The paper presets the means for appreciating the utility of material requirement planning- widely referred to as MRP. Demands for the components and subassemblies that are dependent on the demands for the end-items to which they belong characterize MRP. The first major tool of MRP is the Master Production Schedule (MPS), which fits within the framework of the total manufacturing planning and control system. Differences between make to stock, make to order and assemble to order are described. Converting gross requirement into net requirement is explained. A major component of the information system is the bill of material (BOM), which leads to a product- structure tree reflecting the explosion of parts. Coding and low-level coding are detailed for operating the MRP system.
THE HISTORY OF MRP
There always has been a need for a method to deal with the great complexity of inventory control for the job shops that have many independent parts. The method had to be able to organize all the data in minimal stock keeping units (SKU's) it had to keep track of stick levels, and ordering timing, while coordinating process scheduling with delivery dates for the customers. The challenge of organizing all of this information continued to grow with the passage of time and increasing market size, product line variety and production capabilities.
The first book of material requirement planning was written in 1975 by Joseph Orlicky. He stated in start that development and installation of computer-based MRP system began in 1960.
MRP could work in practical way without the powerful computer capabilities that were emerging by the 1970s. The need to be able to manage the massive amount of information required for ordering and scheduling in large jobs became pressing. The ability to meet that need grew even faster.
MRP AND ITS ASSUMPTIONS
Sometimes the part is used by different end products that are produced simultaneously on the parallel lines. In other circumstances, the common part is used in different end products that are scheduled to be made at widely separated times. Part demands can change according to which special options of the parent product are being produced. Dependencies are seldom as regular because the component s are used in different end products as well, each of which has its own demand patter. Most are only relatively continuous and not as stable as the demand of end product.
The comparison of end product and the component, we can say dependent and independent demand is different. When reordering point model are used to control stock on hand for linked part, parents demand system often produce inventory swings that leads to overstock and out of stocks. This occurs because the information about the products and parts are not properly merged. The result is that inventory levels are mismanaged. Lump withdraws parts to supply their parent products create demand surges, which overpower the steady demand required for reorder point models. Thus MRP reflects the systems view point by connecting the parent products and the dependent parts. This linkage is made by managing the combined information concerning dependent demands, Shortage of stock, deliveries and lead time.
The re-ordering point models in the MRP require that demand distribution exists for their forecasting requirements. When such reliable, long-term forecasts are not feasible, MRP is indicated. This accounts for a broad range of production management situation that require MRP because they have irregular demands and do not have stable distribution.
Even though MRP demand re sporadic and lumpy, they can be predicted as discrete order events when there is advance knowledge about probable ordering placement. Prediction about the demand for parts is often based on forecast of the end product. This is the result of dependent demand. The distinction that is being made is between predictions that are generated by customer notification of intention to buy (use MRP), as compared to forecast based on demand distribution that exists in a steady state overtime. Actual customer order on hand provides relatively solid information about future demands. However, cancelation of orders is not uncommon, so risk factors still play part in the determination of future events. Often there are many customers with a variety of types of products (associated with the job shop). This creates numerous interdependencies and source of change long after order entry for the customer's order. Change also can take place after orders are places with the suppliers for the parts needed to make the end products.
MASTER PRODUCTION SCHEDULE
The master production schedule is one of the most important inputs of MRP information system. There important inputs are Bill of Material and inventory stock level report. The Bill of material describes what constitutes the end product where as inventory stock level shows the at hand stock positions. The aggregate production planning determines the resource capability and capacity to produce generic product in standard hours or in some other generalized dimension. For example, the aggregate plan might specify the number of gallons of shoes to be made in January. The master production schedule converts this number into time-phased plan, which indicates exactly when each type and color of shoe should be made and how much should be made.
The basis for assignment of master production schedules quantity to be made for specific models at chosen time are customer order and forecast of orders to come that are considered to be high. The MPS makes the assignments in response to sales department commitments, which are called order promising. Therefore order promising is defined as "the Process of making delivery commitment, i.e. answering the question, 'When can you ship?" for make to order products, this usually involves a check of uncommitted material and availability of capacity. On the other hand the cumulative lead time for a parent product is found by looking at the longest lead-time path to obtain all the parts that go into as the end item.
CHANGE IN ORDER PROMISING
Order promising by sales and marketing and order fulfillment goals of the production are matched and coordinated by the MPS. If the marketing promises dates that production cannot deliver, changes are required either in due dates promised to customers or in the production schedules for the plant. In Make-To-Stock environment, there is some latitude in what is scheduled. Also, there may be sufficient inventory stock on hand to provide excellent service with minimum delivery time. The MRP emphasis is on finished product, which is usually smaller in number that the number if components that make up the finished product. This is typical of automobiles, homeowner's tools and DVD players.
In make to order (MTO) inventory environment there is no finished goods inventory to call upon. End-items are produced to customer's orders. Consequently, greater dependency exists between sales, which promise delivery, and operations manager, which has to produce what is to be delivered.
The assemble to order (ATO) environment is one where end items are built from subassemblies. Master production schedule ensures that these subassemblies are available to meet the demand within promised due date.
