MRP
Material Requirements Planning
MRP
• …is a planning and scheduling technique used
for batch production of assembled items.
• … is a computer-based information system that
translates master schedule requirements for end
items into time-phased requirements for
subassemblies, components, and raw materials.
• It…
– enables low levels of in-process inventories
– helps to track material requirements
– helps to evaluate capacity requirements
– is a means of allocating production time
Independent and dependent
demand
• A demand is independent if it is needed for its
own. The demand of end-products are usually
independent.
• Dependent demand is a demand for items that
are subassemblies or component parts to be
used in production of finished goods.
• Once the independent demand is known, the
dependent demand can be determined.
Stable demand
Demand
Demand
Comparison of independent and
dependent demand
Time
Amount on hand
Amount on hand
Time
“Lumpy” demand
Safety stock
Time
Time
Independent Demand
Dependent Demand
A
C(2)
B(4)
D(2)
E(1)
D(3)
F(2)
Independent demand is uncertain.
Dependent demand is certain.
MRP
• Based on the master schedule, it is
• working backward from the due date using lead
times and other information,
• to determine when and how much to order from
materials, components, subassemblies etc.
• So that ordering, fabrication, and assembly can
be scheduled for timely completition of end items
while inventory leveles are kept low.
Overview of MRP
MRP Inputs
MRP Processing
MRP Outputs
Changes
Order releases
Master
schedule
Planned-order
schedules
Primary
reports
Bill of
materials
Inventory
records
MRP computer
programs
Exception reports
Planning reports
Secondary
reports
Performancecontrol
reports
Inventory
transaction
Inputs of MRP
• Master production schedule: states which end
products are to be produced, when and in what
quantities. Inputs of the master schedule are customer
orders and forcasts. Separates the planning horizonts
into time buckets. It should cover the cumulative lead
time.
• Bill-of-Materials (BOM): a listing of all of the raw
materials, parts, subassemblies, and assemblies needed
to produce one unit of a product. It is hierarchical and
shows the quantities, too (assembly diagram, product
structure tree, low level coding).
• Inventory records: Includes information on the status of
each item by time period (Gross requirements,
scheduled receipts, amount on hand, lead times, lot
sizes, etc.)
Processing MRP
(assembly time chart)
Procurement of
raw material D Fabrication
of part E
Subassembly A
Procurement of
raw material F
Procurement of
part C
Final assembly
and inspection
Procurement of
part H
Fabrication
of part G
Procurement of
raw material I
1
2
3
Subassembly B
4
5
6
7
8
9
10
11
MPR Processing 2
• Gross requirements
– Total expected demand
• Scheduled receipts
– Open orders scheduled to arrive
• Planned on hand
– Expected inventory on hand at the
beginning of each time period
MPR Processing 3
• Net requirements
– Actual amount needed in each time period
• Planned-order receipts
– Quantity expected to received at the
beginning of the period
– Offset by lead time
• Planned-order releases
– Planned amount to order in each time
period
Updating the System
• Regenerative system
– Updates MRP records periodically
• Net-change system
– Updates MPR records continuously
MRP Outputs
• Planned orders - schedule indicating
the amount and timing of future
orders.
• Order releases - authorization for the
execution of planned orders.
• Changes - revisions of due dates or
order quantities, or cancellations of
orders.
MRP Secondary Reports
• Performance-control reports: evaluate
system operation
• Planning reports: help to forecast
future inventory requirements, e. g.
purchase commitments
• Exception reports: call attention to
major discrepancies
Other Considerations
• Safety Stock
• Lot sizing
–
–
–
Lot-for-lot ordering
Economic order quantity
Fixed-period ordering
MRP is services
• Services also need material components
like packages, tools, physical environment
or materials used in the services.
MRP II
• Expanded MRP with emphasis
placed on integration
–
Financial planning
–
Marketing
–
Engineering
–
Purchasing
–
Manufacturing
MRP II
Market
Demand
Finance
Manufacturing
Master
production schedule
Marketing
Production
plan
MRP
Rough-cut
capacity planning
Capacity
planning
Adjust
production plan
Yes
Problems?
No
Requirements
schedules
No
Problems?
Adjust master schedule
Figure 13.14
Yes
Enterprise resource planning (ERP)
– Next step in an evolution that began
with MPR and evolved into MRPII
– Integration of financial, manufacturing,
and human resources on a single
computer system.
Thanks for the attention!