Inventory Planning

INVENTORY PLANNING & CONTROL Presented to:

Engr. ERIC S. EMBANG

Inventory Planning & Control

INVENTORY PLANNING & CONTROL The ability to maintain an accurate record of inventories across the enterprise. • • • •

raw materials; parts and components; finished goods; or goods in-transit

Inventory Planning & Control

INVENTORY PLANNING & CONTROL The reasons for this emerging concern are many and varied, including: • • • •

expanded product lines; mass customization; shorter delivery cycles; complex global supply chains

Inventory Planning & Control

INVENTORY PLANNING & CONTROL The lack of inventory control could create obstacles like: • Unexpected and expensive production delays

• Unbalanced inventories that make it impossible to meet demand • Hard dollar loss due to excessive waste, scrap and work-in-process • Cash flow problems due to inventory overstocks and excess safety stock • Reduced customer service and competitor gains due to out-of-stocks

Inventory Planning & Control

MRPII The most commonly used model for production planning and control systems is the computer integrated system known as MRPII or Manufacturing Resources Planning.

Inventory Planning & Control

MRPII MRPII and similar systems have brought high levels of control to complex manufacturing systems through the integration of databases that can be accessed instantaneously using computers to record, track, and manipulate data with a great deal of accuracy.

Inventory Planning & Control

MRPII 1. A business plan is prepared which identifies the nature and direction of the business, its financial goals, and the strategic plans to achieve those goals. It is many times accompanied by budgets, projected balance sheet, and a cash flow statement.

Inventory Planning & Control

MRPII 2. Production plans, which serve as a link between the business plan and manufacturing, are prepared that define the overall level of manufacturing output planned; usually as monthly rates for each product family. At this point, specific products are usually not identified, but are combined into aggregate measures that serve to identify general patterns of production capacity. Thus, another common name for these plans is aggregate plans.

Inventory Planning & Control

MRPII 3. Resource requirements plans are prepared that identify in broad terms the major classes of resources that will be needed to provide the long-range capacity to complete the production plan. Typically overall labor level, overall facility capacity, and anticipated major changes in capacity are identified at this level.

Inventory Planning & Control

MRPII 4. Forecasts are prepared to anticipate the level of demand for the products. Forecasting information is important input both at the production plan and master schedule levels.

Inventory Planning & Control

MRPII 5. The first level at which specific end products are usually planned is the master schedule. At this level the anticipated mix of specific end products is usually planned and scheduled. The master schedule serves to provide the game plan from which more specific plans are derived. It also disconnects those plans from the unpredictable nature of the short term marketplace. That disconnection is necessary, because if the manufacturing system tries to respond directly to the short term variations in the market, its relatively long leadtime activities will be disrupted.

Inventory Planning & Control

MRPII 6. At the master schedule level, capacity requirements are checked with rough cut capacity planning. It is a means of determining whether the master schedule can be met with the existing capacity. Because it is primarily to determine feasibility and not to schedule capacity, only critical work centers are checked and it is assumed that if they are adequate the schedule can be achieved.

Inventory Planning & Control

MRPII 7. The level of planning at which individual component requirements are identified and scheduled is material requirements planning. At this level, product information in the form of bills of materials, process information in the form of routings, and inventory information about available materials are used to "explode" the master schedule into schedules for the production or purchase of individual components. It is this level of scheduling that determines the activities for most of the work centers.

Inventory Planning & Control

MRPII 8. The component schedules produced by materials requirements planning are used as the basis for capacity requirements planning. At this point, specific components are converted into standard measures of capacity requirements, such as standard hours, which are then scheduled against the capacity available at the required work centers. These schedules also serve to further check the feasibility of the master schedule.

Inventory Planning & Control

MRPII 9. The output from materials requirements planning is also used as the basis for the preparation of shop orders and purchase orders. Both of which are prepared and submitted to either vendors or the shop to be filled.

Inventory Planning & Control

MRPII 10. On the shop floor other, more immediate, levels of planning and control take place. The order in which the individual orders will be processed is determined and corrections are made as their status changes because of the inherent variables of manufacturing based on MRP and changes in due dates and material availability. Also at this level the control of manufacturing leadtimes is critical and is monitored through input-output analysis.