6 drp-mrp
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04/08/23 1
MRP [Materials Requirement Plan]Popular concept in 1960&1970
Consists of a computer system & a manufacturing information system
Does production scheduling and materials plan MRP system
MRP systems compute net requirements for each inventory item, time-phase them, and
determine their proper coverage
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SUB
ASSEMBLY II SUB ASSEMBLY II
SUB ASSEMBLY I
C2 C5 B2 A5 D5C3 D1 D2 D3 D4A1 A2 B1 C1 C4A3 A4
MAJOR ASSEMBLY
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ObjectivesEnsure the availability of materials -components and products for planned production and customer
deliveryMaintain the lowest possible inventory level
Plan manufacturing activities, delivery schedules and purchasing activities
ProcessMRP starts with, customer’s demand
[independent demand] and explodes the time and need for components based on the demand for end
product
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Scope: MRP System focuses on inbound logistical area
Key elements of MRP systemMaster Production Schedule
Bill of MaterialsInventory Status Files
MRP ProgramOutputs & Reports
Development First phase is called MRPI[Materials
Requirement Planning] and the second phase is called MRPII[Manufacturing Resources Planning]
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MRP I is a computer based production and inventory control system [soft ware] that attempts
to minimize inventories while maintaining adequate materials for production process.
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Customers orders
inventory transactions
Forecasts
Engineering changes
Inventory status file[finished items, WIP, planned orders
Master production schedule[which product to produce, in what quantity & when]
Bill of materials file[product structure and routing]
MRP ISYSTEM
PLANNED SCHEDULES AND VARIOUS OTHER REPORTS
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When does it get applied?The process follows an intermittent system
Demand is dependentPurchasing dept., their suppliers and company’s own manufacturing system is flexible enough to
handle deliveries on weekly basisAdvantages of MRP I
Improved business results[ROI, profits]Improved manufacturing resultsBetter manufacturing control
Less inventory
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Time phased ordering of materials
Less materials obsolescence
Higher reliability
More responsiveness to market demand
Reduced production costs
Disadvantages of MRP I
Due to small lot purchases high material acquisition costs and high ordering costs
Stock out costs are more as safety stock protection is low
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A limitation of software as adapting to specific situations is difficult. So modification of the
software is necessary MRP II
MRP I is updated and expanded to include financial and marketing and logistics elements.
MRP II includes entire set of activities involved in planning and control of production.It consists of a
variety of functions like production planning, resource requirements planning, master production scheduling, materials requirement planning[MRP
I], shop floor control and purchasing
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Orders [production plan]
Bill of materials Inventory records
Material requirement planning [MRP]
Capacity requirement planning [CRP]
Realistic?
Execute capacity plans
Execute materials plan
yes
No
MRP II
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Benefits of MRP IIInventory reductions of one fourth to one third
Higher inventory turn overImproved consistency in on-time customer
deliveryReduction in purchasing costs due to less urgent
purchasesMinimization of workforce overtime
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DRP is a technique of Distribution Management
DRP concept has evolved in two phases, DRPI (Distribution Requirement Planning) & DRP II
(Distribution Resources Planning) DRP I deals with inventory planning whereas
DRP II covers all resources relevant to distribution - warehouse space, man power levels,
transport capacity [eg. trucks, rail cars] and financial flows
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DRP IApplicable to outbound logistics
Determination of inventory requirement at points of consumption for short spans of time Plan to move inventory in the distribution
channel in response to the above It is a time phased plan, dynamic and flexible
in natureCustomer dependent planning, depends on the
changing market environmentNot organization dependent
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Coordination responsibility once the finished goods are produced
Planning is realistic as it is closer to real timeOverall inventory levels are low
Response time to real time market requirement is low
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DRP IIDistribution Resource Planning [DRP II ]is an
extension of DRP IDRP II applies the time phased logic of DRP I
to replenish inventories in multi echelon warehousing systems
DRP II extends DRP I to include the planning of key resources in a distribution system –ware
house space, man power levels, transport capacity [eg. trucks, rail cars] and financial flows
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As an extension of DRP I, DRP II uses the needs of distribution to drive the master schedule,
controlling the materials planning DRP PROCESS
Planning tool for DRP is scheduleSchedule for each SKU at each distribution
facility on daily, weekly or monthly basisIntegration of the above schedules and overall
requirement planning for the regional warehouse and central supply facility
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Marketing benefits Increased service levels - improved OTD,
reduced Customer ComplaintsEffective new product introduction plans
Ability to anticipate shortagesImproved inventory coordination
Logistics benefitsReduced distribution costsReduced inventory levels
Decreased warehouse space requirement as inventory levels are lowLesser back orders
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Improved inventory visibility & co-ord. between manufacturing and logistics
Constraints Needs accurate forecast
Sources of errors in the systemInaccuracy in forecast quantityInaccuracy in forecast locationInaccuracy in forecast time
Variable performance cycles System nervousness-frequent rescheduling
causing confusionUncertainty buffers
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How does a DRP system work?Consider a distribution net work with three
distribution centers catering to the needs of the market
One central facility that supplies inventory to three distribution centers
Central facility is supplied by the production facility planned as per MRP
DRP modifies the MRP to the advantage of the organization
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DRP & MRP LINKDISTRIBUTION CENTER ILEAD TIME IS 2 WEEKS, SAFETY STOCK IS 55, ORDER QUANTITY 500
WEEKS
DETAILS 0 1 2 3 4 5 6 7 8
WEEKLY REQ
- 50 50 60 70 80 70 60 50
STOCK 352 302 252 192 122 542 472 412 362
WHEN & HOW MUCH?
500 500
Order to Central Supply Facility
Arrival From Central Supply Facility
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DISTRIBUTION CENTER IILEAD TIME IS 2 WEEKS, SAFETY STOCK IS 40, ORDER QUANTITY 150
WEEKS
DETAILS 0 1 2 3 4 5 6 7 8
WEEKLY REQ
- 20 25 15 20 30 25 15 30
STOCK 140 120
95
80
60 180 135 145 110
WHEN & HOW MUCH?
150 150
Order to Central Supply Facility
Arrival from Central Supply Facility
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LEAD TIME IS 2 WEEKS, SAFETY STOCK IS 115, ORDER QUANTITY 800
DISTRIBUTION CENTER III
WEEKS
DETAILS 0 1 2 3 4 5 6 7 8
WEEKLY REQ
- 115 115 120 120 125 125 125 120
STOCK 1020
905 790 670 550 425 300 175 855
WHEN & HOW MUCH?
800 800
Order to Central Supply Facility
Arrival from Central Supply Facility
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TO MRP SCHEDULE
LEAD TIME IS 3 WEEKS, SAFETY STOCK IS 287, ORDER QUANTITY 2200
CENTRAL SUPPLY FACILITY
WEEKSDETAILS
0 1 2 3 4 5 6 7 8
WEEKLY REQ
- - - 650 - - 800 - -
STOCK 1250 1250 1250 600 600 600 2000 2000 2000
WHEN & HOW MUCH?
2200 2200
From I & II From III
FROM PRODUCTION
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