Illustrious Case Essay
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The key inputs to implement a Material Requirement Planning come from three sources: a Bill of Materials (BOM), a Master Production Schedule and Inventory Records. The Bill of Materials contain information on every item or assembly required to produce end items, this includes raw materials, component parts, and subassemblies. The Master Production Schedule anticipates how much of each item is wanted and when is wanted. The Master Production Schedule is developed from forecasts and firm customer orders for end items, safety stock requirements, and internal orders.
The Inventory Records provides information of how much inventory is already on hand or on order, and thus should be substracted from the material requirements. These records must be kept up to date. The outputs expected from MRP inlude three primary reports and three secondary reports. The primary reports consist of: planned order schedules, which outline the quantity and timing of future material orders; order releases, which authorize orders to be made; and changes to planned orders, which might include cancellations or revisions of the quantity or time frame.
The secondary reports include: performance control reports, which are used to track problems like missed delivery dates and stock outs in order to evaluate system performance; planning reports, which can be used in forecasting future inventory requirements; and exception reports, which identifies major problems like late orders or excessive scrap rates. The bills of materials for two finished products (D and E), inventory status, and other relevant information are given below. Compute the planned order releases and projected on-hand inventory balances for parts D, E, and F.