Franklin Fan Company is a reputed company, which is engaged in the production of fans for and has two products, which are in great demand in the market. The one product is a ceiling fan and the other is a personal fan. The company is doing well in its business and now the company wants to hold more percentage of shares in the market and attains a competitive position in the market by implementing an electronic resource planning system. The company is implementation such system because they are worried about the market situation, as per the experience over past years the demand for the product increases and in the next situation demand decreases which leads the company in wrong direction.
Material Requirements Planning (MRP) is a process or system for the sustainable planning and distribution of the material requirements to meet the demand of the product in the market by proper quantity of supply. The development of the information technology plays a vital role in the MRP system. Many business enterprises like in the case of Franklin Fan Company, use of MRP system helps by providing information about the available resources required for manufacturing to meet the demand of the market. The MRP system keeps tract on the stock of the product and available resources, which helps the Franklin Fan Company to calculate the net quantity produced and plan for future production. The objective of the MRP system is to provide information to help the enterprise allocate the right material at right place and at right time.
The challenges faced by Franklin Fan Company in implementing the MRP system within the company is that the company fails to maintain the proper and optimum amount of the stock of the product which results in increasing the cost of each unit of production. Therefore, the challenge faced by the fan company is very important to be resolved so that they can attain a competitive advantage by grabbing the market share by keeping regular supply of the product to meet the demand.
The company Franklin Fan Company is facing a depression in the demand of the product, which results in the rise of the cost in per unit of production. Therefore, the company is required to make a plan to adopt such MRP system within the organization that fit the business structure and processes of the organization (Shan et al., 2016). The company needs to make an internal requirement assessment to find out the best suitable MRP system of the company. The company should make an analysis on what type of MRP system they should choose which would support the business structure of the company. The Company is facing problems as to timely allocation of resources with the demand of the product in the market. The Franklin Company faces the problem of non-availability of adequate lead-time for the customer’s delivery of products. The company is facing such problems because the software used in the MRP system does not suit the business structure of the company. The techniques used for the deciding the lot size of production of a particular item requires more and more planning for the inventory. Many a times it is found that the quantity allocated for production causes stock of the product in the inventory, which gives rise in the cost of the per unit production of the company. On the other hand, when the company tries to reduces the unit of production it leads to outages or shortages of the stock of the product. Therefore, the company uses the ‘Lot for Lot’ method. In this method, the company is able to plan its inventory, techniques used and able to allocate optimal resources for the production. This method also helps company to reduce the holding of huge stock of product in the inventory or shortage of finished product in the inventory. Moreover, the lot for lot method helps in reduction of the cost of maintenance of stock in the inventory because the method helps in allocation of optimal resources for production looking into the demand in the market. In this method, the users use mathematical models to make decisions regarding the locating of resources and inventory planning. The main advantages of this in using this method in the manufacturing system is that the production goes on continuously and as allocation of resources are made efficiently there is no capacity constraint (Doma?ski & Fertsch, 2015). The delivery of the finished goods is delivered to the buyers on time to satisfy and meet the demands its customers. This also helps the company to ascertain the relative demand in the market over time without extra cost in the production.
Therefore, it can be concluded that the Franklin Company should use the lot for lot method. This will help the company to determine the demand of the product in the market approximately and helps in allocation of resources for the production of the fans. Equilibrium in demand and supply of the fans are met in the market, it raises more demand for the product and increases the number of orders for the product in a period. The process helps in reducing the cost for maintenance of the inventory or stock as the allocation of resources are optimal. Moreover, increase in order or demand for the products, reduces the cost of production and increases the savings of the company.
Doma?ski, R., & Fertsch, M. (2015). Integration of production and supply in the lean manufacturing conditions according to the lot for lot method logic-results of research. LogForum, 11(4), 351-358.
Shan, Y., Yiping, Y., Xiaojuan, L., Huiling, M., & Xiang, L. (2016). Research on reverse MRP system development of agricultural mechanization based on modularized BOM. Modern Manufacturing Engineering, 9, 008.