Ops 571 - Riordans Fan Manufacturing

MRP for the manufacturing of Riordan's Electric Fans

A manufacturing resource plan (MRP) is an attempt to understand the resources required to manufacture each product while scheduling and ordering the production timeline. A well developed MRP should include a products entire lifeline from scheduling, inventory control, finance, accounting, accounts payable, sales forecasting, etc. Chase, Jacobs and Aquilano state that the "the theme of MRP is [getting the right materials to the right place at the right time] (Chase, Jacobs, & Aquilano, 2006)".

Riordan Manufacturing categorizes the MRP into three major categories. They are raw materials receiving, manufacturing with current inventory, and shipping. These categories represent the three stages in the lifecycle of product development.

The first stage of raw materials receiving attempts to match ordering of raw materials with sales received for manufacturing. An Inventory Clerk orders raw materials based on actual sales orders received with that week. A Receiving Area Supervisor will compare shipments of materials against scheduled incoming orders. Daily the Receiving Area Supervisor will provide a log of all raw materials received to the Receiving Clerk who then provides that list to the Inventory Clerk who adds to the raw material shipments to the inventory system.

During the manufacturing cycle, an Inventory Clerk orders raw material based on a form given to him/her by the manufacturing department. The raw materials usage form indicates the amount of materials used the in the last manufacturing run. This information is then documented in the inventory system by the Inventory Clerk which will exclude the type and quantity of materials used from inventory. When raw materials became depleted the inventory clerk will reorder them from the appropriate provider.

The last stage of the manufacturing process is shipping the order to the client. This stage starts and ends the cycle. First customers place orders with sales staff or via fax. Customer orders are entered into the customer shipping and billing system. This generates a daily report for the shipping department which in turn loads the shipping trucks with the appropriate orders. Lastly, the Inventory Clerk updates the inventory system based on the quantity of shipped products.

New Plan for Riordan's Manufacturing Resource Plan

The Manufacturing or Materials Resource Plan for Riordan includes the master production schedule, bill of materials file, and the inventory records file. Each of these components will need to be dissected to understand where efficiencies can be gained in the MRP. The master production schedule starts with customer's ordering products via phone or fax. The Riordan model does not account for sales forecast. It simply adds up customer orders understanding the raw materials necessary to produce one unit and makes use of simple math to determine the quantity of raw materials to order. Riordan should include sales forecast to attempt predicting the number of customer orders then order just enough raw materials to produce to the forecast.

"Bill of materials is often called the product structure file or product tree because it shows how a product is put together (Chase, Jacobs, & Aquilano, 2006)". Riordan should investigate the modular bill of materials. The modular bill of materials is for buildable items that can be manufactured and stocked in Riordan's warehouse as subassembly parts. Basic fan motors or assemblies can be stocked as subassembly parts.

The inventory records file needs additional automation. The inventory clerk has to update inventory manually several times a day. Inventory estimates should be calculated based on production and sales forecast. Then once or twice a year the inventory clerk can officiate an inventory audit to ensure inventory in stock matches the MRP and inventory records file.

A Supply Chain

To increase the efficiency of the electronic fans operations, Riordan must revise some of the practices in the supply chain management system. Riordan's China facility maintains a meager 93% on-time delivery rate, although it openly carries most of the popular fan engines and the polymer for the fan blades on stock. Furthermore, the facility will be transplanted to the new Shanghai location to reduce logistics (University of Phoenix, 2008).

Orders come from both the R and D depart and consumers. To adapt to a more efficient system the R and D will send electronic modeling and electronic blueprints