MODULE

5
RESOURCE PLANNING
 MATERIAL REQUIREMENT PLANNING
(MRP 1)
• MRP refers to the basic calculations used to determine components required from end item
requirements.

• Material requirements planning (MRP) is a software-based integrated inventory and supply

management system designed for businesses.

• “Materials Requirement Planning (MRP) is a technique for determining the quantity and
timing for the acquisition of dependent demand items needed to satisfy master
production schedule requirements.”

• MRP converts a plan into a list of requirements for the subassemblies, parts, and raw materials
needed to produce a final product within the established schedule.
• OBJECTIVES OF MATERIAL REQUIREMENT PLANNING
• Inventory reduction: MRP determines how many components are required when they are required
in order to meet the master schedule. It helps to procure the materials/ components as and when
needed and thus avoid excessive build up of inventory.

• Reduction in the manufacturing and delivery lead times: MRP identifies materials and component
quantities, timings when they are needed, availabilities and procurements and actions required to
meet delivery deadlines. MRP helps to avoid delays in production and priorities production activities
by putting due dates on customer job order.

• Realistic delivery commitments: By using MRP, production can give marketing timely information
about likely delivery times to prospective customers.

• Increased efficiency:
MRP provides a close coordination among various work centers and hence help to achieve
uninterrupted flow of materials through the production line. This increases the efficiency of production
system.
MRP SYSTEM
1.MASTER PRODUCTION SCHEDULE (MPS)
MPS is a series of time phased quantities for each item that a company produces, indicating how
many are to be produced and when.

2.INVENTORY STATUS FILE

Every inventory item being planned must have an inventory status file which gives complete and
up to date information on the on-hand quantities, gross requirements, scheduled receipts
and planned order releases for an item. It also includes planning information such as lot sizes,
lead times, safety stock levels and scrap allowances.

3.A BILL OF MATERIALS (BOM)

Is an extensive list of raw materials components, and instructions required to construct,
manufacture, or repair a product or service. A bill of materials usually appears in a hierarchical
format, with the highest level displaying the finished product and the bottom level showing
individual components and materials.
MASTER PRODUCTION SCHEDULE (MPS)

• MPS is a series of time phased quantities for each item that a company produces, indicating
how many are to be produced and when.

• MPS is initially developed from firm customer orders or from forecasts of demand before MRP
system begins to operate.

• The MRP system whatever the master schedule demands and translates MPS end items into
specific component requirements. Many systems make a simulated trial run to determine
whether the proposed master can be satisfied.
 Functions of MPS
• To translate aggregate plans into specific end items:
Aggregate plan determines level of operations that tentatively balances the market demands with the
material, labor and equipment capabilities of the company. A master schedule translates this plan into
specific number of end items to be produced in specific time period.

• Evaluate alternative schedules: Master schedule is prepared by trial and error. Many computer
simulation models are available to evaluate the alternate schedules.

• Generate material requirement: It forms the basic input for material requirement planning (MRP).

• Generate capacity requirements: Capacity requirements are directly derived from MPS. Master
scheduling is thus a prerequisite for capacity planning.

• Facilitate information processing: Master schedule determines when the delivery should be
made. It coordinates with other management information systems such as, marketing, finance and
personnel.

• Effective utilization of capacity: By specifying end item requirements schedule establishes the
load and utilization requirements for machines and equipment.
 AGGREGATE PLANNING
• Aggregate planning is an intermediate term planning decision. It is the process of planning the
quantity and timing of output over the intermediate time horizon (3 months to one year)

• Aggregate Planning Strategies

• The variables of the production system are labor, materials and capital.
1.Vary the size or the workforce: Output is controlled by hiring or laying off workers in proportion to
changes in demand.

2.Vary the hours worked: Maintain the stable workforce, but permit idle time when there is a slack
and permit overtime (OT) when demand is peak.

3.Vary inventory levels: Demand fluctuations can be met by large amount of inventory.

