Question

Materials Requirements Planning (MRP) Franklin Fan’s two most profitable products are the ceiling fan (CF151) and the personal fan (PF032). With the rising popularity in home remodeling and personal comfort, Franklin Fan has enjoyed substantial demand for these two products. Last year, Kathryn Marley, the vice president of operations and supply chain management, approved the installation of a new MRP system. It is a first important step toward the eventual goal of a full-fledged ERP system. Marley worked closely with the task force that was created to bring MRP online. She frequently attended training sessions for selected employees, emphasizing how MRP should help Franklin Fan secure a better competitive edge. A year later, the MRP system is working fairly well. However, Marley believes that there is always a better way and seeks to continuously improve the company’s processes. To get a better sense of potential improvements, she met with the materials manager (Sue McCaskey), the production manager (Phil Stanton), and the purchasing manager (Joe Donnell). Here are some of their observations. Materials Manager – Sue McCaskey Inventory records and BOM files are accurate and well maintained. Inventory transactions are faithfully made when inventory is replenished or removed from the stockroom so current onhand balances are credible. There is an MRP explosion each week, which gives the company the new material requirements plan. It provides information that helps identify when new orders need to be launched. Information can also be searched to help identify which scheduled receipts need to be expedited and which ones can be delayed by assigning them a later due date, thereby making room for more urgent jobs. One planner suggested that the MRP outputs should be extended to provide priority and capacity reports, with pointers as to which items need their attention. The original plan was to get the order-launching capability implemented first. However, there is no formal system of priority planning, other than the initial due date assigned to each scheduled receipt when it is released, transforming it from a planned order release into a scheduled receipt. The due dates do not get updated later even when there are unexpected scrap losses, capacity shortages, short shipments, Derived from the Flashy Flashers Case; Chapter 16; Page 582; Operations Management by Krajewski, Ritzman, & Malhotra (10th) 2013 Page 2 or last minute changes in the MPS (responding to requests from favorite customers). Jobs are scheduled on the shop floor and by suppliers according to the EDD rule, based on their due dates. If due dates assigned to scheduled receipts were updated, it might help get open orders done when they are really needed. Furthermore, planned order releases in the action bucket are translated into scheduled receipts (using inventory transactions), after checking that its components are available. The current system does not consider capacity problems when releasing new orders. Production Manager – Phil Stanton His primary complaint is that the shop workloads are anything but level. One week, they hardly have any work, and the supervisor overproduces (more than called for by the scheduled receipts) just to keep everyone busy. The next week can be just the opposite – so many new orders with short fuses that almost everyone needed to work overtime or else scheduled receipt quantities are reduced to cover immediate needs. It is feast or famine, unless they make things work on the shop floor! They do make inventory transactions to report deviations from plan for scheduled receipts, but these “overrides” make the scheduled receipt information in the MRP records more uncertain for the planners. A particular concern is to make sure that the bottleneck workstations are kept busy. Purchasing Manager – Joe Donnell Buyers are putting out to many fires, leaving little time for creative buying. In such cases, their time is spent following up on orders that are required in the very near future or that are even late. Sometimes, the MRP plan shows planned order releases for purchased items that are needed almost immediately, not allowing for the planned lead time. In checking the MRP records, the planned lead times are realistic and what suppliers expect. Last week, things were fine for an item, and this week a rush order needs to be placed. What is the problem? Marley tried to assimilate all this information. She decided to collect all the required information about the ceiling fan and personal fan (shown in the Table 1 through Table 4 and in Figure 1) to gain further insight into possible problems and identify areas for improvement.

Identify of the good and bad points of MRP implementation at the Franklin Fan Company.

Answer 1

Answer: Upsides and downsides of Materials Requirements Planning execution at the Franklin Fan Company.

Favorable circumstances of MRP

Since MRP is an interest arranged framework (dependent on several requests, figure, and so forth.), it functions admirably with offices that have a consistent progression of interest and are not frequently introduced radical changes all through creation periods. Alongside a consistent progression of interest, precise information is an unquestionable requirement. On the off chance that the framework is deciphering inappropriate information, this can cause issues inside the activity. If your office does moderately well with request determining and information exactness, MRP can improve the organization in different manners, for example,

• Following and Forecasting Enhancement
• Information Sharing Accessibility
• Lift in Customer Aid
• Simple to utilize, Integrated System
• Helps with keeping up least stock levels
• On the off chance that you have least stock levels, materials planning will likewise decrease related expenses
• Material following turns out to be a lot simpler and guarantees that financial request amount is accomplished for all part arranges
• Material planning smooths out limit usage and dispenses right an ideal opportunity to items according to request gauge

Inconveniences of MRP

With MRP being requested arranged, this clearly can be hindering to an organization that isn't subject to request figure. Without smooth interest and lead-time recharging consistency, there isn't a great deal of space to alter the framework - leaving you with either excessively little or an over the top any given material. This is the reason organizations that have generally more straightforward tasks might be a superior possibility for MRP frameworks rather than an office that inclines more on the unpredictable side.

• Customization Restrictions
• Rigid System; Not Compatible for Specific Organizations
• Activity Process Re-Organization
• Steep Cost for Installation/Operating
• Material planning is altogether reliant on inputs it gets from other framework divisions. Whenever input data isn't right than the yield for material planning will likewise be off base
• Material planning requires the upkeep of powerful database with all data relating stock records, creation plan, and so forth, without which yield again would be off base
• Material planning framework requires appropriate preparing for end clients, as to get most extreme out of the framework
• Material asset planning framework requires significant speculation out of time and capital.

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