Professor Ahmadi
Slide 1

Material Requirements Planning (MRP)
MRP is a dependent demand technique that uses bill-of material, inventory, expected receipts, and a master production schedule to determine material requirement.
Slide 2

Inventory Classifications
Inventory
Process stage
Number
& Value
Raw Material
WIP
Finished Goods
A Items
B Items
C Items
Demand
Type
Other
Independent
Dependent
Maintenance
Operating
Slide 3

MRP and The Production Planning Process
Forecast &
Firm Orders
Aggregate
Production
Planning
Resource
Availability
Material
Requirements
Planning
Master
Production
Scheduling
No , modify CRP, MRP, or MPS
Capacity
Requirements
Planning
Realistic?
Yes
Shop
Floor
Schedules
Slide 4

MRP Benefits





Increased customer satisfaction due to meeting delivery schedules
Faster response to market changes
Improved labor & equipment utilization
Better inventory planning & scheduling
Reduced inventory levels without reduced customer service
Slide 6

Evaluation of MRP



Most beneficial to process-focused systems that have long processing times and complex multistage production steps
Lead times must be reliable
Difficult to implement
Slide 7

MRP and JIT


MRP - a planning and scheduling technique with fixed lead times
JIT - a way to move material expeditiously
Slide 8

MRP in Services

Can be used when demand for service or service items is directly related to or derived from demand for other services
• restaurant - rolls required for each meal
• hospitals - implements for surgery
• etc.
Slide 9

Bill-of-Material



List of components & quantities needed to make product
Provides product structure (tree)
• Parents: Items above given level
• Children: Items below given level
Shows low-level coding
• Lowest level in structure item occurs
• Top level is 0; next level is 1 etc.
Slide 10

Example: Bill-of -Material for a Moped
The following product structure diagram represents the bill of materials for a dualcarburetor Model 442 Moped.
Level 0 MOPED
Level 1
ENGINE
ASSEMBLY
Level 2
MOTOR
GAS
TANK
CARBURETOR
(2)
WHEEL
ASSEMBLY
(2)
HUB
ASSEMBLY
TIRE
FRAME
Slide 11

Requirements for Effective Use of Dependent
Demand Inventory Models
Effective use of dependent demand inventory models requires that the operations manager know the:
• master production schedule
• specifications or bills-of-material
• inventory availability
• purchase orders outstanding
• lead times
Slide 12