MATERIAL REQUIREMENT PLANNING AND BILLS OF MATERIAL
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The document provides an overview of material requirement planning (MRP) and bills of material (BOM). It defines MRP as a production planning and inventory control system used to manage the manufacturing process. BOMs are then defined as listings that show the materials, components, and quantities needed to produce an item. The document outlines the objectives, advantages, and disadvantages of MRP, and describes the information contained in BOMs such as item quantities, IDs, descriptions, and costs.
MATERIAL REQUIREMENT PLANNING AND BILLS OF MATERIAL
- 1. MATERIAL REQUIREMENT PLANNING & BILLS OF MATERIAL
- 3. • 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.
- 4. 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.
- 5. 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.
- 6. 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.
- 7. • AAKIF • ROLL NO. 46 • TOPIC:-STEPS IN MRP
- 8. Three Basic Steps of MRP • Identifying Requirements • Running MRP – Creating the Suggestions • Firming the Suggestions
- 9. 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
- 10. Step 2: Running MRP – Creating the Suggestions • Critical Items • Expedite Items • Delay Items
- 11. Step 3: Firming the Suggestions • Manufacturing Orders • Purchasing Orders • Various Reports
- 12. • BURHAAN MUZAFAR • ROLL NO.59 • TOPIC:-OVERVIEW OF MRP SYSTEM
- 13. Overview of the MRP System Product Structure File Master Production Schedule Inventory Master File Material Requirements Planning Manufacturing Orders Purchase Orders Various Reports
- 14. MRP Inputs • Product Structure File • Master Production Schedule • Inventory Master File
- 15. MRP Outputs • Manufacturing Orders • Purchasing Orders • Various Reports
- 16. • MUNEER AHMAD • ROLL NO. 87 • TOPIC:-BILLS OF MATERIAL
- 17. 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
- 18. 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
- 19. 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)
- 20. 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
- 21. 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
- 22. 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.
- 23. • JUNAID HASSAN • ROLL NO.75 • TOPIC:-INFORMATION CONTAINED IN BILLS OF MATERIAL AND BENEFITS OF BOM
- 24. What information is on a BOM? 1. Quantity 2. Item ID 3. Description of Item 4. Cost of Item 5. Total Project Cost
- 25. 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.
- 26. Item ID • Tells us which part to order • Example: – The chair needs a 2PC seat, 5DR legs and 1 inch nails.
- 27. Description of Item • Provides a check that the correct item is being ordered.
- 28. 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.
- 29. 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
- 30. 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
Editor's Notes
- #3: Today we will discuss what Material Requirements Planning is and how we can use it in our organization.
- #9: The three basic steps of MRP are 1) Identifying requirements for items to be included in an MRP run, 2) Running the MRP and creating suggestions for action, and 3) firming the suggestions to release manufacturing orders and purchase orders.
- #10: The MRP system looks at several components of demand in order to create its suggestions. The requirements include the above items. Many of these requirements are included in the master production schedules and inventory master files that will be discussed later in this presentation.
- #11: At the end of each day, the MRP system will be run to identify items as critical, expedite, or delay. The MRP system will suggest if you need to order more of a certain material by classifying into the three categories. Critical items are items of immediate importance that should be taken care of right away. Expedite items are items that need to be sped up so that it is completed in less than the normal lead time. Delay items are item that are not of vital importance and can be delayed for the benefit of other items. If you wish, the MRP system can also give greater details such as expected receipt dates, and customer orders making up the demand.
- #12: Once it has been run, the MRP system will suggest that the user send out a purchase order or manufacturing order. The user can then choose on whether to accept the suggestions of the system or change them. For example the MRP system will suggest that a purchase order be sent to order 100 units of material X. The user may accept this suggestion or change the information to fit what he thinks should be ordered. The MRP system keeps track of a vendor master file to ease of sending faxes, emails, or printouts of orders.
- #14: The is an overview of how the MRP system works. The Orange boxes indicate the inputs into the MRP system. The MRP system then processes the information and delivers outputs as indicated by the yellow boxes.
- #15: The three main inputs into the MRP system are product structure files, master production schedules, and inventory master files. These three main inputs summarize the input requirements described earlier.
- #16: The MRP system delivers two main outputs along with various other reports. The two main outputs are manufacturing orders which can be released to shop floors for in-house production and purchasing orders which are sent to outside suppliers. The various reports offer suggested changes in previous plans or existing schedules.
- #18: This definition is provided in our class text and is cited on the slide. It is not a very clear definition so the next slide explains what is means.
- #19: A static bill of materials is a fixed bill for standard assemblies. They use the same materials and components every time. An example of this is the building of a standard chair. The BOM would be the same every time so it would be a static bill of materials.
- #20: This is a simple explanation that can be understood of what a BOM actually is. MRP translates the master productions schedule into orders for actual parts. The BOM is part of this process. Next we will discuss how a BOM can be used in business.
- #21: A dynamic bill can vary in the components that make up a product. An example of this type of BOM is for a Dell computer. For the most part the components are standard, but the customer can choose different features and so those parts will vary from project to project.
- #22: A single level BOM lists the parts included in a single product like a Dell computer.
- #23: To go deeper into a product, a multilevel BOM not only lists the parts of a product, but the parts of the components in the product. For example the BOM not only lists the parts in a Dell computer, but also the parts that are in the battery in the Dell computer. This information was found on the following website: http://www.feldmanengineering.com/BoM_Glossary.htm
- #25: These five items are the most typical and important items on a BOM. Some examples provided later in the presentation do not follow this exact format because there is no standard format for a BOM. Each company needs to modify where needed to fit their individual needs. To illustrate a bill of materials, we will use the project of building a basic chair.
- #26: The quantity is one of the most important parts of the BOM because it tells us how many parts are needed for a project. The chair for example needs 1 seat, 4 legs, 1 back, and 5 nails to hold it together. The builder would not want to order 3 legs or forget to order the back on accident because the chair would not be finished correctly to order.
- #27: The item ID number tells us which type of part to buy. The numbers need to be exact for the correct part to be ordered. In our example the chair needs a specific type of seat, legs, back, and nails. The ID number can be a catalog number assigned by either the company or the vendor, or can be a type of UPC scan-able label.
- #28: The description of the item is just a quick check to make sure all the parts were included. This way the user does not have to memorize each part by ID number. Instead, they can quickly scan the BOM and see that a seat, legs, back, and nails are included.
- #29: The cost of the item lets the user know the cost per item. We can then figure out the cost for all like items. Because we only need 1 seat and 1 back, their cost for like items would be the same as the cost per item. The legs, however, have different costs because we are ordering more than one leg. In this example the legs are $5 each, so the total price of legs ordered are $20.
- #30: The total project cost may be included in some BOM to show the total cost of all the items being ordered. In our example, the total cost of the chair is $37.50.
- #31: This slide is a continuation of the previous slide in explaining the benefits of a bill of materials. It can reduce clerical and engineering efforts and provide what-if scenarios for estimating or quoting. A bill of materials also helps keep track of specific items such as the same items in every way except small details like varying lengths. A bill of materials also is a easy method for accessing part information about a project. This information was found on the following web site: http://www.grms.com/BillsofMaterial.htm