Material Requirements........... Planning | Inventory | Distribution (Business)

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Contents of Presentation 
Relevance of the material requirement planning. MRP system inputs &output Role in production Advantage disadvantage

Material Requirements Planning (MRP) 
Manufacturing computer information system Determines quantity & timing of dependent demand items
1 2 5 25 23 2 3 4
Gross Requirements Scheduled Receipts Available Net Requirements Planned Order Receipts Planned Order Releases

5 15 8 7 7


25 33

30 33


Material requirements planning 
Materials Requirements planning : Computer based information system for ordering and scheduling of dependent demand inventories.  A manufacturing company to produce end items to meet demand the availability of sufficient capacity must be co-ordinate with the availability of all raw material

Function of MRP 
Order planning and control Priority planning and control Providing a basis for planning capacity requirement

MRP depend on some factor 
Cost estimate Order entry Inventory control Bill of material Purchasing Manufacturing floor control and scheduling invoicing

Material requirement planning five stage 
Target and marketing Development of offering Sales Superior experience Retention and win back

Functional input

Functional output

Change in product design and product structure


New design in corporation data

What MRP does
Master schedule for END ITEM

MRP Detail schedule for RAW MATERIAL &COMPONENTS Used in the end product

Operation of MRP system 
Inventory status file


Inventory transaction data

MPS file


Planned order schedule Exception reports

B.O.M. file

Inventory Classifications

Process stage

Number & Value

Demand Type


Raw Material WIP Finished Goods

A Items B Items C Items

Independent Dependent

Maintenance Dependent Operating

Typical Focus of the Master Production Schedule
Make to Order (Process Focus) Number of end items Typical focus of the master production schedule Number of inputs Assemble to Order or Forecast (Repetitive) Stock to Forecast (Product Focus) Schedule finished product

Schedule orders

Schedule modules


Motorcycles, autos, Print shop Machine shop TVs, fast-food Fine dining restaurant restaurant

Steel, Beer, Bread Light bulbs, Paper

Structure of the MRP System
(Bill-of-Material) Lead Times (Item Master File)

Master Production Schedule

MRP by period report

MRP by date report

MRP Programs

Planned orders report

Inventory Data
Purchase requirements Purchasing data Exception reports

The Planning Process
Production Plan Master Production Schedule Material Requirements Plan Capacity Requirements Plan



Execute Capacity Plans Execute Material Plans

Purpose of MRP 
Control inventory level Assign operating priorities Assign capacity to load production system
The theme of MRP is the ³getting the right materials to the right place at the right time in right quantities´.

Effect on MRP 
End product Usually forecast Conventional inventory control applicable Raw material Component parts subassemblies

Objective of MRP 
To improve customer service by meeting delivery schedules promised and shortening delivery lead times To reduce inventory costs by reducing inventory levels To improve plant operating efficiency by better use of productive resource

Three factor of MRP technique 
The MRP technique as a requirements calculator The MRP A manufacturing ,planning and control system The MRP A manufacturing resource planning system

Why requirement of MRP 
How can we increase the production How can we more utilization of the things How can we improve the quality How can we give the best services For increase the profit

Independent and Dependent Demand
Independent Demand A Dependent Demand







Independent demand is uncertain. Dependent demand is certain.

Dependent versus Independent Demand
Item Demand Source Material Type Method of Estimating Demand Planning Method Materials With Independent Demand Company Customers Finished Goods Forecast & Booked Customer Orders EOQ & ROP Materials With Dependent Demand Parent Items WIP & Raw Materials Calculated


Implementation of MRP 
Management commitment User involvement Education and training Selection of packages Data accuracy Realistic MPS

MRP Requirements 
Computer system Mainly discrete products Accurate bill-of-material Accurate inventory status
99% inventory accuracy 

Stable lead times
© 1984-1994 T/Maker Co.

Bill-of-Material Product Structure Tree
Bicycle(1) P/N 1000 Handle Bars (1) P/N 1001 Frame Assembly (1) P/N 1002 Frame (1) P/N 1004

Wheels (2) P/N 1003

scissors SC M Qty: 1 Left side R Qty: 1 L Qty: 1 middle Right side

SC M Qty: 2 R Qty: 1 L Qty: 1

Level 0 1 Leg Assembly Chair Back Assembly


2 Legs (2)

Cross bar

Side Cross Back Rails (2) bar Supports (3)


MRP Input

Gross requirement for a period


Schedule receipt for the period

On hand Inventory at + the end of the period

= Net requirement for a period

Example of MRP
order qty =70 lead time =4 week safety stock40 project requirement 20 20 25 20 20 25 20 20 30 25 25 25 1 2 3 week 4 5 6 7 8 9 10 11 12

scheduled receipts





on hand at the end of period 65

45 95 70

50 100 75 55 105 75 50 95


planned order release




Some Example 
If Maruti suzuki decided 1000 units of alto cars model (finished goods ) dec2009 based on forecast Dell computer manufacture who planned to produce 10000 units of desk top Sony Eric son mobile company is planning to produce 50000 units of mobile with camera 4.0 mega pixel capacity

Advantage of MRP 
Reduced idle time Reduced set up time Better customer services Better response to market demands Helps managers to use the planned schedule

Disadvantage of MRP 
Lack of top management commitment MRP was presented and perceived as a complete and stand alone system to run a firm rather than as part of the total system MRP can be made to function with just in time production system

Problem in using MRP 
Preparation of MPS Maintaining accurate of B.O.M. files In correct stock (inventory ) status Unrealistic lead times

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