4.Subcontract: Constant production rates can be met by using subcontractors to provide extra
capacity.
 CAPACITY REQUIREMENT PLANNING (CRP)
• Capacity requirement planning (CRP) is an iterative process of modifying the MPS or
planned resources to make capacity consistent with the production schedule.

• CRP is used to identify in detail the capacity required to execute the material requirement
planning. At this level, more accurate comparisons of available and needed capacity for
scheduled workloads are possible.

Guidelines to overcome overload

• Unnecessary requirements are to be avoided

• Increment in the normal capacity will help to increase the capacity of the system
• The work may be pushed back to previous periods or pushed forward to later periods
• Sub contracting strategy may be followed
• Revision of master schedule may help to avoid overload condition s.
 CONCEPT OF ERP
• Enterprise resource planning (ERP) is a platform companies use to manage and integrate
the essential parts of their businesses.

• Many ERP software applications are critical to companies because they help them implement
resource planning by integrating all the processes needed to run their companies with a single
system.

• ERP is a centralized method of managing every aspect of operations and processes, from
production to payroll

• The benefits of implementing an ERP:

• Increased visibility into processes

• Communication between different departments
• Centralized data collection and analysis
• Greater efficiency in processes
• Overall cost reductions
 MANUFACTURING RESOURCE PLANNING (MRP II)

• It is an integrated information system that helps manufacturers plan and manage all aspects of
their production, including materials, labor, and other resources.

• Data about the cost of production, including machine time, labor time and materials used as well
as final production numbers is provided from MRP II system to accounting and finance.

• It incorporates strategic planning processes, business planning, and a number of other business
functions such as human resources planning, profit calculation and cash flow analysis. The
primary concern of MRP II is to involve the top management in the production planning

• Both Material Resource Planning (MRP-I) and Manufacturing Resource Planning (MRP-II) are the
predecessors of Enterprise Resource Planning (ERP).
 SCHEDULING OF OPERATIONS
• Scheduling can be defined as “prescribing of when and where each operation necessary to
manufacture the product is to be performed.”

• The principle aim of scheduling is to plan the sequence of work so that production can be
systematically arranged towards the end of completion of all products by due date.

• Principles of Scheduling

• The principle of optimum task size: Scheduling tends to achieve maximum efficiency
when the task sizes are small, and all tasks of same order of magnitude.

• Principle of optimum production plan: The planning should be such that it imposes an
equal load on all plants.

• Principle of optimum sequence: Scheduling tends to achieve the maximum efficiency

when the work is planned so that work hours are normally used in the same sequence.
FLOW SHOP

JOB SHOP
SCHEDULING RULES
THE THEORY OF CONSTRAINTS
• Every process has a constraint (bottleneck) and focusing improvement efforts on that
constraint is the fastest and most effective path to improved profitability.

• “The Theory of Constraints is a methodology for identifying the most important limiting
factor (i.e., constraint) that stands in the way of achieving a goal and then
systematically improving that constraint until it is no longer the limiting factor.”
• Due to bottleneck (or, constraint) :

• (a) Production upstream will produce excess inventory and generate queues. Any
queue is a sign of inefficiency, which must be removed.

• (b) Production (or operation) downstream will remain starved. This will cause the
under utilization of manufacturing/human resources. The under-utilization is again a sign of
inefficiency, which must be removed.

• Due to above reasons, the thrust should be on continuous identification and removal of
constraints. This gives rise to the Theory of Constraints.
FOCUSING STEPS IN TOC
 DRUM BUFFER ROPE CONCEPT
• Drum-Buffer-Rope (DBR) is one application of the theory of constraints in production planning.

• Implementing DBR will improve the flow of operations that have an internal constraint or
a capacity-restrained resource, making it more efficient.

• DBR details a work schedule for the constraint (Drum), which buffers the constraint so that it is
never starved (Buffer) and sets a release mechanism (Rope) to ensure that work gets released
into the system at the right time.

• A constraint-aware workflow control process in which the “drum” beat sets the pace of
production based on the constraint’s capacity, the “buffer” provides a contingency, and the “rope”
controls the flow of work.
 SYNCHRONOUS MANUFACTURING

• Synchronous manufacturing refers to the entire production process working together in

harmony to achieve the goals of the firm.

