just in time to go into sub assemblies and

 Purchase material just in time to be transformed into fabricated parts.