MRP Input and outputs. 1)The Master Schedule

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1 1) Ans MRP Input and outputs 1)The Master Schedule The master schedule is one of three primary inputs in MRP stating which end-items are to be produced, when these are needed, and in what quantities. Normally, the master schedule is formed after disaggregating the aggregate planning which consists of demand for groups of enditems. Based on the customer orders, forecasts, and orders fromlearning from Manufacturing: JIT and MRPinBuiltEnvironment Education 2)The Bill of Materials A bill of materials contains a listing of all of the assemblies, subassemblies, parts, and raw materials that are needed to produce one unit of a finished product. A product structure tree is useful in illustrating how the bill of materials is used to determine the quantities of each oftheingredients (requirements) needed to obtain a desired number of end items: 3) The Inventory Records Inventory records include information on the status of each item by time period or time buckets. This contains gross requirements, scheduled receipts, and expected amount onhand. It also includes other details for each item, such as supplier, lead time, and lot sizepolicy. Changes due to stock receipts and withdrawals, cancelled orders, and similar events are also recorded in this file. MRP Output The MRP system has the ability to provide management with a fairly broad range of outputs. These are often classified as primary reports, which are the main reports, and secondary reports, which are optional outputs. Primary reports 1) Planned orders: indicating the amount and timing of future orders. 2) Order releases: authorising the execution of planned orders. 3) Changes: Revising planned orders, including changes of due dates or orderquantities and cancellations of orders. Secondary reports 1) Performance-control reports: evaluating the system operation by measuringdeviations from plans, including missed deliveries and stockouts, and by providinginformation that can be used to assess cost performance. 2) Planning reports: including purchase commitments and other data that can be usedto assess future material requirements. 3) Exception reports: calling attention to major discrepancies such as late or overdueorders, excessive scrap rates, reporting errors, and requirements for nonexistentparts.

2 2)Ans MRP Processing MRP processing takes the end-item requirements specified by the master schedule and "explodes" them into time-phased requirements for assemblies, parts and raw materials using the bill of materials offset by lead times. The determination of the net requirements is the core of MRP processing. Gross requirements are the total expected demands for an item or raw material during each time period. These quantities are derived from the master production schedule or the planned-order releases of their immediate "parents". Scheduled receipts are open orders (orders that have been placed) and are scheduled to arrive from vendors or elsewhere in the pipeline by the beginning of a period. Projected on hand are the expected amounts of inventory that will be on hand at the beginning of each time period: scheduled receipts plus available inventory from last period. Net requirements are the actual amount needed in each time period. In addition to subtracting projected inventory on hand from gross requirements, net requirements are sometimes adjusted to include safety stock and an allowance for waste. Planned-order receipts are the quantities expected to be received by the beginning of the period. Under lot-for-lot ordering (lot size = 1), this quantity will equal net requirements. Under lot-size ordering, the order size must be in multiples of the lot size, thus this may exceed net requirements. Any excess is added to available inventory in the next time period. Planned-order releases are the planned amount to order in each time period; equal planned-order receipts offset by lead times. This amount generates gross requirements at the next level in the assembly or production chain. When an order is executed, it is removed from "planned-order releases" and entered under "scheduled receipts". As time passes, the plans need to be updated and revised to reflect the moving horizon over time since old orders will have been completed while new orders enter; also there may have been some changes in quantities, delays, missed deliveries, and so on. Orlicky (1975) suggested that MRP records could be updated using either the regenerative system (approach that updates MRP records periodically) or net-change system (approach that updates MRP records continuously). 3)Ans Benifits Reduction in inventory. MRP mainly affects raw materials, purchased components, and workin-process inventories. Users claim a 30 to 50% reduction in work-in-process. Improved customer service. Some MRP proponents claim that late orders are reduced 90%.

