5/21/2019

PRODUCTION PLANNING &

CONTROL
ASSIGNMENT

BY MUHAMMAD TALHA NIAZ

ID: F2016031009
PROGRAM: BS INDUSTRIAL ENGINEERING
TO DR. IJAZ AHMAD CHAUDHRY
What is MRP?
Material requirements planning (MRP) is a production planning, scheduling, and
inventory control system used to manage manufacturing processes. Most MRP
systems are software-based, but it is possible to conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three objectives:
• Ensure materials are available for production and products are available
for delivery to customers.
• Maintain the lowest possible material and product levels in store
• Plan manufacturing activities, delivery schedules and purchasing activities.

Scope of MRP in Manufacturing:

Dependent demand vs Independent demand:
Independent demand is demand originating outside the plant or production
system, while dependent demand is demand for components. The bill of
materials (BOM) specifies the relationship between the end product
(independent demand) and the components (dependent demand). MRP takes as
input the information contained in the BOM.
Companies need to control the types and quantities of materials they purchase,
plan which products are to be produced and in what quantities and ensure that
they are able to meet current and future customer demand, all at the lowest
possible cost. Making a bad decision in any of these areas will make the company
lose money. A few examples are given below:
• If a company purchases insufficient quantities of an item used in
manufacturing (or the wrong item) it may be unable to meet contract
obligations to supply products on time.
• If a company purchases excessive quantities of an item, money is wasted -
the excess quantity ties up cash while it remains as stock that might never
be used at all.
• Beginning production of an order at the wrong time can cause customer
deadlines to be missed.

5/21/2019 Production Planning & Control 1

MPS:
A Master Production Schedule (MPS) is a plan for individual commodities to be
produced in each time period such as production, staffing, inventory, etc. It is
usually linked to manufacturing where the plan indicates when and how much of
each product will be demanded. This plan quantifies significant processes, parts,
and other resources in order to optimize production, to identify bottlenecks, and
to anticipate needs and completed goods. Since an MPS drives much factory
activity, its accuracy and viability dramatically affect profitability. Typical MPSs
are created by software with user tweaking.

How an MPS works:

By using many variables as inputs, the MPS will generate a set of outputs used
for decision making. Inputs may include forecast demand, production costs,
inventory money, customer needs, inventory progress, supply, lot size,
production lead time, and capacity. Inputs may be automatically generated by an
ERP system that links a sales department with a production department. For
instance, when the sales department records a sale, the forecast demand may be
automatically shifted to meet the new demand. Inputs may also be inputted
manually from forecasts that have also been calculated manually. Outputs may
include amounts to be produced, staffing levels, quantity available to promise,
and projected available balance. Outputs may be used to create a Material
Requirements Planning (MRP) schedule.
A master production schedule may be necessary for organizations to synchronize
their operations and become more efficient. An effective MPS ultimately will:
• Give production, planning, purchasing, and management the information
to plan and control manufacturing
• Tie overall business planning and forecasting to detail operations
• Enable marketing to make legitimate delivery commitments to
warehouses and customers
• Increase the efficiency and accuracy of a company's manufacturing
• Rough cut capacity planning

5/21/2019 Production Planning & Control 2

An example of a master production schedule for "product A":

ERP:
"ERP" stands for Enterprise Resource Planning. It refers to a suite of software
that organizations use to manage day-to-day business activities, such as
accounting, procurement, project management, risk management and
compliance, and supply chain operations. A complete ERP suite also includes
enterprise performance management, software that helps to plan, budget,
predict, and report on an organization’s financial results.
ERP systems tie together and define a plethora of business processes and enable
the flow of data between them. By collecting an organization’s shared
transactional data from multiple sources, ERP systems eliminate data duplication
and provide data integrity with a "single source of truth."
Today, ERP systems are critical for managing thousands of businesses of all sizes
and in all industries. To these companies, ERP is as indispensable as the
electricity that keeps the lights on.

Business Value of ERP:

It’s impossible to ignore the impact of ERP in today’s business world. As
enterprise data and processes are corralled into ERP systems, businesses are able
to align separate departments and improve workflow, resulting in n significant
bottom-line savings. Examples of specific business benefits include:
• Improved business insight from real-time information generated by
reports

5/21/2019 Production Planning & Control 3

 • Lower operational costs through streamlined business processes and best
practices
• Enhanced collaboration from users sharing data in contracts, requisitions,
and purchase orders
• Improved efficiency through a common user experience across many
business functions and well-defined business processes
• Consistent infrastructure from the back office to the front office, with all
business activities having the same look and feel
• High user-adoption rates from a common user experience and design
• Reduced risk through improved data integrity and financial controls
• Lower management and operational costs through uniform and integrated
systems.

Benefits of ERP:
• ERP can improve quality and efficiency of the business. By keeping a
company's internal business processes running smoothly, ERP can lead to
better outputs that may benefit the company, such as in customer service
and manufacturing.
• ERP supports upper level management by providing information for
decision making.
• ERP creates a more agile company that adapts better to change. It also
makes a company more flexible and less rigidly structured so organization
components operate more cohesively, enhancing the business—internally
and externally.
• ERP can improve data security in a closed environment. A common control
system, such as the kind offered by ERP systems, allows organizations the
ability to more easily ensure key company data is not compromised. This
change, however, with a more open environment, requiring further
scrutiny of ERP security features and internal company policies regarding
security.
Some examples of ERP software are SAP ERP, Microsoft Dynamics GP, Oracle
ERP Cloud, NetSuite ERP, SYSPRO etc.

5/21/2019 Production Planning & Control 4

5/21/2019 Production Planning & Control 5