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Manufacturing Resource Planning (MRP II) is a systematic method of modeling the various forces that go into manufacturing a product, and is a direct successor to Materials Requirement Planning (MRP), which concerned itself primarily with the production and inventory control processes in a manufacturing environment. While both systems are designed as of 2011 using business software, they were initially made to be flow chart systems that could be drawn out by hand and implemented without the aid of computers. Where MRP II has advantages over MRP is in its comprehensive analysis of the entire manufacturing environment. It includes new elements in data calculations, such as financial effects on the production cycle and the effects of changes in labor efficiency and scheduling on output levels. These factors can themselves influence other aspects of production from forecasting for future orders to performance measurements for wage rates and sales figures.
The main difference between MRP and MRP II is one of scale. MRP was initially developed in the 1960s by Joseph Orlicky after studying the manufacturing processes used by the Toyota corporation in Japan. Manufacturing was known to operate at its highest capacity when materials for products were available in the quantities precisely needed for orders, which is popularly referred to as Just in Time (JIT) inventory, and when those orders could be scheduled and delivered without delay. These are the primary concerns on which MRP was focused.
By the year 1981, Orlicky's ideas for MRP had been adopted by more than 8,000 companies worldwide and, by the late 1980s, software had evolved to utilize the more complex version of MRP II, which was pioneered by Oliver Wright and George Plossi. The benefits of MRP II are based on the understanding that previously-considered peripheral influences can have an enormous impact on the efficiency of a manufacturing environment. These include such aspects as design engineering for products and cost controls throughout the system. MRP II takes the Just in Time concept beyond simply inventory and expands it to a Just in Time calculation of labor availability and capacity, coordination for the arrival of raw materials, and so on.
In order for MRP II to work properly, there must be consistent accuracy in the data that is gathered. This is essential because every step in a manufacturing process using MRP II involves some sort of planning based on this data. The process generally runs through seven different stages incrementally, with some feedback loops along the way to correct for errors. First, there is general business planning followed by production planning and master production scheduling. Before manufacturing starts, a stage of material requirements planning, or MRP, is then undertaken, and capacity planning for the facility is calculated. At this point, every calculation is assumed to be accurate and the final two stages of executing capacity plans and material plans takes place.
The disadvantages of MRP II are centered around the fact that all of the prior planning before production can be based on misleading data and slow down the production process itself. As unexpected changes occur, the planning process must also be recalculated from the start, which can cause inefficiency if feedback about problems is not supplied on a timely, regular basis. For this reason, MRP II is often run in a batch environment, where a manufacturing facility periodically produces product runs in individual lots so that it can enable course corrections rapidly to meet real-world conditions in financing, sales, and operations.