Question

What systems are used to forecast sales, develop production schedules, and select inventory dates that minimize costs.

Answer 1

Ans- MATERIAL REQUIREMENT PLANNING systems are used to forecast sales, develop production schedules, and select inventory dates that minimize costs.

Explanation for the statement-

MEANING OF MATERIAL REQUIREMENT PLANNING SYSTEM-

Material requirement planning is a system which plan production, scheduling and inventory control .

Material requirement planning system mainly focuses on the below objectives-

• Ensure materials are available for production and products are available for customers ,according to their demands.

• Maintain the lowest possible material and product levels in store.

• Planned manufacturing activities, delivery schedules and purchasing activities.

• It reduces inventory Cost by reducing Inventory levels.

• It improves plant operating efficiency by better use of productive resources.

IN MATERIAL REQUIREMENT PLANNING SYSTEMS, step by step procedures are followed to produce the output of the system which forecast sales , schedule production and minimise costs.

INPUTS OF MATERIAL REQUIREMENT PLANNING SYSTEM-

1) MASTER PRODUCTION SCHEDULE (MPS)

This is a key input as it tells what the company intends to produce, the maximum time to deliver it to customers etc. This is schedule of quantity and timing of all end products to be produced over a specific planning horizon.

2) BILL OF MATERIAL (BOM)

A Bill of material is also called as product structure file, as it contains list of all finished products,quantity of raw materials, parts,assemblies and sub-assemblies in each production.

3) INVENTORY STATUS FILE-

This file contains information about the quantity of orders, what item should be ordered and when orders should be released.This file gives complete information and up to date information about the quantities requirements, receipts and planned order releases for the item.

From these three major inputs, following outputs are produced-

• Planned order schedule,i.e planning of the quantity of each material, to be order.

• Changes in planned orders which means Scheduling.

• Planning reports like inventory forecast, purchase commitment reports, stock out incidences etc.

• To project capicity requirements.

By these procedures , inputs Material requirement planning system forecast sales, develop production schedules and select inventory dates that minimize costs.