3 Quicker response to changes in demand and in the master schedule. Greater productivity. Claims are that productivity can be increased by 5 to 30% through MRP. Labor requirements are reduced correspondingly. Reduced setup and product changeover costs. Better machine utilization. Increased sales and reductions in sales price. These are also claimed as MRP benefits by some users. Limitations This means that other systems in the enterprise need to work properly both before implementing an MRP system, and into the future. For example systems like variety reduction and engineering which makes sure that product comes out right first time (without defects) must be in place. A blinds manufacturing company need to manufacture vertical blinds and roman shades in time without any defects other with it be wastage of money. Production may be in progress for some part, whose design gets changed, with customer orders in the system for both the old design, and the new one, concurrently. The overall ERP system needs to have a system of coding parts such that the MRP will correctly calculate needs and tracking for both versions. Parts must be booked into and out of stores more regularly than the MRP calculations take place. Note, these other systems can well be manual systems, but must interface to the MRP. For example, a walk around stocktake done just prior to the MRP calculations can be a practical solution for a small inventory (especially if it is an open store ). The other major drawback of MRP is that takes no account of capacity in its calculations. This means it will give results that are impossible to implement due to manpower or machine or supplier capacity constraints. 4) Ans Refer page no 33.1 to Production and operation management by S N Chary

4 5)Ans AGGREGATE PLANNING STRATEGIES Options for coping with fluctuating demand are categorized as either capacity oriented options (operations oriented strategies) or demand oriented options (marketing oriented strategies). Operations oriented strategies can be further classified as either a leveling strategy or a chase strategy. Marketing tactics for dealing with demand seasonality include inducing demand shifts, utilizing back orders, or offering counter seasonal products Aggregate Planning Strategies Capacity Oriented Options Leveling strategy - Changing inventory levels Chase strategy - Hire or layoff - Overtime or idle time - Subcontracting - Part-time workers Demand Oriented Options Influencing demand - Sales, discounts, rebates, promotions, etc. Back ordering - Take orders, ship later Counter seasonal products

5 Leveling strategy: Maintain output at a constant (level) rate throughout the planning horizon. Accommodate seasonal variations in demand through the accumulation and depletion of inventories. Chase strategy: Vary the output rate to match the seasonal variations in demand. Output rate can be varied by (1) hiring and firing workers, (2) utilizing overtime and idle time, (3) subcontracting, (4) using part time workers. Mixed strategy: A cost effective aggregate plan may require the use of a combination of the various strategies listed above. Such a plan is referred to as a mixed strategy. 6) Ans Informal Tools The aggregate planning process, which compares market demand projections against existing and potential inventory capacity, uses basic tables, charts and other graphics aligned to data processing systems. These tools are used in aggregate planning to compare an assortment of alternative ways of achieving a company's supply management goals. When using these types of informal methodologies alone, one disadvantage identified is that they might not provide the most optimum aggregate plan, according to Lin Pan and Brian H. Kleiner in their essay "Aggregate Planning Today." Mathematical Techniques Mathematical techniques are used in the aggregate planning process. For example, production rates and human resource requirements might be evaluated as linear program problems. This involves choosing and expressing values for known and unknown variables, quantities to be minimized or maximized and constraints. One of the disadvantages with using mathematical techniques, such as the linear programming method, in aggregate planning is the assumption of determinism generally factored into its application. Heuristic Methods Heuristic methods can accelerate the aggregate planning process based on the experience and knowledge of the planning team. Examples of heuristic techniques include making judgments based on past experience or using known industry best practices. It is used in aggregate planning because the process is driven by the organization's decision-makers who draw upon their

6 knowledge and experience. For example, the framework used for planning production might involve heuristic techniques to, in part, establish production ratios based on production management's experience with specific inventory areas at varying production levels. Budget Considerations A firm's budget significantly shapes estimates for production capacity. Generally, budgets are developed using factors that are also used in the aggregate planning process -- for example, existing inventory levels and valuations, historical purchasing patterns and human resource production capabilities. Additionally, aggregate plans must operate within the constraints imposed by the revenue allocations earmarked for production of various products or services. In this sense, aggregate planning and preparing budgets are closely related business functions. 7) Ans EOQ=75 WEEK LT=3 WEEKS Requirement Scheduled receipts On hand at the end of the period 50 Planned order release Explanation Refer Page No in Production and management By S.N. Chary