Material Requirements Planning 5
WhatFunctions of the Firm affect a Material Requirements Planning (MRP)System? How?
Ideally,a (Material Requirements Planning) MPR system is a technique, whichassists in placing orders and scheduling dependent demand items. Thesoftware is essential in a firm in that managers use it to assessdependent demand commodities, which in this case are finished goodssuch as spare parts, raw materials, and subassemblies. In essence,the level of production of the finished goods determines the amountof inventory required in production. For instance, the dependentdemand inventory items such as tires, windows, seats, suit belts arefor a factory that manufactures vehicles. Material requirements usethe dependent demand techniques to measure inventory, bill ofmaterial, (BOM) inventory, receipts used, and the master productionschedule (MPS). The system is essential in enhancing effectiveness,efficiency, and reliability during production (Heisig, 2002, p. 45).
Thesystem appeals to various types of production firms given that itassesses the various components of production from the initial stageto the final product. As such, it helps the company in budgeting onwhen to increase raw materials needed for the production of aparticular product. The bill of material, Master production schedule,purchase records, and inventory are the main requirements needed tocreate an MPR. As a result, the functions of the firm that rely onthe following items are dependent on the system (Ptak, 2011, p. 72).
Inessence, some of the sectors in a firm that deal with the softwareare scheduling, management, financing, and operations. Notably, thesedepartments are predominant in manufacturing firms, which require anefficient scheduling and ordering program to enhance output. Hence,it is vital to have an understanding of how each function affect theMPR and its implication of production (Kurtz & Boone, 2011, p.94).
Managementfocuses on planning, controlling, implementing, and evaluatingcompany strategies with the intention of completing a goal andobjective. A firm’s management team should have a preciseunderstanding of how all the operations in the company function. Ifanything, management determines the overall outcome of manufacturing.A change in one policy or strategy can result in the reduction orincrease of inventory. As such, if a firm decides that it willincrease the production of more cars, the changes will affect thesystem (Heisig, 2002, p. 82).
Afirm has to ensure that it meets its deadlines on time when inproduction. The system assists in secluding and placing orders of theparts needed by the firm. Ideally, scheduling depends on the companybudget, management, location of the plant, and number of employees.For instance, if a firm receives early orders for a car, thescheduling will have to change to reflect on the time of delivery ofthe raw materials and the production of the final product (Ptak,2011, p. 178).
Manufacturingand production cannot take place if a company’s finances are not inorder. In this case, if a company cannot meet the required budgetaryneeds for the production period, it will have to scale back on theamount of goods produced. Hence, the function of finance plays avital role in the overall use of the MPR system (Heisig, 2002, p.115).
Operationsare in charge of planning and executing the schedule. Therefore, theymake decisions, which affect the management, budgetary needs, type ofmaterials to be used, and the amount of raw materials needed tocomplete a product. Therefore, the MPR system will schedule and placeorders, after the operations team gives the go-ahead (Kurtz &Boone, 2011, p. 190).
Heisig,G. (2002). Planningstability in material requirements planning systems.Berlin: Springer.
Kurtz,D. L., & Boone, L. E. (2011). Contemporarybusiness.Hoboken, N.J: Wiley
Ptak,C. A., Smith, C., & Orlicky, J. (2011). Orlicky`smaterial requirements planning.New York: McGraw-Hill.