Material Requirements Planning System

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Material Requirements Planning (MRP) System - Riordan Manufacturing

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University of Phoenix

BSA/375

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Abstract

At the request of the Chief Operations Officer and the Vice President Operations, Riordan Manufacturing, an evaluation was requested for the development of a Material Requirements Planning (MRP) system. The system is to track and manage raw materials as well as finished product inventory throughout Riordan Manufacturing. Overall, the objective of implementing an MRP is to reduce on hand raw materials and finished goods inventory costs. The intent of this paper is to provide summary information to upper management by demonstrating the business requirements
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Once completed, the corporate assets should be more than adequate to support MRP usage along with other corporate endeavors in the ERP realm.

Based on input from the software vendor, the MRP will be capable of handling an increase in activity generated by the corporate goal of increased sales and marketing.

Economic feasibility was assessed as follows:

MRP will reduce operational cost by a minimum of 10% by eliminating surge hiring and purchasing to meet production needs.

MRP will reduce cycle time by a minimum of 15% by normalizing the production lines and quantities of products on-hand or in-production.

MRP will reduce on-hand stock of finished products by up to 30% by reducing lead-times associated with production and procurement of raw materials.

Break even point will be realized within 6 months of implementation.

MRP will result in greater customer satisfaction as lead-times are reduced or eliminated in purchase-to-delivery times.

The current business process can be summarized both verbally and visually. Currently raw materials are ordered and stockpiled. Once an order is received, the material on-hand is reviewed to ensure sufficient quantities are available. If sufficient quantities are not on-hand additional materials are ordered. Deliverables are manufactured and shipped to the customer. Review of raw materials on-hand is
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