Understanding MRP (Material Planning), EOQ (Economic Order Quantity), ROP (Reorder point) and ROQ
History of Material Planning (MRP)
Before MRP, and before computers dominated the industry, Reorder points (ROP) / reorder-quantity (ROQ) types of methods such as EOQ (Economic Order Quantity) had been used in manufacturing and inventory management.In 1964, as a responter to the Toyota Manufacturing Program, Joseph Orlicky developed the Need for Material Planning (MRP). The first company to use MRP was Black & Decker in 1964, with Dick Alban as the project leader. Orlicky 1975 Material Requirements Planning has the subtitle The New Way of Life in Production and Inventory Management. In 1975, MRP was implemented in 700 companies. This number had grown to around 8,000 in 1981.
In 1983 Oliver Wight developed the MRP in manufacturing resource planning (MRP II). In the 1980s, Joe Orlicky's developed into Oliver Wight, this manufacturing resource planning (MRP II) that brought Master scheduling, Dirty capacity planning, capacity planning requirements, S&OP in 1983 and other concepts for classical MRP. In 1989, around one third of the software industry was MRP II software sold to the American industry ($ 1.2 billion worth of software).
What are the contents of Material Planning (MRP)
Dependency Request vs Independent RequestDemand is independent of demand originating outside the factory or production system, while demand depends on demand for components. The Bill of Material (BOM) determines the relationship between the final product (independent demand) and components (demand dependent). MRP takes as input the information contained in the BOM.
Data that must be considered include:
The last item made. This is sometimes called an Independent Request, or Level "0" in BOM (Bill of material).
How much is needed at a time.
the amount needed to fulfill the request.
stored material.
Inventory status records. Records of clean materials available for use are already in stock (on hand) and materials are in order from the supplier.
Material bill. Details of ingredients, components and materials needed to make each product.
Planning data. This includes obstacles and directions for producing the last items. These include items such as: Routing, Labor and Machine Standards, Quality and Testing Standards, Pull / Work Cells and Push orders, Lot sizing techniques (ie Fixed Lot Size, Lot-For-Lot, Economic Order Quantity), Scrap Percentage , and other inputs.
The output
There are two outputs and various messages / reports:
Output 1 is the "Recommended Production Schedule" which sets out the detailed schedule of the minimum start and finish dates required, by the amount, for each step of the Routing and Bill of Materials needed to meet the demand of the Master Production Schedule (MPS).
Output 2 is "Recommended Purchase Schedule". This sets out the two dates that the goods purchased must be received at the facility AND the date that the Purchase Order, or Press Order Blanket must occur to match the production schedule.
Message and Report
Purchase Order. Orders for suppliers to provide materials.Reschedule notifications. It recommends canceling, increasing, delaying or speeding up existing commands.
Method for finding order quantities
The well-known method for finding order quantities is:
Dynamic lot-sizing
Silver-Meal Heuristics
Least-Unit-Cost heuristic
MRP function
The basic functions of the MRP system include: inventory control, material processing bills, and basic scheduling. MRP helps organizations to maintain low inventory levels. It is used to plan manufacturing, purchasing and providing activities.
MRP is a tool to deal with this problem. This provides answers to several questions:
What items are needed?How much is needed?
When are they needed? ...
MRP can be applied both to goods purchased from outside suppliers and to sub-assemblies, produced internally, which are components of more complex items.
The development of mrp becomes erp
ERP is a development of Manufacturing Resource Planning which is also a result of the Evolution of Material Resource Planning (MRP).
ERP systems usually handle the process:
Manufacture.Logistics,
Distribution,
Inventory (inventory),
Shipping, invoices,
and corporate accounting.
Based on the matters handled above, the ERP will also help to control the process
sales,
delivery,
production,
inventory management,
quality management, and
human Resources.
In the development of ERP is inseparable from the development of manufacturing engineering (manufacturing) itself. The need for information from the manufacturing process is also more and more that will be useful for every actor of manufacturing both the implementation and decision makers. ERP development through very long stages by developing from a system that was born before.
Phase I: Material Requirement Planning (MRP), the forerunner of ERP, with the concept of material requirements planning
Phase II: MRP Close-Loop, a series of functions and not limited to the MRP, consists of priority problem solving tools and plans that can be changed or replaced if necessary
Phase III: Manufacturing Resource Planning (MRP II), is the development of the MRP close-loop which is added by 3 elements: sales and operations planning, financial interface and simulation analysis of the required needs
Phase IV: Enterprise Resource Planning (ERP), an extension of MRP II, which is an expansion of several business processes including financial integration, supply chains and covering cross-border organizational and company functions easily done