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BA 356 Upper Iowa University Material Requirements Planning Systems Discussion

BA 356 Upper Iowa University Material Requirements Planning Systems Discussion

Question Description

I’m working on a management discussion question and need an explanation to help me learn.

Material requirements planning (MRP) systems are useful for manufacturing processes that involve the ordering of numerous types of units of inventory that may have fluctuations in demand, ordering costs, and/or holding costs. MRP is especially useful for processes that have dependent demands with varying lead times. Inventory that is required for processing a job will need to consider inventory on hand, inventory needed, and the lead times needed to ensure units are on hand to complete jobs by specified dates.

Possible inventory problems mentioned in this week’s text were fluctuation in demand of product, fluctuations in lead time for obtaining a product after order placement, stockouts (running out of product), bottlenecks in production, and carrying cost relationship to the inventory unit cost. MRP’s that are used effectively should minimize or eliminate inventory problems that were discussed in this week’s reading. The effectiveness of an MRP is only as good as the information that is entered into it in a timely manner. The information entered into MRPs needs to be relevant. Inventory levels aim to keep reordering costs balanced with holding costs, keeping in mind inventory quantity sufficient to prevent stockout.

I chose to read more about the MRP/ERP system Fishbowl because it was listed as low cost and I like its display layout. Each feature that it offers comes at a price, so the MRP is dependent on what users feel is relevant to be monitored. Features offered by Fishbowl that I feel are relevant to ensuring adequate inventory levels are on hand at the leanest cost are bill of materials, capacity requirements planning, cost control, costing methods, finite capacity scheduling, inventory control, inventory tracking, item data, MRP, production resources data, production schedule, production management, sales analysis, shop floor control, and shop floor data collection.

Fishbowl can prevent costly stockouts by ensuring all inventory units required for production are on hand. The bill of materials (BOM) identifies all of the parts needed to produce one unit of end product. Inventory required to produce an end product is determined with respect to units of inventory on hand. Inventory needs to arrive on time to finish projects on time. Say, part E and F are required to build part C which is required to build the end product of A. MRP systems can be used to determine by what date part E and F need to arrive in order to give the time required to build part C. Part C needs to be built in time to ensure the proper amount of time is given to manufacture part A. The other features I listed as useful for inventory monitoring play a part in supply reordering and storage. Manufacturers want to keep their costs as low as possible. Inventory levels on hand are based upon cost to reorder, cost to hold, and marginal profits earned when ordering in bulk at discount. Real-time inventory data is necessary to ensure that the fine balance of inventory costs are minimized. Sales analysis anticipates demand requirements. Shop floor control and monitoring gives data about production cycle schedule progress.

In my opinion, MRP and JIT can be used incorrectly because of human error. A possible major setback of JIT is bottlenecks in production. When one part of the manufacturing process is slowed due to not having adequate supplies or labor on hand, or when setups are not completed on time, the entire manufacturing process is delayed or comes to a halt as it waits for an integral part. MRP’s are only as good as the data that is monitored and entered. MRP’s need to have all necessary inventory components monitored. Workers need to understand the value of monitoring production data.

Fishbowl. (2001-2021). Manufacturing MRP software. https://www.fishbowlinventory.com/mrp-software#

Render, B., Stair, Jr., R. M., Hanna, M. E., & Hale, T. S. (2018). Quantitative analysis for management (13 ed.). Pearson Education.

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