Assignment Chapter 21

What do we mean when we say that MRP is based on dependent demand?

MRP or Material Requirement Planning is a measure that is taken to assess the number of different materials that would be needed to develop a specific product. It means that one product is dependent on the requirements of another product as the completion of this product would result in another product and hence we can say that MRP is based on dependent demand. The dependent demand can be further explained by supposing that a company is making engines for automobiles. It means that the production of these engines is dependent on the demand for automobiles in the consumer market.

Discuss the importance of the master production schedule (MPS) in an MRP system.  

When a product or item is intended to be produced, a Master Production Schedule is prepared first. This schedule enables organizations to know what is the demand for the product in the consumer market and when this demand should be fulfilled by producing the product. So it’s a schedule of how much and when to produce. This schedule is based on the forecast of the demand of the product, how mush orders are in place for the already developed products, the status of the safety stocks and internal orders.

MPS is used to control and plan manufacturing in different firms. It also helps in business planning in the light of predicted forecasts.

What are the sources of demand in an MRP system? Are these dependent or independent, and how are they used as inputs to the system?

MRP or Material Requirement Planning (MRP) is a planned process which enables organizations determine the amount of raw material for producing different items. Customers and Aggregate Production Plan are the two sources of demand in an MRP. The customer demand is a dependent demand as it does not deal with the forecasting. On the other hand, Aggregate Production Plan is an independent demand as they are run via master production schedule and made part of the MRP system at appropriate levels.

Match the industry type to the expected benefits from an MRP system as High, Medium, or Low.

Assemble-to-stock HIGH

Assemble –to-order HIGH

Make-to-stock MEDIUM

Male-to-order HIGH

Engineer-to-order HIGH

Process MEDIUM

What are the three primary data sources used by the MRP system?

An MRP system uses Master Production Schedule (MRS), Bill of Materials File and Inventory Records File as its data sources. These source are explained in the bellow.

Master Production Schedule: It allows the organization to know the information about the quantity of the components that is required and its requirement timing.

Bill of Material File: This contains the information about the specific items or assembly that is needed in the production of the end product.

Inventory Record File: In an MRP system, there is a need to record lengthy records related to inventory. This record in made in the inventory record file.