Material Requirement Planning (MRP) MCQ Quiz - Objective Question with Answer for Material Requirement Planning (MRP) - Download Free PDF

Explanation:

Master Production Schedule (MPS):

• The Master Production Schedule (MPS) is a critical component of production planning in manufacturing operations. It represents a detailed plan that specifies the starting and finishing times of different products. This schedule serves as a bridge between customer demand and the production system, ensuring that the right products are manufactured at the right time in the required quantities. The MPS is a key input for material requirements planning (MRP) and helps in achieving a balance between supply and demand.
• The primary purpose of the MPS is to ensure that production aligns with customer demand while optimizing the use of available resources. It provides a clear roadmap for production activities, helping to avoid overproduction, underproduction, and stockouts. The MPS also ensures that production is carried out efficiently, minimizing waste and reducing costs.
• The MPS is created based on customer orders, sales forecasts, and inventory levels. It is typically divided into time buckets, such as daily, weekly, or monthly intervals. The schedule specifies the quantities of each product to be produced in each time bucket, along with the starting and finishing times for production activities. The MPS is regularly updated to reflect changes in customer demand, production capacity, and inventory levels.

Key Features:

• The MPS specifies the quantity of each product to be produced over a specific time period.
• It defines the starting and finishing times for the production of each product, ensuring that deadlines are met.
• The schedule takes into account factors such as available production capacity, inventory levels, and lead times.
• It serves as a guideline for procurement, ensuring that raw materials and components are available when needed.

Advantages:

• Helps in achieving a balance between supply and demand, reducing the risk of stockouts and overproduction.
• Provides a clear roadmap for production activities, ensuring that deadlines are met.
• Improves resource utilization by optimizing the use of available production capacity.
• Facilitates better coordination between production, procurement, and sales functions.

Explanation:-

MRP II

• Manufacturing Resources Planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company.
• MRP II Serves as an extension of MRP

Additional Information

Materials Requirement Planning, It is a planning technic that converts the master production schedule of end products into a detailed schedule for raw materials and parts used in those end products.

Maximum retail price is the highest price labeled on the product which can be charged by the seller of that product.

ERP - Enterprise Resource Planning

Explanation:-

MRP II

• Manufacturing Resources Planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company.
• MRP II Serves as an extension of MRP

Additional Information

Materials Requirement Planning, It is a planning technic that converts the master production schedule of end products into a detailed schedule for raw materials and parts used in those end products.

Maximum retail price is the highest price labeled on the product which can be charged by the seller of that product.

ERP - Enterprise Resource Planning

Explanation:

Inventory turnover ratio:

• The inventory turnover ratio measures how often inventory is sold and replaced over a specific period.
• It is an efficiency ratio that helps to evaluate the liquidity and performance of inventory management.
• However, it does not directly influence the level of safety stock in an inventory control system.
• Safety stock is primarily influenced by factors that cause variability and uncertainty, such as lead time variability, supplier reliability, and demand variability.
• The inventory turnover ratio is more of a performance metric rather than a factor that affects the level of safety stock.

Additional InformationLead time variability

• Lead time variability refers to the fluctuations in the time it takes for an order to be delivered after it has been placed. This variability can affect the level of safety stock because unpredictable lead times require holding extra inventory to avoid stockouts. If the lead time is highly variable, higher safety stock levels are needed to buffer against the uncertainty.

Supplier reliability

• Supplier reliability is the consistency with which a supplier delivers goods within the agreed lead time and in the correct quantities. If a supplier is unreliable, it increases the risk of delays or incomplete deliveries. To mitigate this risk, businesses maintain higher levels of safety stock. Reliable suppliers, on the other hand, allow companies to reduce safety stock levels.

Demand variability

• Demand variability is the fluctuation in customer demand for products. High variability in demand increases the uncertainty of how much inventory is needed at any given time. To prevent stockouts during periods of unexpectedly high demand, businesses hold additional safety stock. Conversely, if demand is stable and predictable, lower levels of safety stock are required.

Explanation:

Planned Order Schedule in MRP System

• A planned order schedule is a key output of a Material Requirements Planning (MRP) system.
• It details the planned orders that need to be released at specific times to ensure that the necessary materials and components are available for production when required.
• These schedules help in managing the timing and quantity of orders to optimize inventory levels and ensure smooth production operations.
• In an MRP system, the planned order schedule is generated based on several inputs, including the master production schedule (MPS), bill of materials (BOM), and inventory status file.
• The MRP system calculates the net requirements for each component and determines the timing and quantity of planned orders to meet these requirements.
• This process involves backward scheduling from the due date to ensure that materials are available just in time for production.

Advantages:

• Helps in maintaining optimal inventory levels by planning orders based on actual requirements.
• Ensures timely availability of materials, reducing production delays and downtime.
• Improves production efficiency by synchronizing material availability with production schedules.

Disadvantages:

• Requires accurate input data (e.g., demand forecasts, inventory levels) for effective planning.
• Can be complex to manage, especially in environments with high variability in demand and lead times.

Applications:

•  Planned order schedules are widely used in manufacturing environments to coordinate the procurement and production of materials and components. They are crucial in industries such as automotive, electronics, and aerospace, where precise material planning is essential for efficient production operations.

Explanation:

Production Planning & Control consist of three different stages.

