MANUFACTURING RESOURCES PLANNING
What is MRP II and why it is being used
Definition and History
According to American Production and Inventory Control Society, MRP II can be defined as a method of the effective planning of all the resources of a manufacturing company (Higgins, Leroy and Tierney 1996). It is actually advancement or can be said as a upgrading of Material Requirement Planning System (MRP) system, which is a set of technique that uses bills of material, data and a master production schedule to calculate the requirements for materials in a manufacturing company.
The MRP system was initiated in the 1960s and was spearheaded by a team of IBM innovators comprising Joe Orlicky, George Plossl and Ollie Wright who sought to create a structured methodology for planning and scheduling materials for complex manufactured products. Over the past 30 years MRP has spawned an entire industry in manufacturing and professional services. It has evolved hand in hand with technological advancements in the computer hardware industry. At the beginning, MRP systems were run on large mainframe computer costing a lot of money and required large technical staff to support them. However in the 1970s they underwent refinements that saw disparate modules get included and critical business concerns such as cost accounting and Capacity Requirements Planning get added. This gave rise to a new generation system called MRP II. Continued changes spurred by increased technological advances coupled with the expansion of global business marketplace has led to changes in MRP II to enable it to facilitate the operations of the entire business enterprise.
The characteristics of MRP II are the operation and financial system are the same, it has simulation capabilities that enable predictions to be made beforehand and last but not least it involves every facet of business from planning to execution (Higgins, Leroy and Tierney 1996). MRP II offers a systematic method for planning and procuring materials to support production. It constitutes relatively simple ideas implemented using a computer.
MRP II provides a general control structure that breaks the production control problem into a hierarchy based on time scale and production aggregation. They are many different forms of the MRP II hierarchy but generally all of them constitute three major parts: long range planning, intermediate range planning and short term control.
Long range planning
The scope of this level of planning ranges from six months to five years while replanning may vary from a monthly to annual basis. This level of planning is usually conducted at corporate level and the decisions made typically impact all the plants belonging to one manufacturing firm. Long range planning constitutes three activities: forecasting, resource planning and aggregate planning. Forecasting predicts demand in the future. It is important for determining capacity, tooling and personnel. Resource planning determines the capacity requirements over the long term. This would help whether to build a new plant or expand and existing one. Aggregate planning determines the level of production, staffing, inventory and overtime. This information enables management to make decisions such as whether to build up inventory or use overtime, or a combination of two to meet increased demand of the product.
Intermediate planning
Intermediate planning involves planning the different functions that take place during production. It constitutes demand management, master production schedules, rough-cut capacity planning, bill of resources, material requirement planning and capacity requirement planning.
Short term control
Short term control comes into play whenever a job is released to shop floor or when a purchase order is released to vendors, so as to ensure on time completion with the correct quantity and specifications. Short term control serves two functions: job dispatching and input/output control.