Material Requirement Planning (MRP)

A computerized information system to aid in

managing dependant demand inventory and
scheduling replenishment orders

Purposes of MRP
• Inventory – right part, quantity, time
• Capacity – complete load
• Priority – due date

Getting the right material to the right place at the right time
Material Requirement Planning (MRP)
Inputs to MRP
• Bill of material (BOM)
• Master production schedule (MPS)
• Inventory record database

Bill of Material (BOM)

• all the components of an item

• usage quantities (for unit parent)

• the parent-component relationships
 Material Requirement Planning (MRP)
Bill of Material

Seat Assy
Back
slats

Seat Seat
Frame Cushion

Seat Frame
Board

Chair Ladder back Back

Assy legs Front Leg
legs supports
 Material Requirement Planning (MRP)
Bill of Material

Chair

Ladder back Front Leg Seat

1 2 4 1
subassy legs supports subassy

Back Back Seat Seat

1 1
legs 2 slats 4 Frame Cushion

Seat Frame Board 4

 Material Requirement Planning (MRP)
Master Production Schedule (MPS)
Details of how many end items will be produced
within specified periods of time

April May

Aggregate 670 670

Week number 1 2 3 4 5 6 7 8
Ladder-back
150 150
Chair

Kitchen chair 120 120

Desk chair 200 200 200 200

 Material Requirement Planning (MRP)
Inventory Record
A record that shows an item’s lot-size policy,
lead time and various time-phased data Lot size = 230 unit
Lead time = 2 wks

Week No. 1 2 3 4 5 6 7 8
Gross
requirements
150 0 0 120 0 150 120 0

Scheduled receipt 230

Projected on-hand
117 117 117 227 227 77 187 187
inventory (37)

Planned receipt 230 230

Planned order 230 230
release
 Material Requirement Planning (MRP)
Inventory Record
Lot size = 230 unit
Lead time = 2 wks
Safety stock = 80 unit

Week No. 1 2 3 4 5 6 7 8
Gross
requirements
150 0 0 120 0 150 120 0

Scheduled receipt 230

Projected on-hand
117 117 117 227 227 307 187 187
inventory (37)

Planned receipt 230 230

Planned order 230 230
release
 Material Requirement Planning (MRP)
Inventory Record
Lot for Lot
Lead time = 2 wks

Week No. 1 2 3 4 5 6 7 8
Gross
requirements
150 0 0 120 0 150 120 0

Scheduled receipt 230

Projected on-hand
117 117 117 0 0 0 0 0
inventory (37)

Planned receipt 3 150 120

Planned order
3 150 120
release
Material Requirement Planning (MRP)

Customer Order Forecast

Master Production Schedule

(MPS)

Inventory MRP Bill of

Records Explosion Material

Material Requirement Planning

(MRP)
 Material Requirement Planning (MRP)
Example
A C

B D D 2 F

Week No. 1 2 3 4 5 6
Gross requirements
of A
80

Gross requirements
of C
50
Material Requirement Planning (MRP)
For A (LT = 1 wk; lot for lot)
Week No. 1 2 3 4 5 6
Gross requirements 80
Scheduled receipt
Projected on-hand inventory
Planned receipt 80
Planned order release 80

For C (LT = 1 wk; lot for lot)

Week No. 1 2 3 4 5 6
Gross requirements 50
Scheduled receipt
Projected on-hand inventory
Planned receipt 50
Planned order release 50
Material Requirement Planning (MRP)
For D (LT = 2 wks; lot size = 100)

Week No. 1 2 3 4 5 6
Gross requirements 80 100

Scheduled receipt 50
Projected on-hand
65 65 85 85 85 85
inventory (15)

Planned receipt 100 100

Planned order release 100 100

Manufacturing Resource Planning (MRPII)
Customer Order Forecast

Master Production Schedule

(MPS)

Inventory MRP Bill of

Records Explosion Material

Material Requirement Planning (MRP)

Cost and
Financial Data

Manufacturing Resource Planning (MRPII)

Purchasing Financial Marketing HRM Manufacturing

Reports Reports Reports Reports Reports
Enterprise Resource Planning (ERP)