THE IMPACT OF MATERIAL REQUIREMENT PLANNING IN MANUFACTURING INDUSTRY (A Case Study of Peugeot Automobile Nigeria Plc, Kakuri Branch Kaduna)
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THE IMPACT OF MATERIAL
REQUIREMENT PLANNING IN MANUFACTURING INDUSTRY
(A Case Study of Peugeot
Automobile Nigeria Plc, Kakuri Branch Kaduna)
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Production
is the transformation of one set of resources into a second set. In order to
describe the constraints and opportunities for production, different methods
have been developed through the years both in the practical engineering context
and from an academic point of view (Grubbström, 1995). For the multi-level,
multi-stage production-inventory system, an analysis applying the combined
methodology of input-output analysis and the place transform has proven to be
useful.
In practice,
the managerial information system dealing with multi-level, multi-stage
production-inventory systems is referred to as Material Requirements Planning
(MRP). Here, product complexity as well as lead times are essential
ingredients. In this research we allow these terms to be used in a synonymous
way both for the theoretical analysis and as a name for the corresponding
practical information system.
In a multi-level manufacturing system
finished products, subassemblies, components, raw materials, etc., (items), are
distinguished. MRP reduces a master production schedule of finished products
into a time-phased suggested schedule of requirements of intermediate items to
be manufactured and purchased, based on the estimated external demand for
finished products. This “parts explosion” determining requirements from higher
levels down to lower levels (upstream to downstream) traces the product
structures.
Material Requirements Planning (MRP)
is a computer-based inventory management system designed to assist production
managers in scheduling and placing orders for dependent demand items. Dependent
demand items are components of finished goods—such as raw materials, component
parts, and subassemblies—for which the amount of inventory needed depends on
the level of production of the final product. For example, in a plant that
manufactures bicycles; dependent demand inventory items might include aluminium,
tires, seats, and derailleurs.
The first MRP systems of inventory
management evolved in the 1940s and 1950s. They used mainframe computers to
explode information from a bill of materials for a certain finished product
into a production and purchasing plan for components. Before long, MRP was
expanded to include information feedback loops so that production personnel
could change and update the inputs into the system as needed. The next
generation of MRP, known as manufacturing resources planning or MRP II, also
incorporated marketing, finance, accounting, engineering, and human resources
aspects into the planning process. A related concept that expands on MRP is
enterprise resources planning (ERP), which uses computer technology to link the
various functional areas across an entire business enterprise.
MRP works backward from a production
plan for finished goods to develop requirements for components and raw
materials. "MRP begins with a schedule for finished goods that is
converted into a schedule of requirements for the subassemblies, component
parts, and raw materials needed to produce the finished items in the specified
time frame," William J. Stevenson wrote in his book Production/Operations
Management. MRP breaks down inventory requirements into planning periods so
that production can be completed in a timely manner while inventory levels—and
related carrying costs—are kept to a minimum. Theoretically, it is often
asserted that, when implemented and used properly, MRP can help production manager’s
plan for capacity needs and allocate production time. However, it is also
argued that MRP systems can be time consuming and costly to implement, which
may put them out of range for some small businesses. In addition, the
information that comes out of an MRP system is only as good as the information
that goes into it. Thus, for MRP to be successfully implemented and sustained,
current accurate bills of materials, part numbers, and inventory records must
be maintained. These and similar, issues relating to the concept and practice
of MRP is what this research work intends to examine.
1.2 STATEMENT OF THE PROBLEMS
As stated earlier, MRP is a planning
technique designed to assist production manager in scheduling and placing
orders for dependent demand items such as raw materials, component parts and
sub-assemblies relative to the desired level of production. However, it has
been observed that the technique is not yet very popular among organization.
Not only that, it is also argued that the system is so time consuming and
costly that not every organization can adopt it.
In this research work, attempts have
been made to critically assess the possible contribution of the MRP technique
to the efficiency of manufacturing organization with particular focus on
production cost.
1.3
OBJECTIVES OF THE STUDY
The objective of this study is to
examine Material Requirement Planning as it ensures availability of material in
an organization. The specific objectives are:
1.
To
highlight the usefulness of MRP in PAN.
2.
To
identify the various materials related operational problems in PAN that can be
handled by the application of the MRP technique.
3.
To
provide knowledge for future research work.
1.4 STATEMENT OF HYPOTHESIS
The study shall be guided by this
hypothesis, thus;
H0: Material Requirement Planning is not a
strategy for cost reduction in manufacturing organization
H1: Material Requirement Planning is a strategy
for cost reduction in manufacturing organization
1.5 SIGNIFICANCE OF THE STUDY
The significance of this research
work cannot be over emphasized because it is a requisite for the award of
higher National Diploma
in Production and Operations Management.
The study
will help manufacturing organizations to appreciate and understand MRP as it affects productivity and reveal ways in which it could be
applied for desired benefits.
Students
in business and management studies can also expand their knowledge base from
this research work. It can also be used as a reference material and a base for
further research.
To the
government, the study will introduce an efficient
system of production planning to replace the traditional, inefficient practices
found in public corporations.
1.6 SCOPE OF THE STUDY
This research work covers the
Material Requirement Planning (MRP) as a cost reduction strategy in a
manufacturing concern. It however, limits it scope to PAN Kaduna.
1.7 LIMITATIONS OF THE STUDY
1)
Finance:
with the present doomed financial situation the researcher finds it difficult
to purchase necessary materials for the project at reasonable cost and also to
carryout other relevant facts find exercise with ease.
2)
Time
constraint: It is very important for one to get enough time to accurate and up
to date, but the time available for this work is not adequate as a student, the
researcher has to face the project, at the same time coupling with the class
work, preparation for final examination as well as numerous assignments.
3)
Another
problem is the acute shortage of qualified, skilled and experienced personnel
to effectively provide the researcher with appropriate data in course carrying
out the research.
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