THE BILL OF MATERIAL
The bill of material (BOM) is the recipe of a product. As an example it the cook's shopping list for the dinner party. Job shop production manager used the MON long before MRP was even developed. Now it is the critical part of MRP. MRP cannot be used without BOM. The social dinner party was fun but a restaurant has more serious view about the materials required for the manufacturing food services. This bill of material of an automobile is so extensive that it has to be subdivided into subassemblies of components.
The definition given by APICS gives complete explanation. "A listing of all of the subassemblies, intermediates, parts, and raw material that go into a parent assembly showing the quantity of each required to make an assembly. It is uses in conjunction with the master production schedule to determine the items for which purchase requisition and production orders must be released. There is a variety of display formats for bills of material, including the single- level bill of material, indented bill of material, modular (planning) bill of material, transient bill of material, matrix bill of material and coasted mill of material. It may also be called the 'Formula', 'recipe', 'ingredient list', in certain industries."
The BOMs include every material that goes into or onto a product. It can also be applied to every material that is needed to deliver a service. This is epitomized by "meals on wheels". In manufacturing the materials may be screws, nails, rivets, glue, paints and packaging.
OPERATION OF THE MRP
The Inventory files are the third major input for MRP computer systems. Stock on hand need to be up-to-date. So should all the information of orders, including the suppliers lead time. The roles of MPS and the BOM have been discussed already. It should be noted that preparation of MPS involves knowledge of BOMs as well as the inventory and supplier information. When various parent items have had their parent explosion accomplished, coding provides a mean of identifying the fact that some parts belong to more than one parent. When the master production schedule calls for various amounts of alpha and beta product the MRP must combine the demands of commonly shared parts. Coding technique capture other relevant information about parts, such as data about supplier, storage location, and what substitutes exits. Coding of part names is the foundation for an effective information system to link the components and the parents together. Is also is the best means of identifying families of parts that can be made with minimal setup changes. Such parts-family- oriented process are subject that is identified as "Group technology". Part numbers should not be chosen randomly. There is so much useful information that can be instantly gleaned from carefully coded part number. It is best to code part numbers so that they reflect the level of the part and the product parents of the part. Additionally, as suggested earlier, codes show who are current suppliers of the part, who might be future supplier or the part, alternative location storage, and the type of material the part is made.
The method called low- level coding is commonly used to organize order quantity calculation parts with combined demands, top- level parents, such as VCR models, are called level zero. Parts and components that are one level down are coded level one. Those tow levels down are coded level two, etc, this coding scheme shows how distant parts are (in their linkage) from their parent products.
CONCLUSION
Therefore to conclude the article presented the means for appreciating the utility of Material requirement planning-widely referred as MRP. Part demands can change according to which special options of the parent product are being produced. When reordering point model are used to control stock on hand for linked part, parents demand system often produce inventory swings that leads to overstock and out of stocks. This occurs because the information about the products and parts are not properly merged. Lump withdraws parts to supply their parent products create demand surges, which overpower the steady demand required for reorder point models. Thus MRP reflects the systems view point by connecting the parent products and the dependent parts. This linkage is made by managing the combined information concerning dependent demands, Shortage of stock, deliveries and lead time. Prediction about the demand for parts is often based on forecast of the end product. Actual customer order on hand provides relatively solid information about future demands. The master production schedule is one of the most important inputs of MRP information system. There important inputs are Bill of Material and inventory stock level report. The Bill of material describes what constitutes the end product where as inventory stock level shows the at hand stock positions. If the marketing promises dates that production cannot deliver, changes are required either in due dates promised to customers or in the production schedules for the plant.
The MRP emphasis is on finished product, which is usually smaller in number that the number if components that make up the finished product. Master production schedule ensures that these subassemblies are available to meet the demand within promised due date. The bill of material (BOM) is the recipe of a product. Job shop production manager used the MON long before MRP was even developed. Now it is the critical part of MRP. There is a variety of display formats for bills of material, including the single- level bill of material, indented bill of material, modular (planning) bill of material, transient bill of material, matrix bill of material and coasted mill of material. When the master production schedule calls for various amounts of alpha and beta product the MRP must combine the demands of commonly shared parts. Part numbers should not be chosen randomly. It is best to code part numbers so that they reflect the level of the part and the product parents of the part.
Additionally, as suggested earlier, codes show who are current suppliers of the part, who might be future supplier or the part, alternative location storage, and the type of material the part is made. The method called low- level coding is commonly used to organize order quantity calculation parts with combined demands, top- level parents, such as VCR models, are called level zero. Parts and components that are one level down are coded level one. Those tow levels down are coded level two, etc, this coding scheme shows how distant parts are (in their linkage) from their parent products.
The paper presets the means for appreciating the utility of material requirement planning- widely referred to as MRP. Demands for the components and subassemblies that are dependent on the demands for the end-items to which they belong characterize MRP. The first major tool of MRP is the Master Production Schedule (MPS), which fits within the framework of the total manufacturing planning and control system. Differences between make to stock, make to order and assemble to order are described. Converting gross requirement into net requirement is explained. A major component of the information system is the bill of material (BOM), which leads to a product- structure tree reflecting the explosion of parts. Coding and low-level coding are detailed for operating the MRP system.
