Benefits of an MRP System Operations Management Assignment Help

Benefits of an MRP System

Manufacturing companies with more than S I0 million in annual sales are most likely to  have some form of a computerized MRP system. A computerized system is necessary because of the sheer volume of materials, supplies, and components that are part of expanding product lines, and the speed that firms need to react to constant changes in the system. When firms switched from existing manual or computerized systems to an MRP system, they realized many benefits, including .

• More competitive pricing.
• Lower selling price.
• Lower inventory levels.
• Improved customer service.
• Faster .response to market demands.
• Increased flexibility to change the master schedule.
• Reduced setup and tear-down costs.
• Reduced idle time. In addition, the MRP system
• Gives advanced notice so managers can see the planned schedule before the orders are actually released.
• Tells when to de-expedite as well as expedite.
• Delays or cancels orders.
• Changes order quantities.
• Advances or delays order due dates.
• Aids capacity planning.

In converting to an MRP system, many firms claimed as much as-lf) percent reductions in inventory investment. (See OM in Practice Box.)

Where MRP Can Be Used

Where MRP Can Be Used
MRP is being used in a variety of industries with a job-shop environment (meaning that a  number of products are made in batches using the same production equipment). The list inExhibit 17.5 includes process industries, but note that the processes mentioned are confined .

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