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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 PointReorder PointReorder point
Lead time Time
Safety stock
Balanceon hand
Balanceon hand
A. No 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.
Customerorder file
Sales forecast
file
Finished-goods
inventory file
Produc-tion
capacityfile
Bill ofmaterial
file
PlannedPlannedorderorder
scheduleschedule
Rawmaterialsinventory
file
1.Productionscheduling
system
2. Materialrequirements
planning system
3. Capacityrequirements
planning
Purchasingsystem
Order releasereport
4.Order releasesystem
Order releasereport
Shop floorcontrolsystem
Performance reports
Planning reports
Exception reports
Changes to planned orders
An MRP An MRP II System System
Masterproduc-
tionschedule
The purpose is to integrate MRP with all systems that affect materials management
Organizational systems Accounting information system
Materialrequirements
planning
Executive information
system
Orderentry
Accounts payable
Accountsreceivable General
ledger
An MRP II SystemAn MRP II SystemOther functional information systems
Purchasing
ReceivingBilling
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
DATABASE
Accountinginformation
system
Industrialengineering
system
Manufacturingintelligencesubsystem
Productionsubsystem
Inventorysubsystem
Qualitysubsystem
Costsubsystem
Internalsources
Environmentalsources
InputInputsubsystemssubsystems
OutputOutputsubsystemssubsystems
Users
Data Information
A Model of a Manufacturing SystemA Model of a Manufacturing System
Data collection terminals› Track material flow› Gather job data (job reporting)› Gather attendance data (attendance
reporting)
TerminalTerminal
Receiving areaReceiving area
Raw-materialsRaw-materialsstoreroomstoreroom
ReceivingReceivinginspectioninspection
Shop floor areaShop floor area
Finished-goodsFinished-goodsstoreroomstoreroom
Shipping areaShipping area
1
2
3 4 5
6
7
8
9
10
11
12
Location of Location of Data Collection TerminalsData Collection Terminals
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. QuestionnaireProduction capabilityEmphasis on quality
2.Financial analysisLong-term reliability
3.Buyer tour of supplier's plant4.Suppliers tour the firm's plant
Units replaced or repaired becauseof defective parts, supplier spareparts availability, and so on
Units rejected upon receipt, unitsrejected during production, reasons for rejection, and so on
Customerservice input
Qualitycontrol input
Supplierinput
Financial strength, quality controlemphasis, past quality and deliveryperformance, and so on
Supplierfile
Input to Supplier RecordsInput to Supplier Records
Used to:1. Build production facilities2. Operate production facilities Production schedule determines when
the production steps are performed Track expected and actual completion
times
Rawmaterialsinventory
Plastic top
Plasticcylinder
Step 1
Step 5
Step 6
Step 7
Step 8
Step 2
Step 3 Step 4Step 9
Finishedgoods
inventory
Flashlight
Attach springAttach spring
Install bulbInstall bulb
Install reflectorInstall reflector
Install red lensInstall red lens
Install clear lensInstall clear lens
Attach switchAttach switch
Attach strapAttach strap Add batteriesAdd batteriesPut top onPut top oncylindercylinder
PRODUCTION AREAPRODUCTION AREA
Importance of determining the inventory level
Maintenance cost (a.k.a. carrying costs)
Purchasing costs Economic Order Quantity (EOQ) Economic manufacturing quantity
(EMQ)
---------------------------------------------------
Safety stock
Average inventory level
Safety stock
Average inventory level ------------------------------------------------------
A. Order quantity of 20; average level is 15.
0
5
15
25
0
13
5
21
B. Order quantity of 16; average level is 13.
Bal
ance
on
h
and
Bal
ance
on
han
d
Time
Time
The Effect of Order Quantity on Average The Effect of Order Quantity on Average Inventory LevelInventory Level
Deming’s 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
TQM Philosophy
*Customer-driven quality standards*Customer-supplierlinks*Preventionorientation*Quality at the source*Continuous improvement
TotalQuality
Management
Graphical Tools
*Process flowcharts*Check sheets*Pareto analysisand 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. Standards2. Information
SubsystemSubsystem
User Inventory Quality Production CostUser Inventory Quality Production Cost
Vice president of manufacturingVice president of manufacturing
Other executivesOther executives
Plant SuperintendentPlant Superintendent
Manager of planning and control Manager of planning and control
Manager of EngineeringManager of Engineering
Manager of quality controlManager of quality control
Director of purchasing Director of purchasing
Manager of inventory controlManager of inventory control
Other managers Other managers
How Managers Use the How Managers Use the Manufacturing Information SystemManufacturing Information System
XX XX XX
XX
XX
XX
XX
XX
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XX XX
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XX XX XX XX
The philosophy that all production and information technologies must work together
Includes both physical and conceptual systems
CAD is the link
The Physical Production
System The CBIS
CAM
RoboticsCAD
Executive Information
System
Other functional
information systems
Manufacturing Information
System
Legend :
Physical System
Conceptual system
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
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