INVENTORY

PLANNING &
CONTROL

Presented to:

Engr. ERIC S. EMBANG

 Inventory Planning & Control

INVENTORY PLANNING & CONTROL

The ability to maintain an accurate
record of inventories across the
enterprise.
• raw materials;
• parts and components;
• finished goods;
• or goods in-transit
 Inventory Planning & Control

INVENTORY PLANNING & CONTROL

The reasons for this emerging
concern are many and varied,
including:
• expanded product lines;
• mass customization;
• shorter delivery cycles;
• complex global supply chains
 Inventory Planning & Control

INVENTORY PLANNING & CONTROL

The lack of inventory control could create
obstacles like:
• Unexpected and expensive production delays
• Unbalanced inventories that make it impossible to
meet demand
• Hard dollar loss due to excessive waste, scrap and
work-in-process
• Cash flow problems due to inventory overstocks
and excess safety stock
• Reduced customer service and competitor gains
due to out-of-stocks
 Inventory Planning & Control

MRPII
The most commonly used model
for production planning and control
systems is the computer integrated
system known as MRPII or
Manufacturing Resources
Planning.
Inventory Planning & Control

MRPII
MRPII and similar systems have
brought high levels of control to
complex manufacturing systems
through the integration of databases
that can be accessed instantaneously
using computers to record, track, and
manipulate data with a great deal of
accuracy.
Inventory Planning & Control

MRPII
1. A business plan is prepared which
identifies the nature and direction of
the business, its financial goals, and
the strategic plans to achieve those
goals. It is many times accompanied
by budgets, projected balance sheet,
and a cash flow statement.
Inventory Planning & Control

MRPII
2. Production plans, which serve as a link
between the business plan and manufacturing,
are prepared that define the overall level of
manufacturing output planned; usually as
monthly rates for each product family. At this
point, specific products are usually not identified,
but are combined into aggregate measures that
serve to identify general patterns of production
capacity. Thus, another common name for these
plans is aggregate plans.
Inventory Planning & Control

MRPII
3. Resource requirements plans are
prepared that identify in broad terms the
major classes of resources that will be
needed to provide the long-range capacity
to complete the production plan. Typically
overall labor level, overall facility capacity,
and anticipated major changes in capacity
are identified at this level.
Inventory Planning & Control

MRPII
4. Forecasts are prepared to
anticipate the level of demand
for the products. Forecasting
information is important input
both at the production plan and
master schedule levels.
Inventory Planning & Control

MRPII
5. The first level at which specific end products are
usually planned is the master schedule. At this level
the anticipated mix of specific end products is usually
planned and scheduled. The master schedule serves
to provide the game plan from which more specific
plans are derived. It also disconnects those plans from
the unpredictable nature of the short term marketplace.
That disconnection is necessary, because if the
manufacturing system tries to respond directly to the
short term variations in the market, its relatively long
leadtime activities will be disrupted.
Inventory Planning & Control

MRPII
6. At the master schedule level, capacity
requirements are checked with rough cut
capacity planning. It is a means of determining
whether the master schedule can be met with
the existing capacity. Because it is primarily to
determine feasibility and not to schedule
capacity, only critical work centers are checked
and it is assumed that if they are adequate the
schedule can be achieved.
Inventory Planning & Control

MRPII
7. The level of planning at which individual
component requirements are identified and
scheduled is material requirements planning. At
this level, product information in the form of bills of
materials, process information in the form of
routings, and inventory information about available
materials are used to "explode" the master
schedule into schedules for the production or
purchase of individual components. It is this level
of scheduling that determines the activities for
most of the work centers.
Inventory Planning & Control

MRPII
8. The component schedules produced by
materials requirements planning are used as
the basis for capacity requirements planning.
At this point, specific components are
converted into standard measures of capacity
requirements, such as standard hours, which
are then scheduled against the capacity
available at the required work centers. These
schedules also serve to further check the
feasibility of the master schedule.
Inventory Planning & Control

MRPII
9. The output from materials
requirements planning is also used
as the basis for the preparation of
shop orders and purchase orders.
Both of which are prepared and
submitted to either vendors or the
shop to be filled.
Inventory Planning & Control

MRPII
10. On the shop floor other, more immediate,
levels of planning and control take place. The
order in which the individual orders will be
processed is determined and corrections are
made as their status changes because of the
inherent variables of manufacturing based on
MRP and changes in due dates and material
availability. Also at this level the control of
manufacturing leadtimes is critical and is
monitored through input-output analysis.