While MRP I primarily address the inbound flow of inventory (materials management), MRP II adds other interfaces such as finance, marketing, and integrated logistics. Like MRP I, MRP II is a push inventory model which pushes product through manufacturing and distribution processes in order to meet forecast demand. However, it adds further dimensions to the basic model. MRP II not only considers the inbound flow of material, but also how much material can actually be handle within the plant. Furthermore, it actually handles production scheduling, labour needs, inventory budgets, and personnel needs. But the most important feature is the addition of the finance interface. This module provides the capability of transforming the operating production plans into financial terms, consequently the data can be used for financial planning and control purposes of a more general management nature. Another significant addition is the simulation module. This simulation capability enables management to perform a more comprehensive alternative planing work in developing the marketing and business plans. Operating variable could be regulated to examine the systemwide response to the proposed operating change.
Besides MRP II includes the entire set of activities involved in the planning and control of production operations. It consists of a variety of functions of modules and includes production planing, resource requirement planning, master production scheduling, materials requirements planning (MRP I), shop floor control, and purchasing.
Process of MRP II
Step 1 - Market Demand; the process begins with an aggregation demand from all sources. Examples of sources are firms’ orders, forecasts, and safety stock requirements.
Step 2- Production Plan; with inputs from manufacturing, finance, and marketing, the production plan would be derived.
Step 3- Rough-cut capacity planning; it involves short-term capacity considerations that are affected by irregularities in demand. It formulates benchmarks for the proper use of personnel, machines, and shifts. Bills of capacity and bills of labour resources are the primary inputs to determine rough-cut capacity. In the event of incapability in producing the require output (due to limitation of capacity), adjustment to the production plan would be made.
Step 4- Master production schedule; formulation of the master production schedules provides a realistic, detailed, statement of what the firm expects. It is more detail than the aggregate plan, it translates the aggregate plan into specific numbers of specific products to be produced in a specific period of time.
Step 5- Material requirements planning (MRP); MRP is the heart of the entire process (MRP II). When MRP comes into play, material and schedule requirements would be generated.
Step 6- Capacity requirements planning; at this stage, the capacity requirement planning determine whether the firm has enough capacity (e.g. worker, space, money) to meet the...