material requirement planning and bills of material

MATERIAL REQUIREMENT PLANNING & BILLS OF

MATERIAL

Material Requirement Planning (MRP)

• DEFINITION Material requirements planning (MRP)

refers to production planning and inventory control software systems that are used to manage the manufacturing process.

A materials requirement planning (MRP) information system is a sales forecast-based system used to schedule raw material deliveries and quantities, given assumptions of machine and labor units required to fulfill a sales forecast.

OBJECTIVES OF MRP To ensure that material and components are

available for production, and final products are ready for dispatch.

• To maintain minimum inventory but also ensure right quantity of material is available at the right time to produce right quantity of final products.

• To ensure planning of all manufacturing processes, this scheduling of different job works as to minimize or remove any kind of idle time for machine and workers.

ADVANTAGES OF MRP• It helps in maintain minimum inventory

levels.• With minimum inventory levels, material

planning also reduces associated costs.• Material tracking becomes easy and ensures

that economic order quantity is achieved for all lot orders.

• Material planning smoothens capacity utilization and allocates correct time to products as per demand forecast.

DISADVANTAGES OF MRP• Material planning is highly dependent on

inputs it receives from other systems or department. If input information is not correct than output for material planning will also be incorrect.

Material planning system requires proper training for end users, as to get maximum out of the system.

• Material resource planning system requires substantial investment of time and capital.

• AAKIF • ROLL NO. 46• TOPIC:-STEPS IN MRP

Three Basic Steps of MRP• Identifying Requirements• Running MRP – Creating the

Suggestions• Firming the Suggestions

Step 1: Identifying the Requirements

• Quantity on Hand• Quantity on Open Purchase Order• Quantity in/or Planned for

Manufacturing• Quantity Committed to Existing Orders• Quantity Forecasted

Step 2: Running MRP – Creating the Suggestions

• Critical Items• Expedite Items• Delay Items

Step 3: Firming the Suggestions

• Manufacturing Orders• Purchasing Orders• Various Reports

• BURHAAN MUZAFAR• ROLL NO.59• TOPIC:-OVERVIEW OF MRP

SYSTEM

Overview of the MRP SystemProduct

Structure File

Master Production Schedule

Inventory Master File

Material Requirements

Planning

Manufacturing Orders

Purchase Orders

Various Reports

MRP Inputs• Product Structure File• Master Production Schedule• Inventory Master File

MRP Outputs• Manufacturing Orders• Purchasing Orders• Various Reports

• MUNEER AHMAD• ROLL NO. 87• TOPIC:-BILLS OF MATERIAL

Definition

Bill of Materials (BOM)• A listing of all the subassemblies,

intermediates, parts, and raw materials that go into a parent assembly showing the quantity of each required to make an assembly.

Bozarth, Cecil C. and Handfield, Robert B. Introduction to Operations and Supply Chain Management

. Pearson Education, Inc., Upper Saddle River, New Jersey, 2006. p.461.

Types of BOMs

• Static (fixed) bill– A bill of material for a part that is normally made from

the same components, labor and raw materials.– Used for standard assemblies, components, and

engineer-to-order customer orders.

• Example:– A bill of materials for a standard chair

Definition Explained

• Basically, a bill of material (BOM) is a complete list of the components making up an object or assembly.

• It is also part of material requirements planning (MRP)

Types of BOMs

• Dynamic (parametric) bill– A bill of material for a product or part for

which size, color, laminate, and other options can be selected.

• Example:– A bill of materials for a Dell computer

Types of BOMs

• Single level bill of material– A bill of material that lists the materials, parts

and labor required to make another part.

• Example:– A bill of materials to make a Dell computer

Types of BOMs

• Multilevel bill of material– A bill of material that lists the components, assemblies,

and materials required to make a part, the components, assemblies, and materials required to make each component and assembly of the part, and so forth.

• Example:– A BOM for the battery inside the Dell computer.

• JUNAID HASSAN• ROLL NO.75• TOPIC:-INFORMATION

CONTAINED IN BILLS OF MATERIAL AND BENEFITS OF BOM

What information is on a BOM?

1. Quantity2. Item ID3. Description of Item4. Cost of Item5. Total Project Cost

Quantity• Tells user how many of each part is

needed for each project

• Example:– A chair needs 1 seat, 4 legs, 1 back,

and 5 nails.

Item ID • Tells us which part to order

• Example:– The chair needs a 2PC seat, 5DR legs and 1 inch nails.

Description of Item

• Provides a check that the correct item is being ordered.

Cost of Item

• Cost is included to show how much each part is per item and the total cost of all like parts.

• Example:– The cost of a leg is RS 5 per leg. Then the total price

of the legs ordered would be RS20 because there are 4 legs.

Total Project Cost

• Shows the total cost of all items and is also the total cost of the direct materials used in the project.

• Example:– Seat RS10, Back RS5, Leg RS5 per leg, Nail RS

5 per nail– Total Cost of a chair = 10 + 5 + 5*4 + .5*5 = RS

37.50

Benefits of a BOM Help to maintain an accurate record of information. Improve material management through responding to

changes in production. Control inventory levels. Reduce obsolete parts; Control and reduce manufacturing costs; and provide what-if capabilities for estimates