MRP II

Manufacturing resource planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units and financial planning .

This is not exclusively a software function, but a combination of people skills, dedication to data base accuracy, and computer resources. It is a total company management concept for using human resources which is used more productively.

CAD ( computer-aided engineering)

Design database

CAM (Computer-aided manufacturing) Robotics

Reorder point (ROP) systems

The reorder point is the level of inventory when an order should be

made with suppliers to bring the inventory up by the Economic order quantity Still used by many firms. It is especially well suited to retail inventories.

Reorder Point
Reorder point

Balance on hand
Lead time Time

A. No safety stock

Balance on hand

Safety stock
B. Safety stock

Components:
1. Production scheduling system - produces a master production schedule that encompasses the longest lead time plus the longest production time. 2. MRP system - explores the bill of materials. Converts the gross requirements into the net requirements.

3. Capacity requirements planning system works with MRP system to keep production within plant capacity. Produces outputs: reports and planned order schedule. 4. Order release system produces reports for shop floor and purchasing.

An MRP II System
Customer order file Sales forecast file Finishedgoods inventory file Production capacity file
1.Production scheduling system

Bill of material file

3. Capacity requirements planning

Purchasing system

Order release report

Master production schedule

2. Material requirements planning system

Planned order schedule

4.Order release system

Planning reports

Order release report

Raw materials inventory file

Performance reports Exception reports Changes to planned orders

Shop floor control system

The purpose is to integrate MRP with all systems that affect materials management Organizational systems Accounting information system

An MRP II System
Executive information system
Other functional information systems

Order entry
Material requirements planning

Purchasing

Billing

Receiving

Accounts receivable

General ledger

Accounts payable

More efficient use of resources

Reduced inventories Less idle time Fewer bottlenecks

Better priority planning

Quicker production starts Schedule flexibility

Improved customer service

Meet delivery dates Improved quality Lower price possibility

Improved employee moral Better management information

Faster material flow Small lot size Timing Compare JIT to online processing and MRP to batch Kanban pulls material as opposed to MRP push Computer not emphasized

Definition (same components as marketing)

A computer-based system that works in

conjunction with other functional information systems to support the firm's management in solving problems that relate to manufacturing the firm's products

A Model of a Manufacturing System

Input subsystems
Accounting information system Internal sources Industrial engineering system Environmental sources Manufacturing intelligence subsystem

Output subsystems
Production subsystem

Data Information

D A T A B A S E

Inventory subsystem
Users

Quality subsystem

Cost subsystem

Data collection terminals

Track material flow Gather job data (job reporting) Gather attendance data (attendance

reporting)

Receiving area Receiving inspection

Raw-materials storeroom

Location of Data Collection Terminals

Terminal

9
10

Shop floor area

7

Finished-goods storeroom Shipping area

11

12

Can be viewed in terms of environmental contacts Labor unions (personnel flow)

formal and informal systems personnel information union contract compliance

Suppliers (material and machine flow)

1. Questionnaire
Production capability Emphasis on quality

2. Financial analysis
Long-term reliability

3. Buyer tour of supplier's plant 4. Suppliers tour the firm's plant

Input to Supplier Records

Supplier input
Financial strength, quality control emphasis, past quality and delivery performance, and so on

Quality control input

Units rejected upon receipt, units rejected during production, reasons for rejection, and so on

Supplier file

Customer service input

Units replaced or repaired because of defective parts, supplier spare parts availability, and so on

Used to: 1. Build production facilities 2. Operate production facilities Production schedule determines when the production steps are performed Track expected and actual completion times

Plastic top

Step 5

Install bulb

Raw materials inventory

Plastic cylinder

Step 6

Install reflector

Attach switch
Step 7 Step 2 Step 1

Install red lens

Attach spring
Step 8

Install clear lens

Step 3

Step 4

Step 9

Attach strap

Add batteries
Flashlight

Put top on cylinder Finished goods inventory

PRODUCTION AREA

Importance of determining the inventory level Maintenance cost (a.k.a. carrying costs) Purchasing costs Economic Order Quantity (EOQ) Economic manufacturing quantity (EMQ)

The Effect of Order Quantity on Average Inventory Level

25

Balance on hand

15 5 0

--------------------------------------------------Safety stock
Time

Average inventory level

A. Order quantity of 20; average level is 15.

Balance on hand

21
13 5 0

-----------------------------------------------------Safety stock
Time

Average inventory level

B. Order quantity of 16; average level is 13.

Demings fourteen points; maintained that it is not workers but management that determines quality Total quality management (TQM) Elements of TQM

zero defects quality at the source

Total Quality Management

TQM Philosophy
*Customer-driven quality standards *Customer-supplier links *Prevention orientation *Quality at the source *Continuous improvement

Graphical Tools
*Process flowcharts *Check sheets *Pareto analysis and histograms *Cause and effect (fishbone) diagrams *Run charts *Scatter diagrams *Control charts

Statistical Tools
*Sampling plans *Process capability *Taguchi methods

Top management commitment Annual quality targets A fine-tuned physical system

Maintained machines
Neat facilities Trained workers

Emphasis on raw material

Periodic reports Required ingredients

1. Standards 2. Information

How Managers Use the Manufacturing Information System

Subsystem

User
Vice president of manufacturing Other executives Plant Superintendent Manager of planning and control Manager of Engineering Manager of quality control Director of purchasing Manager of inventory control Other managers

Inventory
X X X X

Quality
X X X X X

Production
X X X X

Cost
X X X X

X X X X X

The philosophy that all production and information technologies must work together Includes both physical and conceptual systems CAD is the link

CAM

CAD
Robotics

The Physical Production System

Legend :
Physical System Conceptual system

Executive Information System Manufacturing Other Information functional System information systems

The CBIS

Both physical and conceptual system

Criticism Authors like Pochet and Wolsey [3] argue that MRP and MRP II, as well as the planning modules in current APS and ERP systems, are actually sets of heuristics. Better production plans could be obtained by optimization over more powerful mathematical programming models, usually integer programming models. While they acknowledge that the use of heuristics, like those prescribed by MRP and MRP II, were necessary in the past due to lack of computational power to solve complex optimization models, this is no longer true