MRP II

MRP II means Manufacturing Resource Planning this is a extension to Material Requirements Planning (MRP). MRP II is a procedure that is used in the production planning and control of industrial companies. The inventor of MRP II is Oliver Wight, his idea is a market-oriented and resource-oriented planning of sales, production and inventory quantities (Wight 1995, p. 56).

MRP vs MRP II

Manufacturing Resource Planning (MRP II) is an extension of MRP, which only covers Material Requirements Planning (MRP) (Wight 1995, p. 56). The quantities planned in the MRP show a crucial weakness: One does not know whether they can be realized, because the production capacities were not considered in the planning. Oliver Wight first addressed this weakness with the closed loop MRP. In essence, the execution of the plans and the resulting correction requirements are fed back to planning, and capacity requirements planning is included. The step from Closed Loop MRP to MRP II is more of a paradigm than a planning one. The main concern is the integration of top management into production planning. As described in the objectives, the aim is to achieve end-to-end planning - from the business plan to the sales plan to the production plan (Wight 1995, p. 57).

Goals of MRP II

The goals of MRP II are the minimization of storage times, idle times and set-up times as well as the maximization of the capacity utilization of resources (especially machines and manpower). MRP II aims to achieve end-to-end planning - from the business plan to the sales plan to the production plan (Wight 1995, p. 143).

Framework of MRP II

We speak of MRP II when we talk about an integrated planning of the business process of service provision with the steps

1. Planning and forecasting of medium-term sales
2. Medium-term material requirements planning on the basis of parts lists
3. medium-term rough planning or master planning with order dates and capacities
4. short-term demand forecast, parts requirements calculation, production, capacity and inventory planning and optimization,
5. Production control
6. Controlling

First, the production program is planned on the basis of long-term sales and operations planning. For this purpose, the expected sales quantities are forecast in a demand planning process, taking into account customer orders (Demand Management), and the capacity requirements and available capacity are roughly compared at a high level of aggregation (Rough-cut Capacity Planning). Production program planning can comprise two levels, one at the product group level (Aggregate Production Planning) and the other at the finished product level (Master Production Scheduling). The production program is the starting point for Material Requirements Planning, which determines the required quantities of assemblies, individual parts and raw materials. The required and the available capacities are compared within the framework of capacity requirements planning. The last stage of MRP II includes the execution of the plans within the framework of controlling. It is responsible for releasing and executing the production orders shortly before the planned start date (Higgins, Le Roy, Tierney 1996, p.29)

Requirements for MRP II

MRP II assumes that essential planning parameters such as capacities, order throughput times and processing times can be predicted with a high degree of certainty. Production bottlenecks must always be overcome by capacity adjustments. Above all, however, it must be possible to predict the production program with sufficient accuracy, which in turn requires a reliable sales forecast or planning. Ideally, these requirements are most likely to be met in mass or large-scale production (Kurbel 2016, p. 133).

References

• Higgins, P., Le Roy, P., & Tierney, L. (1996). Manufacturing planning and control: Beyond MRP II. Springer Science & Business Media.

• Kurbel, K. (2016). Enterprise Resource Planning und Supply Chain Management in der Industrie: Von MRP bis Industrie 4.0. Walter de Gruyter GmbH & Co KG.

• Wight, O. (1995). Manufacturing resource planning: MRP II: unlocking America's productivity potential. John Wiley & Sons.

Author: Tom Alende