Material Requirement Planning

Material Requirement Planning

 Materials requirements planning (MRP) is the logic
for determining the number of parts, components
and/or materials required to produce a demanded
product.

 MRP is a software system.

 MRP provides time scheduling information

specifying when each of the materials, parts and
components should be ordered or produced.
 Material Requirement Planning
 MRP is the scientific technique for planning
the ordering and usage of materials at
various levels of production and for
monitoring the stocks (inventories) during
these transactions.

 MRP therefore, is both inventory control

and scheduling technique.
 Benefits of MRP
 Reduces Inventory Levels
 Reduces Component Shortages
 Improve Shipping Performance
 Improve Customer Service
 Improve Productivity
 Improve Communication
 Reduce Freight Cost
 Reduction in Excess Inventory
Contd…
 Benefits of MRP
 Reduce Purchasing Cost
 Improve Production Schedules
 Reduce Manufacturing Cost
 Less Scrap and Rework
 Simplified & Accurate Scheduling
 Improve Supply Schedules
 Improve Calculation of Material
Requirements
 Improve Competitive Position
 Steps of MRP
 Determine the aggregate requirement of
finished products.
 Determine the net requirement of finished
products.
 Develop a master production schedule.
 Determine gross requirement.
 Screen out A, B and C category of items.
 Determine the net requirement of items.

Contd…
 Steps of MRP
 Adjust requirement for scrap allowance

 Schedule plan orders

 Determine aggregate demand and order

quantities

 Write and place the planned orders

 Maintain the schedules

 Computerized System of MRP
 Determine gross requirement of finished
products
 Determine net requirement of finished
products
 Determine net component requirement
 Plan order size
 Material requirements considering lead times
 Maintain and update the requirement plan
 Review and adjustment of planned orders
 Provide control by exception
 Master Production Schedule-MPS
 A Master Production Schedule (MPS) is the plan
that a company has developed for Production,
Inventory, Staffing, etc.
 It sets the quantity of each end item to be
completed in each week of a short-range planning
horizon.
 A MPS is the master of all schedules. 
 It is a plan for future production of end items.
 It is usually linked to manufacturing where the plan
indicates when and how much of each product will
be demanded.
Any Questions?
Thank You…
Prepared by: Dr. K. M. Rahman
Associate Professor
Sinhgad Institute of Management,
Vadgaon, Pune