1.1 BACKGROUND OF THE STUDY
Production is the transformation of one set of
resources into a second set. In order to describe the constraints and opportunities
for production, different methods have been developed through the years both in
the practical engineering context and from an academic point of view
(Grubbström, 1995). For the multi-level, multi-stage production-inventory
system, an analysis applying the combined methodology of input-output analysis
and the place transform has proven to be useful.
In practice, the managerial information system dealing
with multi-level, multi-stage production-inventory systems is referred to as
Material Requirements Planning (MRP). Here, product complexity as well as lead
times are essential ingredients. In this research we allow these terms to be
used in a synonymous way both for the theoretical analysis and as a name for
the corresponding practical information system.
a multi-level manufacturing system finished products, subassemblies,
components, raw materials, etc., (items), are distinguished.
MRP reduces a
master production schedule of finished products into a time-phased suggested
schedule of requirements of intermediate items to be manufactured and
purchased, based on the estimated external demand for finished products. This
“parts explosion” determining requirements from higher levels down to lower
levels (upstream to downstream) traces the product structures.
Requirements Planning (MRP) is a computer-based inventory management system
designed to assist production managers in scheduling and placing orders for
dependent demand items. Dependent demand items are components of finished
goods—such as raw materials, component parts, and sub assemblies—for which the
amount of inventory needed depends on the level of production of the final
product. For example, in a plant that manufactures bicycles; dependent demand
inventory items might include aluminium, tires, seats, and derailleurs.
first MRP systems of inventory management evolved in the 1940s and 1950s. They
used mainframe computers to explode information from a bill of materials for a
certain finished product into a production and purchasing plan for components.
Before long, MRP was expanded to include information feedback loops so that
production personnel could change and update the inputs into the system as
needed. The next generation of MRP, known as manufacturing resources planning
or MRP II, also incorporated marketing, finance, accounting, engineering, and
human resources aspects into the planning process. A related concept that
expands on MRP is enterprise resources planning (ERP), which uses computer
technology to link the various functional areas across an entire business
works backward from a production plan for finished goods to develop
requirements for components and raw materials. "MRP begins with a schedule
for finished goods that is converted into a schedule of requirements for the
subassemblies, component parts, and raw materials needed to produce the
finished items in the specified time frame," William J. Stevenson wrote in
his book Production/Operations Management. MRP breaks down inventory
requirements into planning periods so that production can be completed in a
timely manner while inventory levels—and related carrying costs—are kept to a
minimum. Theoretically, it is often asserted that, when implemented and used
properly, MRP can help production manager’s plan for capacity needs and
allocate production time. However, it is also argued that MRP systems can be
time consuming and costly to implement, which may put them out of range for
some small businesses. In addition, the information that comes out of an MRP
system is only as good as the information that goes into it. Thus, for MRP to
be successfully implemented and sustained, current accurate bills of materials,
part numbers, and inventory records must be maintained. These and similar,
issues relating to the concept and practice of MRP is what this research work
intends to examine.
OF THE PROBLEMS
As stated earlier, MRP is a planning technique
designed to assist production manager in scheduling and placing orders for
dependent demand items such as raw materials, component parts and
sub-assemblies relative to the desired level of production. However, it has
been observed that the technique is not yet very popular among organization.
Not only that, it is also argued that the system is so time consuming and
costly that not every organization can adopt it. In this research work, attempts have been made
to critically assess the possible contribution of the MRP technique to the
efficiency of manufacturing organization with particular focus on production
1.3 OBJECTIVES OF THE STUDY
objective of this study is to examine Material Requirement Planning as it
ensures availability of material in an organization. The specific objectives
1. To highlight the
usefulness of MRP in PAN.
2. To identify the
various materials related operational problems in PAN that can be handled by
the application of the MRP technique.
3. To provide
knowledge for future research work.
study shall be guided by this hypothesis, thus;
Requirement Planning is not a strategy for cost reduction in manufacturing
Requirement Planning is a strategy for cost reduction in manufacturing
OF THE STUDY
significance of this research work cannot be over emphasized because it is a
requisite for the award of higher National Diploma in Production and Operations Management.
study will help manufacturing organizations to appreciate and understand MRP as it affects productivity and
reveal ways in which it could be applied for desired benefits.
in business and management studies can also expand their knowledge base from
this research work. It can also be used as a reference material and a base for
the government, the study will introduce an efficient system of production planning to replace
the traditional, inefficient practices found in public corporations.
