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ASSIGNMENT INSTRUCTIONS:
Explain the difference between materials requirement planning (MRP) and Master Production Schedule. Provide examples of how each is applied in the supply chain.
HOW TO WORK ON THIS ASSIGNMENT(EXAMPLE ESSAY / DRAFT)
Introduction: In the supply chain management, two important tools for planning and controlling the production process are Materials Requirement Planning (MRP) and Master Production Schedule (MPS). MRP and MPS are both useful in predicting future demand, but they differ in their application and focus. This essay will explore the differences between MRP and MPS, and provide examples of how each tool is applied in the supply chain.
Materials Requirement Planning (MRP): Materials Requirement Planning is a computer-based inventory management system used to ensure that raw materials and components are available when needed for production. The main objective of MRP is to balance the inventory levels with the production needs to avoid stockouts or excess inventory. MRP works by using the production plan to determine the quantity of raw materials and components needed to fulfill the demand. It then checks the inventory levels of these materials and components and generates purchase orders or production orders to meet the demand.
For example, a company that produces bicycles might use MRP to ensure that they have enough steel, rubber, and plastic components to produce the number of bikes required to fulfill its customer orders. The MRP system will generate purchase orders for the necessary raw materials and components, based on the production plan and inventory levels. This ensures that the company has the materials on hand when they are needed, and reduces the risk of stockouts or excess inventory.
Master Production Schedule (MPS): The Master Production Schedule is a detailed plan that outlines the production schedule for a specific period, typically one to six months. The MPS considers the demand forecast, production capacity, and inventory levels to determine the production plan. The MPS breaks down the production schedule into specific time periods and assigns the required production quantity for each period.
For example, a company that produces canned goods might use MPS to plan its production for the next six months. The MPS will specify how much of each product should be produced during each month, taking into account the demand forecast, production capacity, and inventory levels. The MPS will ensure that the production schedule is optimized to meet the demand, while also balancing inventory levels and production costs.
Difference between MRP and MPS: The main difference between MRP and MPS is the focus of each tool. MRP is used to manage inventory levels and ensure that the raw materials and components are available when needed for production. MPS, on the other hand, is used to plan the production schedule and determine the required production quantities for each period.
MRP is a subset of MPS, as it is used to determine the quantity of raw materials and components needed to meet the production schedule outlined in the MPS. MRP uses the production plan outlined in the MPS to generate purchase orders or production orders for the necessary materials and components.
Conclusion: In summary, Materials Requirement Planning (MRP) and Master Production Schedule (MPS) are two important tools in the supply chain management process. While both tools are used to predict future demand, they differ in their application and focus. MRP is used to manage inventory levels and ensure that raw materials and components are available when needed for production. MPS is used to plan the production schedule and determine the required production quantities for each period. By using both MRP and MPS, companies can optimize their production process to meet the demand while balancing inventory levels and production costs.
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