Material Requirements Planning (MRP)

Material Requirements Planning (MRP)
Material Requirements Planning (MRP) is a computer-based production

planning and inventory control system. MRP is concerned with both
production scheduling and inventory control. It is a material control
system that attempts to keep adequate inventory levels to assure that
required materials are available when needed.
• For Example in weaving plant that manufactured fabrics, dependent
demand inventory item might include yarn, sizing materials etc. The
theme of MRP is ‘ getting the right component parts and materials to
right place and right time.
􀀀 Independent demand- Finished products
􀀀 Dependent demand- components
Depended VS Independent demand
Depended demand: Item is used for the assembly of another item. The
demand of the item is thus derived from the demand of another item.
Demand of the item is computed. Demand for a shirt clothing translates
into demand of X meter woven fabric, xy meter thread and so on. So the
item needed in the manufacturing of a shirt are the dependent demand
items.
Independent demand: Item is sold to the market by marketing

department; not to be used internally. Demand is forecasted.
MRP Objectives
1.Inventory Reduction: MRP determines how many

components are required, when they are required in order to
meet the master schedule. It helps to procure the
materials/components as and when needed and thus avoid
excessive build up of inventory.
2. Reduction in the manufacturing and delivery lead time:
MRP helps to avoid delays in production and priorities
production activities by putting due dates on customer job
order.
MRP Objectives
3. Realistic delivery commitments: By using MRP, production

can give marketing timely information about likely delivery
times to prospective customers.
4. Increased Efficiency: MRP provides a close coordination
among various work centers and hence helps to achieve
uninterrupted flow of materials through the production line.
This increases the efficiency of production system.
Functions served by MRP
Order Planning and control: When to release orders and for

1.
what quantities of
materials/components.
2. Priority Planning and control: How the expected date of
availability is compared to the need date for each
component
3. Provision of a basis for planning capacity requirements
and developing a broad business plans.
Questions addressed in MRP Processing
✔ What do we want to produce, and when- Provided by

Master Production Schedule.
✔ What Component are required to make it and how many-
Bill of Materials (BOM)
✔ How many are already scheduled to be available-
Inventory status file
✔ How many more we needed- Difference in required and
available
✔ When to order these amount- Planned order release.
MRP System
MRP Inputs
Master Production Schedule (MPS): Monthly or weekly plans for

individual products. MPS must sum up to production plan.
MPS is a series of time phased quantities for each item that a company
produces, indicating how many are to be produced and when. MPS is
initially developed from firm customer order or from forecasts of
demand before MRP system begins to operate.
• Bill of Materials (BOM): a listing of all raw materials, parts,
subassemblies, and assemblies needed to produce one unit of a product.
• Inventory records file: Provides an accounting of how much inventory is
already on hand or on order and thus should be subtracted from the
material requirements.
MRP Processing
Using information culled from BOM, MPS, and inventory

records file, and MRP system determines the net
requirements of raw materials, components parts. MRP
processing first determines gross material requirements,
then subtracts out the inventory on hand and adds back in
the safety stock in order to compute the net requirements.
MRP Outputs
• Primary Reports:
✔ Planned order schedules, which outline the quantity and timing of future
materials orders.
✔ Order release, which authorized orders to be made.
✔ Change to Planned order, which might include cancellations or revisions of the
quantity or time frame.
• Secondary Reports:
✔ Performance control reports, which are used to track problems like missed
delivery dates and stock-outs to evaluate system performance.
✔ Planning reports, which can be used in forecasting future inventory requirements
✔ Exception reports, which call manager’s attention to major problems like late
orders or excessive scrap rate.
Benefits of MRP
•Helping PM to minimize inventory levels and associated

carrying costs
• Track materials requirements
• Determine most economical lot sizes for orders
• Compute quantities needed as safety stock
• Allocate production time among various products
• Plan for future capacity needed.

Material Requirements Planning (MRP)

Uploaded by

Copyright:

Available Formats

Material Requirements Planning (MRP)

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Material Requirements Planning (MRP)

Uploaded by

Copyright:

Available Formats

Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a computer-based production

Independent demand: Item is sold to the market by marketing

1.Inventory Reduction: MRP determines how many

3. Realistic delivery commitments: By using MRP, production

Order Planning and control: When to release orders and for

✔ What do we want to produce, and when- Provided by

Master Production Schedule (MPS): Monthly or weekly plans for

Using information culled from BOM, MPS, and inventory

•Helping PM to minimize inventory levels and associated

You might also like