OM PRE - MID

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 Introduction
 Organizations need to estimate resource
requirements so that they can satisfy
market demand for their products.
 It is important for multiple products
manufacturer, to whom thousands of RM
are required.
WHAT IS AGGREGATE PLAN?
It defines the best combination of workforce
level, inventory on hand, and production
rate that matches the company’s
recourses to market demand.
 Aggregate plans define how
resources can be best employed to
meet market demand for the given
products. The objective of an AP is
to minimize production costs, make
appropriate changes in production
rates and workforce levels and to
improve profits, customers service
and utilization of resources.
 By disaggregating operations,
managers convert aggregate plans
into a detailed MASTER PRODUCTION
 MPS: it defines the type and volume of
each product that is to be produced within
the planning horizon. The MPS is a
detailed plan that specifies the exact
timing for the production of each unit.
 MPSs are also used in scheduling various
stages of production, depending on the
type of operations.[ make- to- order and
assemble- to- order]
 The process of MPS involves the planning
of activities to determine whether or not
an operation can achieve the production
objectives mentioned in the MPS.
 MRP & CRP are the two planning activities
that are a part of the MPS.
 CRP determines whether the existing
production capacity is sufficient to achieve
the objectives of the MPS.
 WHAT IS MRP?
 The primary objective of an MRP system is
to manage dependent demand inventories
and schedule production activities.
 MRP helps an operations manager find the
net requirement of a component after
taking into consideration inventory on
hand, scheduled receipts, and scheduled
order releases.
 FUNDAMENTALS OF MRP:
 Based on the demand for end
product, MRP system disassembles
the end product into component
parts and subassemblies.
 MRP is a backward scheduling
process that estimates requirement
of materials starting with the date of
requirement and working backward
to estimate date of receipt keeping in
veiw production and waiting time,
and estimating date of order, based
on delivery lead - time.
 An MRP system helps in coordinating
orders from external [ purchase orders]
and internal sources [jobs] .
 The system studies the future production
requirements and disassembles the end
product into required amount of raw
materials, parts, subassemblies, and
assemblies required in each time bucket of
the planning horizon.
 Finally, a schedule is generated that
specifies the time when the items are
required. This schedule takes into
consideration the time when each item is
needed in production, the lead times
available for procuring the items, etc.
 MRP is useful for organizations
involved in the production of
complex production. Organization
working with shorter delivery
schedules, job – shops and assemble
– to order organizations.
 DIAGRAM IN 189
 OBJECTIVES OF MRP:
 The primary purpose of MRP is to
provide an adequate supply of
dependent demand inventory as and
when required.
 Improved customer service [ to fulfill
delivery promises, with sufficient
invent.]
 Reduced investment in inventory [by
reducing dead capital]
 Improved operating efficiency [timely
availability of RM increase efficiency]
 Faster response to market changes
[ it starts with end product so, quick
response is possible, it is flexible
enough to respond effectively to the
changes]
 COMPONENTS OF AN MRP SYSTEM
 MRP system is a computer based
management information system
that was developed in the 1960s to
overcome the problems of manual
record keeping of dependent
demand inventory transactions.
 It extends to processing information
for production scheduling and taking
capacity planning decisions.
 DIAGRAM - 191
 An MRP system translates the demand for
end products into raw material and
component requirements. The system
requires the following information to
operate successfully:
 Customer orders pending for future
deliveries and unfinished orders that must
be completed in the planned production
period.
 Demand forecasts that specify the
quantity of products demanded and the
time period in which these demands are to
be satisfied.
 Capacity information that helps in
 Details of the dependent demand
inventory items at the various stages of
the transformation process and the stages
through which these items traverse to
make an end product.
 Changes in inventory requirements due to
product design changes expected during
the planning time period.
 Available level of inventories at the
beginning of the planning time period.
 Quantities of ordered, purchased, or
contracted inventory items that an org.,
expects to receive during the planning
time period.
 Once all pre-requisite inf., is
received, OM manager convert it into
a form acceptable to the MRP
system. Theree elements common
to all available variants of MRP
System are
 MRP system INPUTS
 MRP system PROCESS
 MRP system OUTPUTS
 *******
 MRP system INPUTS:
 Inputs of an MRP system include MPS,
BILLS OF MATERIAL, & INVENTORY
RECORDS FILE:
 MPS:
 The MPS file contains information about
when and how many units of finished
products are required. It also contains
information about the available cumulative
lead time for purchase, receiving,
fabricating, and assembling.
 The time horizon in MPS IS divided into
time buckets.
 BILLS OF MARTERIAL
 BOM contain the list of materials
along with the quantity required to
produce one unit of a product. The
BOM file shows the hierarchical
levels or phases a product goes
through during production.
 It consists of the complete list of all
end products, the structure of the
products, and the quantity of each
item required for producing each
higher level item in the production