MRP

Question 1

What is MRP?

Answer 1

Material Requirements Planning, it’s a crucial system used in manufacturing to ensures the time availability of materials, optimize inventory levels and improve production efficiency.

Question 2

What did it provide?

Answer 2

It provides a structured approach to determining what material needed, in what quantity and when they should be ordered or produced.

Question 3

3 Major Input:
MPS

Answer 3

• Master Production Schedule: outlines the number of finished goods planned for production within a specific period. Cth, if a fact plans to produce 1000 laptops next month, MPS provides the info to further material planning.

Question 4

3 Major Input:
BOM

Answer 4

• Bill of Materials: This detailed list of all raw materials, parts and components needed to assemble a finished product. Cth, the BOM includes items like screens, processors, keyboard and batteries.

Question 5

3 Major Input:
IR

Answer 5

• Inventory Records: tracking the availability of materials, including current stock level, pending order & lead times. Cth, if fact oredy has 500 laptop screen in stock but needs 1000, MRP will trigger an order for remaining 500.

Question 6

Mrp process (4)

Answer 6

• Demand determination: based on the mps, the system calculates the number of materials needed.
• Net requirements calculation: inventory are checked & system determines the additional materials required after accounting for existing stock.
• Planned order scheduling: system generates schedules for production & purchase orders, ensures materials arrive when needed.
• Order release: materials are ordered/scheduled for production according to the calculated timeline.

Question 7

Importance of Lot-Sizing in MRP:
Lot-for-Lot (L4L)

Answer 7

orders the exact quantity required, minimizing invntory costs but increasing ordering frequency. Cth, a bakery orders flour daily based on demand.

Question 8

Importance of Lot-Sizing in MRP:
Economic order quantity (EOQ)

Answer 8

balances order cost & inventory holding cost. Cth, a car manufacturer orders tires in bulk to reduce overall costs.

Question 9

Importance of Lot-Sizing in MRP:
Least total cost (LTC)

Answer 9

selects the lot size where ordering & holding costs are closest. Cth, a furniture company calculates the best order size for wood to balance costs.

Question 10

Importance of Lot-Sizing in MRP:
Least unit cost (LUC)

Answer 10

minimizes the cost per unit by analyzing different lot sizes. Cth, smartphone determines the optimal batch size for screen orders to lower per-unit costs.

Question 11

MRP benefits

Answer 11

• Reduced stockouts & overproduction: by planning material needs accurately, companies avoid situations where production halts due to material shortage/excessive storage costs from overordering
• Improved efficiency: ensures that materials arrive exactly when needed, reducing idle production time & improving workflow.
• Better cost control: by optimizing inventory levels, businesses reduce waste, lower carrying costs & improve financial performance.

Question 12

MRP challenges

Answer 12

• Dependence on accurate data: if there any errors in demand forecast, records or inventory records, the entire system can be disrupted.
• Complexity in implementation: requires significant coordination between departments, making it difficult for small businesses with limited resources.
• Not suitable for all industries: less effective for custom-made/project-based manufacturing, where production varies greatly & cannot be planned in advance.