OF THE STUDY
research work covers the Material Requirement Planning (MRP) as a cost
reduction strategy in a manufacturing concern. It however, limits it scope to
1.7 LIMITATIONS OF THE STUDY
with the present doomed financial situation the researcher finds it difficult
to purchase necessary materials for the project at reasonable cost and also to
carryout other relevant facts find exercise with ease.
Time constraint: It is very important for
one to get enough time to accurate and up to date, but the time available for
this work is not adequate as a student, the researcher has to face the project,
at the same time coupling with the class work, preparation for final
examination as well as numerous assignments.
Another problem is the acute shortage of
qualified, skilled and experienced personnel to effectively provide the
researcher with appropriate data in course carrying out the research.
1.8 HISTORICAL BACKGROUND OF PAN
The entry of most popular and favourite vehicle Peugeot brand
into Nigeria dates back to 1957 when the first set of 100 units of Peugeot 403
car were imported by individual into the country. Within a period of two years
Peugeot 403 became so popular as a result of its dependability, suitability in
Nigeria roads that assumed the status of official cars for many top government
officials and wealthy business people. This unprecedented achievement led to
the appointment of SCOA in 1957 as the sole agent for Peugeot cars in Nigeria
and imported the first set of 403 Peugeot cars.
Since independence in 1960, the growth rate of Nigerian economy
had taken such a proportion that the number of imported cars could no longer
cope with the demand, the military government of Nigerians opened negotiation
with automobiles Peugeot of France for the setting up of an assembly plant in
the country. That dream became reality when on December 15th 1972 Peugeot
Automobiles of Nigeria was incorporated with an authorized share capital of N3,
million and paid up capital of N2, million on 14th march, 1975 the assembly
plant in Kaduna was commissioned by general Yakubu Gowon, the Head of state.
That same year the first set of Nigeria Peugeot cars rolled out of the plant.
However, with time a further rise in demand for production at
the plant in the country necessitated the federal government introduction of
the structured adjustment programme (SAP). Since its inception, PAN has turned
out over N370, 000 cars with total assets amounting to N1, Billion at the end
OBJECTIVE OF PAN
The Peugeot automobile of Nigeria was established in 1975 with
the following objective
To Chart a course for Nigerians industrialization in the area of
assembly and manufacturing of automobiles vehicles
To engage in a local
assembly or production of cars suitable to Nigerians physical environment and
To produce vehicle spare parts and accessories
To reduce dependence on importing the automobile industry and
therefore help conserve foreign exchange for the country.
To serve as an avenue for the transfer of technology by
providing on the job training to Nigeria workers techniques and managers who
would eventually develop technology usable in many aspect of the economic life
of the country
To create employment opportunities for the growing arms of
skills, semi skilled and unskilled Nigerians by developing on industrial
network of supplies that would contribute to the establishment of basic
technology in the field of machinery stamping manufacturing of plastic parts
To function effectively, every business organizations need a
structure which has the characteristics of unity, continuity, flexibility and
predictability required for efficient interactions with its environment. The
problem of planning and monitoring when management must overcome to be
successful is to ensure that the objective of each part of the organization are
securely welded together (unity) using both start and long term forecasting
(continuity) being able to adopt the plan in the light of changing
circumstances (flexibility) and attempting to accurately predict course of
action (predicting) to meet the increasing challenges of its responsibility and
expectation of its performance. At the apex of the pyramidal chart is a board
of directors headed by a chairman appointed by the federal government. The
board of directors is the highest hierarchy. The board responsibility is that
of formulating policy guideline for implementation by the general management
They plan, organize, set goals and formulate policies. The
collective policies and decisions of the board are carried out by the chairman.
The general management team is headed by a managing director (a foreigner)
assisted by a deputy director (a Nigeria). Directly attached to the office are
company’s secretary department and three functional department namely, internal
audit, corporate planning and data processing.
There are four general managers who run the affairs of the
company’s (4) major division. These divisions are personal, administration,
commercial, finance and finally industrial.
Quality: - this is
the ability of a product to meet with customer expectation.
- these are components, parts, raw materials that are used to produce other
goods that are kept in the storehouse.
- this is the detail description of requirement laid down for material
component or process or service.
- is the process of setting standard for acceptability of goods purchase or
goods manufacture where actual is compare with expected quality.
- It is the level used as a measure for weight, length, quality, tests or for
the required degree of excellence.
- is the logic checking of conformance with specification or standard.
- Is the
process of continuous inspection to see that tests are been carried out in accordance with specification.
monetary value of goods or service purchase.
bundle of an item(s) that provide satisfaction, manufacturing output or
Reliability: - products or service that have all the
characteristics expected of them in terms of functional performance, taste etc.