2. TECHNIQUES OF MATERIALS PLANNING
Direct Materials –
• High value - (i) BOM / Explosion charts
(ii) MRP
(iii) Inventory Control
• Low value - Inventory Control
Indirect Materials – (i) Past Consumption Analysis
Technique
(ii) Exponential Smoothing
(iii) Inventory Control
2
3. FORECASTING
Forecasting is a prelude to planning.
Principles of Forecasting -
• Forecasts attempt to look into the unknown future & except
by sheer luck, will be wrong to some degree.
• Every forecast should include an estimate of error, often
expressed as a percentage of the forecast /as a range
between maximum & minimum values.
• Forecasts are more accurate for families/groups.
• Forecasts are more accurate for nearer time periods.
Forecasting Techniques –
• Qualitative
• Extrinsic
• Intrinsic
3
4. MASTER PRODUCTION SCHEDULE (MPS)
• It forms the link between production planning
& what manufacturing will actually build
• It forms the basis for calculating the capacity
& resources needed
• The MPS drives the material requirements
plan.
• It keeps priorities valid. The MPS is a priority
plan for manufacturing.
4
5. MASTER PRODUCTION SCHEDULE (MPS)
Information needed to develop an MPS –
• The production plan
• Forecasts for individual end items
• Actual orders received from customers & for
stock replenishment
• Inventory levels for individual end items
• Capacity restraints
5
6. MASTER PRODUCTION SCHEDULE (MPS)
Objectives of MPS –
• To maintain the desired level of customer
service by maintaining finished-goods
inventory levels or by scheduling to meet
customer delivery requirements.
• To make the best use of material, labor &
equipment.
• To maintain inventory investment at the
required levels
6
7. MASTER REQUIREMENTS PLAN (MRP)
MRP is the scientific technique for planning the
ordering & usage of materials at various levels
of production & for monitoring the stocks
during these transactions.
MRP, is both inventory control & scheduling
technique.
Objectives of MRP –
• Determine requirements
• Keep priorities current
7
8. MASTER REQUIREMENTS PLAN (MRP)
Advantages of MRP over Conventional Planning –
• Low levels of in-process inventories.
• Ability to keep track of material requirements.
• Ability to evaluate the capacity requirements
generated by a given master schedule.
• A means of allocating production time.
8
9. INPUT-OUTPUT OF MRP SYSTEM
INPUT –
1. Master Production Schedule
2. Inventory Records
3. Bill of Material
OUTPUT –
1. Primary Reports – planned orders, order releases,
changes to planned orders
2. Secondary Reports –
(i) Performance-control reports
(ii) Planning reports
(iii) Exception reports
9
10. BILL OF MATERIALS (BOM)
The Association for Operations Management
(APICS) defines a bill of material as “a listing of
all sub-assemblies, intermediates, parts & raw
materials that go into making the parent
assembly showing the quantities of each
required to make an assembly.”
BOM provides details such as part no.,
description, quantity required, material
specifications etc.
10
11. BILL OF MATERIALS (BOM)
BOM STRUCTURE –
1. Product Tree
2. Parent-component relationship
3. Multilevel bill
4. Multiple bill
5. Single-level bill
6. Indented bill
7. Summarized parts bill
8. Planning bill
11
12. BILL OF MATERIALS (BOM)
Uses of BOM –
1.Product definition
2.Engineering change control
3.Service parts
4.Planning
5.Manufacturing
6.Costing
12
14. MANUFACTURING RESOURCE PLANNING (MRP II)
• Provides the mechanism for coordinating the
efforts of marketing, finance, production &
other departments in the company.
• A method for the effective planning of all
resources of a manufacturing company
14
15. ENTERPRISE RESOURCE PLANNING
American Production & Inventory Control Society (APICS)
defines ERP as “Framework for organizing, defining &
standardizing the business processes necessary to effectively
plan & control an organization so the organization can use its
internal knowledge to seek external advantage.”
• allows the tracking of orders & other important planning
• control information throughout the entire company
• allows managers to share data between firms so that they
can have visibility across the complete span of supply chain
15
