Does a MRP system provide value to an organization?
According to Anderson and Schroeder (1984), Material Resource Planning (MRP) systems can offer a number of potential benefits to manufacturing organizations. Some of such benefits include helping production managers to minimize inventory levels and the associated carrying costs, track material requirements, determine the most economical lot sizes or batch quantities for orders, compute quantities needed as safety stock, allocate production time among various products, and plan for future capacity needs. The information generated by MRP systems is useful in other areas of the organization as well.
The manufacturing functions of most manufacturing companies are the engines that drive profitability within the organization. Thus, companies are quick to spend significant amount of money implementing MRP systems within their organization because having such a system is deemed a standard industry requirement for manufacturing companies. The issue that this project will seek to answer is whether implementing such a system will be a value add proposition for ABC, Inc., a medical device company located in Eatontown, New Jersey.