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2009503046
 Material requirements planning (MRP) is a
computer-based inventory management
system designed to assist production
managers in scheduling and placing orders
for items of dependent demand.
 Dependent demand items are components
of finished goods—such as raw materials,
component parts, and subassemblies—for
which the amount of inventory needed
depends on the level of production of the
final product.
 MRP is a material planning methodology
developed in the 1970's making use of
computer technology. The main features of
MRP are the creation of material requirements
via exploding the bills of material, and time-
phasing of requirements using posted
average lead times.
 MRP II was developed as the second
generation of MRP and it features the closed
loop system: production planning drives the
master schedule which drives the material
plan which is the input to the capacity plan.
Feedback loops provide input to the upper
levels as a reiterative process.
 The goal of the MRP or Material Requirements
Planning document is to supply information that
will enable the company to have enough
inventory on hand to fulfill demand, (and no
more) available only when needed, (and no
sooner) at a quality level that meets specification,
(but does not have to exceed it) and at the lowest
price. A good MRP or Material Requirements
Planning program can provide the basic needs of
keeping inventory levels low and fulfilling
customer expectations for on time delivery.
 There are two important questions to ask
here. How much of an item is needed? When is an
item needed to complete a specified number of
units, in a specified period of time? The MRP
process involves the following steps:
 Determine the gross requirements for a
particular item
 Determine the net requirements and when orders
will be released for fabrication or subassembly
 Net Requirements = Total Requirements –
Available Inventory
 Net Requirements = (Gross Requirements +
Allocations) – (On Hand) + Scheduled Receipts
 Develop a master production schedule for
the end item (this is the output of the
aggregate / production planning). The MPS is
adjusted accordingly, as follows:
 Create schedules identifying the specific parts
and materials required to produce the end
items. The bill of materials will be useful here
 Determines the exact numbers needed
 Determines the dates when orders for those
materials should be released, based on lead
times
 Multiple planning cycles
 Concurrent MRP planning views
 Optionally driven by selected glovia G2
Master
 Production Scheduling cycle
 Computer-planned orders
 Generate purchase requisitions
 Generate purchase orders
 Contract purchase order releases for
suppliers
 Work orders optionally generated
 Repetitive schedules created from MRP-
planned orders
 MRP planning by work center
 MRP transfers for supply & demands across
locations
 Material Requirements Planning solution
includes modules for inventory management,
product definition and costing, master
scheduling and materials requirement
planning, capacity planning, work order
management, purchase order management,
sales order management, shipping and
receiving, and sales analysis. Material
requirements planning software can also
include a full accounting package, if desired
 Master Production Schedule
 Product Structure
 Inventory Levels
 There are two outputs and a variety
of messages/reports:
 Output 1 is the "Recommended
Production Schedule" which lays out a
detailed schedule of the required
minimum start and completion dates,
with quantities, for each step of the
Routing and Bill Of Material
required to satisfy the demand
from the Master Production
Schedule (MPS).
 Output 2 is the "Recommended Purchasing
Schedule". This lays out both the dates that
thepurchased items should be received into
the facility AND the dates that the Purchase
Orders, or Blanket Order Release should
occur to match the production schedules.
The MRP is a framework for providing useful
information
for decision makers. The key to realizing the benefits
from
any MRP system is the ability of the inventory planner
to
use the information well. The specific benefits of MRP
include the following:
 Increased customer service and satisfaction
 Improved utilization of facilities and personnel
 Better inventory planning and scheduling
 Faster response to market changes and shifts
 Reduced inventory levels without reduced customer
service
 The MRP is also a very powerful tool since it
takes into consideration changes in certain
assumptions especially under uncertain
conditions, especially when the inputs to the
MRP system change because of the following
realities in the production area:
 Delays in scheduled receipts
 Changes in planned order sizes because of
capacity constraints
 Changes in gross requirements which dictate
changes in lot sizes at sub-component levels
 Unavailability of raw materials for one sub-
component which negates the need for a
fellow subcomponent as both must be ready
for the parent production
 Utilization of same parts at different levels
indicating the need to restructure the bill of
materials and
 Presence of price discounts or some other
features which makes it advisable to purchase
more than the anticipated need
 The major problem with MRP systems is the integrity
of the data. If there are any errors in the inventory
data, the bill of materials (commonly referred to as
'BOM') data, or the master production schedule, then
the outputted data will also be incorrect (colloquially,
"GIGO": Garbage In, Garbage Out). Data integrity is
also effected by inaccurate cycle count adjustments,
mistakes in receiving input and shipping output,
scrap not reported, waste, damage, box count errors,
supplier container count errors, production reporting
errors, and system issues. Many of these types of
errors can be minimized by implementing pull
systems and using bar code scanning. Most vendors
of this type of system recommend at least 99% data
integrity for the system to give useful results.
 Another major problem with MRP
systems is the requirement that the user
specify how long it will take a factory to make
a product from its component parts
(assuming they are all available). Additionally,
the system design also assumes that this
"lead time" in manufacturing will be the same
each time the item is made, without regard to
quantity being made, or other items being
made.