1. Planning
2. Action
3. Monitoring.

• Planning Stage: Planning stages include activities such as planning the resources, facilities, etc. They are further divided into two stages.
  • Pre-planning Stage: This stage deals with the activities such as product planning, forecasting of the demand on the basis of the past trend, inputs planning, plant and facility planning related to location and layout.
  • Planning Stage: After the pre-planning, the quantity, level of quantity, process capacity, production planning like routing, scheduling materials, tools planning, etc. are carried out in the planning stage.
• Action Stage: It is the real implementation of the plan. It begins with dispatching functions, which deals with the progress of work or job.
• Monitoring: In this stage, the planned activities are controlled and monitored by using various techniques such as inventory control, tool control, cost control, quality control, etc. 

Explanation:

In inventory management system there are two ways to review the inventory, they are

Fixed order or quantity system:

• In this system the reorder level of the inventory is fixed as soon as the inventory reaches the reorder level a prescribed quantity is ordered in this system the size of order is fixed while the time of order is variable. It is also called reorder level system or two-bin system or Q-system.

Periodic review system/periodic inventory system:

• In this system the period of time after which inventory is reviewed is fixed, after that particular period new order is placed at that point. In this system the time of order is fixed but the size of order is variable. It is also called fixed period system or P-system.

Explanation:-

MRP II

• Manufacturing Resources Planning (MRP II) is defined as a method for the effective planning of all resources of a manufacturing company.
• MRP II Serves as an extension of MRP

Additional Information

Materials Requirement Planning, It is a planning technic that converts the master production schedule of end products into a detailed schedule for raw materials and parts used in those end products.

Maximum retail price is the highest price labeled on the product which can be charged by the seller of that product.

ERP - Enterprise Resource Planning

Concept:

Product Layout:

• It is also known as line layout.
• It implies that various operations on raw material are performed in a sequence and the machines are placed along the product flow line i.e. machines are arranged in the sequence in which the raw material will be operated upon.
• This type of layout is preferred for continuous production i.e. involving a continuous flow of in-process material towards the finished product stage.

Advantages:

• Smooth and logical flow lines
• Small in-process inventories
• Short total production time/unit
• Reduced material handling
• Little operator skill, simple training
• Simple production planning & control
• Less space for work in transit and temporary

Process Layout:

• It is also known as a functional layout and is characterized by keeping similar machines or similar operations at one location (place).
• In other words, all lathes will be in one place, all milling machines at another, and so on, that is machines have been arranged according to their functions. 

• Enterprise resource planning (ERP) is the integrated management of core business processes, often in real-time and mediated by software and technology
• ERP provides an integrated and continuously updated view of core business processes using common databases maintained by a database management system

Explanation:

Material Requirement Planning (MRP)

• It is a tool for this computation for the production planning, scheduling, and inventory control functions.
• MRP converts the Master Production Schedule (MPS) for end products into a detailed schedule for the raw material and components used in the end products.
• It deals with bringing in the right amount of raw material at the right time to support production and help manufacturing companies better manage their procurement of material to support manufacturing operations.
• From the given below figure, Output of MRP is Planned order schedule

Benefits of Material Requirement Planning

1. It enables maintaining low levels of in-process inventories
2. It can track material requirements
3. It can evaluate capacity requirements
4. It is a means of allocating production time
5. It has the ability to easily determine inventory usage by backflushing, which refers to exploding an end item's BOM to determine the quantities of the components that were used to make the item.

Explanation:

Bill of Materials (BOM) File: 

• BOM represents the product structure.
• It encompasses information about all sub-components needed, their quantity, and their sequence of build-up in the end product. 
• Information about the work centers performing build-up operations is also included in it.

From the above figure, we can see that it contains the Part number, Quantity, and Specifications but not the price.

Explanation:

ABC analysis is also known as Always Better Control analysis. This is also known as the principal of the Law of Vital Few and Trivial Many.

It is an analysis based on levels of importance. It is also a proportional value analysis.

Class A:

• Only 10% in the number
• Accounts for 75% of the annual inventory usage value
• It requires high attention for maintenance
• Needs continuous rigorous control
• Lower safety stocks
• Fixed-interval inventory control system might be used

Class B:

• Next 20% in the number
• Accounts for 15% of the annual inventory usage value
• Need relaxed control (periodic review)
• It requires high attention for maintenance

Class C:

• Next 70% in the number
• Accounts for 10% of the annual inventory usage value
• Can be managed in a more casual manner
• Fixed-order inventory control system might be used

Annual Usage Value = Annual Usage rate × Unit Cost

Explanation:

Material Requirement Planning:

It is a material control system in inventory handling to assure that the required materials are available when needed.

The major objectives of an MRP system are:

• 1. Ensure the availability of materials, components, and products for planned production activity.
• 2. Maintain the lowest possible level of inventory.
• 3. Plan manufacturing activities, delivery schedules, and purchasing activities.

So, there are various lot-sizing approaches in material requirement planning. Some are discussed below.

Explanation:

Materials Requirements Planning (MRP):

• Materials requirements planning is a simple system of calculating arithmetically the requirements of the input materials at different points of time based on the actual production plan.
• It can be seen from the figure that an MRP system has three major input components:

Master Production Schedule (MPS): 

• MPS is designed to meet the market demand (both the firm orders and forecasted demand) in the future in the taken planning horizon.
• MPS mainly depicts the detailed delivery schedule of the end products. However, orders for replacement components can also be included in it to make it more comprehensive.

Bill of Materials (BOM) File: 

• BOM represents the product structure.
• It encompasses information about all sub-components needed, their quantity, and their sequence of build-up in the end product. 
• Information about the work centers performing build-up operations is also included in it.

Inventory Status File: 

• The inventory status file keeps an up-to-date record of each item in the inventory.
• Information such as item identification number, quantity on hand, safety stock level, quantity already allocated, and the procurement lead time of each item is recorded in this file.