POM Ch-13

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PRODUCTION AND

OPERATIONSMANAGEMENT

Chapter 13RESOURCE REQUIREMENTS

PLANNING

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Himalaya Publishing House Production and Operations ManagementBy K. Aswathappa & K. Shridhara Bhat

Chapter 13Resource Requirements

Planning

Resource Requirements Planning:Determination of the amount and timing of production resources needed to produce

finished products as per master productionschedule.Resource Requirements Planning SystemExhibit 13.1 illustrates the working of aresource requirements planning system.

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Planning

Resource Requirements Planning System

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Planning

F low Chart of Resource Requirements Planning Systemor Rough-cut Capacity Planning Process

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Planning

Materials Requirements planning (MRP-1 or mrp):Computer based information system for ordering andscheduling of dependent demand inventories.Objectives of MRP

1. To improve customer service by meeting deliveryschedules promised and shortening delivery lead times.

2. To reduce inventory costs by reducing inventory levels.3. To improve plant operating efficiency by better use of

productive resources.

Three main purposes of a basic MRP system are to:� Control inventory levels� Assign operating priorities� Assign capacity to load production systems.

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Planning

Manufacturing Resource Planning (MRP II ): Broad-based resource co-ordination system involving other areas of a firm in the planning process, such asmarketing, finance and the human resource.

Three important functions of MRP are:� Order planning and control� Priority planning and control

� Providing a basis for planning capacity requirements.

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Planning

Information F lowfor Planning andControlling with

MRP

Operation of MRPSystem

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Planning

Operation of MRP System

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Planning

MRP System InputsMaster Production Schedule: One of the three primaryinputs in MRP, specifies what end products are to beproduced, in what quantities and when.Bill of Materials file: Provides the information regardingall the materials, parts and sub assemblies that go into theend product.Inventory Status file: Gives complete and up-to-dateinformation on the on-hand inventories, grossrequirements, scheduled receipts and planned order releases for the item.

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� MRP System OutputsPrimary outputs of MRP Systems:

� Planned order schedule� Changes in planned orders.

Secondary inputs of MRP system:� Exception reports� Performance reports� Planning reports.

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Planning

Manufacturing Resource Planning(MRP II)

Manufacturing Resource Planning (MRP II)addresses the planning and control of activitiesrelated to materials, capacity, finance,engineering, sales and marketing.Closed-loop MRP:A system built around material requirementplanning (MRP-I) and also including additionalplanning functions such as master productionscheduling and capacity requirement planning.

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MRP In Services

In an MRP system for services, the master schedule can represent services to be provided.

An example, of a product-service package is afood catering service which requires preparingand serving meals for a large number of customers.

Distribution Requirement Planning (DRP): Atime-phased stock-replenishment plan for alllevels of a distribution network using the MRPplanning logic.

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Planning

Enterprise Resource PlanningEnterprise Resource Planning (ERP); A softwarepackage developed for optimum use of resources of anenterprise in a planned manner. It integrates the entireenterprise starting form the supplier to the customer,covering, logistics, financial and human resources.� Features of ERP

1. Accommodating variety2. Integrated Management Information3. Seamless integration4. Supply chain management5. Resource management6. Integrated data model

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Planning

� Scope of ERPa. Financialsb. Logistics

c. Human resourcesd. Work flowApplication of ERP

ERP is gaining popularity in India at a rapidpace. This is mainly due to the need for reducing costs especially when the salesare sluggish in the sub-merging markets.

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POM Ch-13