Abstract:
The present study was conducted on a local electronics applicancc manufacturing company in
the context of how the planning of material requirement i, performed. The company is a
fabrication'asscmbly organization ".here raw matenals arc procured, processed and assembled. It
would nOl be unrealistic to say that the management of indizcnous industries is not very keen to
apply the operations management techmques such as inventory conlrol, scheduling, material
requirements planning (MRP) etc. This situation can be altributed to a number of failures, But
main reason of the orgalli~ation's reluctant attirnde is identified as unawareness of the state-ofthe-
an techniques and and benefits <lcmed out of utilizing of these teclmiques, a potential one of
which is the "MRP. A general perception lhat the procurement of raw materials either in huge
quantity at a time or small quantity from period to period would not have any significant effect
on the total cost still prevails in many local companies. But the situation is certainly different and
healthier condition can be achieved by adopting and applying these techniques.
MRP is applied for planning of fLuurc activities of a company. Data on demand, of the products
(MPS), lead times, set-up/ordering costs, holding or carrying costs etc. are required, However in
this stlldy previous data of the company for a period of six months from Janllary to June, 2002
were used to analyse and make comparative srndy. It has been found that the procurement of
materials applying an estahlishcd algorithm (i.e. Wagner-Whltin approach) instcad of CUTTenl
practice (liser defined mcthod) could reduce the tolal invcntory cost quite remarkably. Tnthe lot
sizing analysis an educational version pTodliction and operation management software named
POM was used, The outcome of the analysis revealed that the company cOlild save as high as
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67% of the inventory cost in case of the transformer only. Similar situation is expectcd to prevail
for other items also.
Moreover, the incorporation ofMRP could facilitate the company in many respecls. There is a
potentia! ,cope of improving the current situation through rcduction in the tolal inventory cost,
avoidance of reordering, shortfalls of matenal" minimization of idle timc, improvment of the
efficiency of operations, delivery of product in a shortcr period, improvment of customer service,
increase in productivity, and reduction in the overall cost of products.
Howcvcr, it would be required for the company to bring in change in many aspects to adapt the
MRP system, the impor!ant of which are the relationship with vendor, consistent quality of the
raw materials, the documcntation process, recruitment of skilled manpower, estimating thc
reliable lead times elc. S,llIation could be improved further by applying the res lIlts of
mathematical model for multiple itcm, lot size and variable lot size taking into consideration of
the real-life constraints such as store's space, available fund, transport facilities elc.
