Strategies to Be Adopted by Two Organisations

The best option for Organization A is the Material Requirements Planning (MRP).&nbsp. The MRP is a software-based production planning and inventory control system used to manage manufacturing processes.&nbsp. An MRP system is intended to simultaneously meet 3 objectives:

    • ensure materials and products are available for production and delivery to customers.
      • maintain the lowest possible level of inventory.
        • plan manufacturing activities, delivery schedules and purchasing activities.

        All manufacturing organizations, whatever their products face the same daily practical problem – that customers want products to be available in a shorter time than it takes to make them.&nbsp. Companies need to control the types and quantities of materials they purchase, plan which products are to be produced and in what quantities and ensure that they are able to meet current and future customer demand, all at the lowest possible cost.&nbsp. If a company purchases insufficient quantities of an item used in manufacturing or the wrong item, they may be unable to meet contracts to supply products by the agreed date. If a company purchases excessive quantities of an item, money is being wasted – the excess quantity ties up cash while it remains as stock and may never even be used at all. This is a particularly severe problem for food manufacturers and companies with very short product life cycles.&nbsp. However, some purchased items will have a minimum quantity that must be met, therefore, purchasing excess is necessary. ( is used by many organizations as a tool to deal with these problems.&nbsp. This applies to items that are bought in and to sub-assemblies that go into more complex items.&nbsp. There are two kinds of output.&nbsp. Output 1 is the "Recommended Production Schedule" which lays out a detailed schedule of the required minimum start and completion dates, with quantities, for each step of the Routing and Bill Of Material required to satisfy the demand from the MPS.&nbsp. Output 2 is the "Recommended Purchasing Schedule".&nbsp. This lays out the dates that the purchased items should be both received into the facility and the date/s the Purchase orders, or Blanket Order Release should occur to match the production schedules.Note that the outputs are always recommended.&nbsp. Due to a variety of changing conditions in companies, since the last MRP/ERP system re-generation, the recommended outputs need to be reviewed by trained people to group orders for benefits in set-up or freight savings.&nbsp. These actions are beyond the linear calculations of the MRP computer software.The major problem with MRP systems is the integrity of the data.&nbsp. If there are any errors in the inventory data, the bill of material (commonly referred to as ‘BOM’) data or the master production schedule the outputted data will also be incorrect. Most vendors of this type of system recommend at least 98% data integrity for the system to give useful results.&nbsp. Another major problem with MRP systems is the requirement that the user specifies how long it will take a factory to make a product from its component parts (assuming they are all available).&nbsp. Additionally, the system design also assumes that this "lead time" in manufacturing will be the same each time the item is made, without regard to the quantity being made, or other items being made simultaneously in the factory.