• Synchronous manufacturing logic attempts to coordinate all resources so that they work
together and are in harmony or are "synchronized."

• In synchronized manufacturing system, the measured goals focus on total system

performance, and not on localized measures such as labor or machine utilization.
 Business Process Modelling

• Business process modeling (or) process modeling, is the analytical representation

or put simply an illustration of an organization’s business processes.

• Business process modeling is the graphical representation of a company’s business

processes or workflows, as a means of identifying potential improvements. This is
usually done through different graphing methods, such as the flowchart, data-flow
diagram, etc.
1.Improving Efficiency – The main function of BP modeling is to improve the way the processes are done.
finding different ways to improve the way the process works, which leads to higher efficiency, productivity,
output, and finally, profits.

2.Enforce Best-Practices & Standardization – If you’re running a big organization, there’s a good chance
that different teams do the same process differently. Creating the best-practice design ensures that everyone
knows how to do the process.

3.Process Agility – If BP analysis is a norm within an organization, they will eventually develop a culture of
innovation and change. By being able to constantly tweak business operations, you’ll be able to evolve in the
face of technological change.

4.Transparency – Everyone within your organization will be, more or less, aware of how your processes
work: what’s the goal, how it operates, etc. This leads to accountability; who owns what process becomes
transparent.

•Beat the Competition – As a result of all the other benefits we’ve mentioned, you’ll be able to beat and
outlast your competition in the long-run.

•Provides consistency and controls the process

•Sets a clear starting and ending to the process

 INDUSTRY 4. 0
• Industry 4.0 refers to the intelligent networking of machines and processes for industry with
the help of information and communication technology .
BENEFITS OF INDUSTRY 4.0

•Organizations can leverage Industry 4.0 to do more with less and avail improved productivity and
efficiency with better resource allocation, automatic tracking and reporting, and less wastage.

•Businesses can use sensor data to check on manufacturing processes across the shop floor
in real time and compare it with a digital twin to determine any scope for improvement.

•Smart factories can avail the benefit of improved agility and flexibility since it is easier to add
new products to the existing production line and create fantastic opportunities for high mix low
volume (HMLV) manufacturing, one-off manufacturing, etc.

•Manufacturers can monitor machine health using sensors to avoid break downs and failures on
the shop floor and take any preventive/corrective measures as needed.

•While typical manufacturing units run in silos, smart factories facilitate machine to machine and
system to system communication that allows improved collaboration between business
processes and production lines.
 DISRUPTIVE TECHNOLOGY
• Disruptive technology is a new way of doing something that causes a change in an existing
industry or brings about a new market.

• Disruptive technology is a new way to do something that has the potential to disrupt an existing
market or industry significantly. Disruptive technology can involve new products, business models,
technologies, or ways of doing things.

• Refer:

1. Robotics
2. AI
3. Machine learning
4. Autonomous Mobile Robots
5. IoT and IIoT
6. Smart Manufacturing
 ADDITIVE MANUFACTURING (3D PRINTING)

• Additive manufacturing (AM) or additive layer manufacturing (ALM) is the industrial

production name for 3D printing, a computer controlled process that creates three
dimensional objects by depositing materials, usually in layers

• Additive Manufacturing (AM) is an appropriate name to describe the technologies that build 3D
objects by adding layer-upon-layer of material, whether the material is plastic, metal,
concrete etc.

• Unlike “subtractive manufacturing” processes such as machining, where parts are created by
removing material, additive manufacturing builds geometries by “adding” feedstock such as
filament, wire or powder.
 SMART FACTORY
• A smart factory is a digitized manufacturing facility that uses connected devices,
machinery and production systems to continuously collect and share data. This data is
then used to inform decisions to improve processes as well as address any issues that
may arise.

• Smart factories connect the digital and physical worlds in order to monitor an entire production
process, from supply chain management to manufacturing tools and even the work of
individual operators on the shop floor.

• Refer:

• Smart Products
• Automation
• RPA (Robotic process automation)
• Augmented and Virtual Reality