Material Requirement Planning (MRP)

by manidatta ray.

Resource Requirement Planning (RRP)

RRP is concerned with the determination of the amount and timing of production resources such as personnel, materials , cash and production capacity needed to produce the finished products or end items as per the Master Production Schedule (MPS) . RRP is usually applied to the critical work centers which are most likely to be bottlenecks .

Master Production Schedule (MPS)

MPS defines the type and volume of each product that is to be produced within the planning horizon . MPS is a detailed plan that specifies the exact timing for the production of each unit . MPS are also used in scheduling various stages of production , depending on the type of operations.

Two main elements of Resource Requirement Planning (RRP) are : Material Requirement Planning (MRP) . Capacity Requirement Planning (CRP) .

What is MRP (Material Requirements Planning)

Is a basic tool for performing the detailed material planning function in the manufacturing of component parts and their assembly into finished items.

MRP is a system used for planning the future requirements of dependent items. This planning is done based on three points ,known as elements of MRP : No. of items already in the inventory (Inventory Status) No. of finished goods to be produced in the near future using these items ( Master Production Schedule) No. of units of the items required for manufacturing a single unit of finished product .( Bill of Materials )

Elements of MRP
Master Production Schedule (MPS) Bills of Materials Inventory Status File

Objective of MRP
The Operation Manager adopts MRP for the reasons : To improve the customer Service To reduce Inventory investment To improve plant operating efficiency

What can MRP do?

Reduce Inventory Levels Reduce Component Shortages Improve Shipping Performance Improve Customer Service Improve Productivity Simplified and Accurate Scheduling Reduce Purchasing Cost Improve Production Schedules Reduce Manufacturing Cost Reduce Lead Times Less Scrap and Rework Higher Production Quality

What can MRP do?

Improve Communication Improve Plant Efficiency Reduce Freight Cost Reduction in Excess Inventory Reduce Overtime Improve Supply Schedules Improve Calculation of Material Requirements Improve Competitive Position

Master Production Schedule (MPS)

A Master Production Schedule (MPS) is devised to either replenish finished goods inventories or to fill customer orders . An MPS begins as a trial schedule to be tested for feasibility through MRP . MPS derives the MRP system , and as the MPS is updated , the MRP results are also modified .

Bills of Material File

bill of material is a list of materials and their quantities required to produce one unit of product or end item . Each product therefore has a bill of material . A bills of material file ( product structure file) , is a complete list of all finished products, the quantity of each material in each product and the structure of the product ( assemblies, subassemblies, parts , and raw materials and their relationships ) . It is also known as indented bill of material . Bills of material file is an up to date computerized file that must be revised as products are redesigned .
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Inventory Status File

It is a computerized file with a complete record of each material held in inventory . Each material, no matter at how many levels it is used in a product or in many products, has one and only one material record. A material record includes , inventory on hand , materials on order and customer orders for the item . These records are kept up to date by inventory transactions such as receipts, disbursements , scrapped materials, planned orders etc .

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.

Planned Order Report (POR)

POR gives information about the planned orders to be released on some future date or during a given interval of time . This report is helpful in preparing for the funds required for payments to the suppliers in the future according to the dates and order sizes .

Order Release Report (ORR)

ORR gives information about Planned orders to be released on the present date . It helps the Purchase Managers to release the Purchase Orders (POs) to the suppliers. This is the most common report generated by the MRP processing logic and it helps the Purchase Manager to keep track of the POs that have to be sent on a particular day .

Order Change Report (OCR)

OCR facilitates the Purchase Manager to change the placed order, due to the revisions of due dates , order quantities, or cancellations of orders . OCR provides the purchase manager , with information about all such changes to be made in the open orders with the suppliers.