LE / SU6

Material requirements
planning
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 Learning outcomes
 Define how the “Material Requirements Planning”
(MRP) system functions within an organisation (7.1) ;
 Describe the objectives of an MRP system (7.2);
 Explain the dependent demand requirements of an
MRP system (7.3);
 Discuss the inputs for an MRP system (7.4);
 Describe the structure of an MRP system (7.5);

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 Learning outcomes (cont.)
 Discuss the outputs derived from an MRP system
(7.6);
 Outline the other aspects of an MRP system (7.7);
 Explain the management of an MRP system (7.8)
&(7.8); &
 Discuss the advantages and disadvantages of using
an MRP system (7.9).

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 7.1Introduction
 Material requirements
planning [ MRP]
 MRP aggregates the
production system to
produce products at the
right time, place and
quantities.
 MRP as a system furnishes
critical information
regarding the correct
quantities to purchase of
raw material or parts
utilised in the
manufacturing
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University Press 2013
 7.2 MRP objectives
MRP system operates on
dependent demand

 Reasons for
implementing MRP:
- Improve operation
efficiency
- Improve manner in
which customers are
treated
- Need to minimize
investment in inventory.

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 7.3 Dependent demand

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7.3.1 Management of demand (Fig. 7.1)

Voledige kapisiteit en material plan /

Complete capacity and materials plans

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 7.4 Insette benodig vir `n MRP stelsel

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7.4 Inputs required for an MRP system (cont.)
Input 1: MPS (Master
production schedule)
Spells out what is to be
manufactured & time (when)

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7.4 Inputs required for an MRP system (cont.)
Input 2: Bill of materials
(BOM)( or product structure
tree)

How to compute BOM

requirements (Read: DEFY
example from page 200 -202).

BOM type:
- Modular bill
- Phantom and planning
bills
- Low level coding
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7.4 Inputs required for an MRP system (cont.)

Input 3: Accurate inventory

records = 99%
- Gross requirements for
each part
- Scheduled receipt date
of the material
- Stock on hand

Files of records for inventory

- Item file
- Transaction file
- Location file
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7.5 The structure of an MRP system – SELF
STUDY

Key terms:
- Gross requirements
- Scheduled receipts
- Projected on hand
- Net requirements
- Planned-ordered
receipts
- Planned-ordered
releases

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7.6 Outputs derived from an MRP system
Primary reports
• Change report
• Orders planned
• Orders released

Secondary reports
• Reports relating to
performance control
• Reports relating to
planning
• Exception reports.

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 7.7 Other aspects of MRP
 Safety stock
 Lot sizes - EOQs & EPQs

Just read ( Table 7.7 p. 191 -

200 - Methods utilised to
establish lot sized)

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7.8 Management of an MRP system
7.8.1 Dynamics of MRP:
• Time fences
• Pegging

7.8.2 Material requirements

planning and JIT
• The small bucket approach
• The balanced flow
approach.

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7.9 Advantages and disadvantages of using a
MRP system
Two basic functions:
Advantages:
- Avoidance of inventory
problems
- Effective linkages
between planning efforts
- Early identification of
problem areas
- Highlights hidden
problems
- Instantaneously
available information
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7.9 Advantages and disadvantages of using a
MRP system
Disadvantages:
- Requires a lot of
information
- MRP requires a detailed
MPS, but MPS is an
inaccurate document
- Effort required in
recording information
- Any error has major
negative impact
- Plans can change in a
moment’s notice

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