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Benefits And Drawbacks of MRP

MRP systems offer a number of potential benefits to manufacturing firms. Some of the main benefits include:

(i)    Helping production managers to minimize inventory levels and the associated carrying costs, track material requirements, determine the most economical lot sizes of orders, compute quantities needed as safety stock, allocate production time among various products, and plan for future capacity needs.

(ii)    The information garneted by MRP systems is useful in other areas as well. “A range of people in a typical manufacturing company are important users of the information provided by an MRP system.

(iii)    Production managers, who must balance workloads across departments and made decision about scheduling work, and plant foremen, who are responsible for issuing work orders and maintaining production schedules, also rely heavily on MRP output.

(iv)    Other users include customer service representatives, who must be able to supply customers with projected delivery dates, purchasing managers, and inventory mangers.

MRP systems also have several potential drawbacks, however.

(i)    First, MRP relies upon accurate input information. If a small business has not maintained good inventory records or has not updated its bills of material with all relevant changes, it may encounter serious problems with the outputs of its MRP system

(ii)    Another potential drawback associated with MRP is that the systems can be difficult, time consuming, and costly to implement. Many businesses encounter resistance from employees when they try to implement MRP.

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