2. Definition:
Material requirements planning (MRP) is a production planning
and inventory control system used to manage
manufacturing processes.
MRP is the common tool used for tracking dependent demand
items
Determines quantity & timing of dependent demand items.
Determines how much and when to buy, how much to make and
when to make
3. Objective:
Ensure materials are available for production and products are
available for delivery to customers.
Maintain the lowest possible material and product levels in store
Plan manufacturing activities, delivery schedules and purchasing
activities.
Goal is to accomplish the MPS – Master Production Schedule
4. Dependent Demand
The demand for one item is related to the demand for
another item
Component part to be used in the production of finished
goods.
Independent Demand
When demand for one item is not related to the demand for
another item
Independent demand is fairly stable once allowances are
made for seasonal variations.
5. LLA
B C
D E GF
Independent vs. Dependent Demand
Dependent Demand
Independent Demand
L (0)
L (1)
L (2)
6. MRP INPUTS
1)The master production schedule:
States which end items to be produced, when they are needed,
and in what quantities
The quantities are determined through customers order ,forecast
& orders from warehouse.
For Eg: Master Production Schedule for end item X
Week Number
ITEM X 1 2 3 4 5 6 7 8
Quantity 400 150
7. 2) Bill of material
Contains list of all the assemblies , subassemblies ,parts raw
materials needed to produce one unit of a finished Product.
Listing in the bill of materials is hierarchical.
It is represented through a product tree structure.
8. X (1)
A(1) C(1)
D(2)
B(1)
E(2) F(1)
J(2) K(1)
G(1) H(3) F(1)
J(2)
For Eg : Suppose we want to manufacture 100 units of X then
What quantities of A B C D E F G H J K are required?
Product Structure for item X
100 100 100
100
400
100200200
200
100
200
300
100
9. 3) Inventory Records:
Gives complete and up to date information of on hand
inventory, Gross requirement , Scheduled receipts and planned
order release for the item
It also includes details such as lot sizes ,lead times, safety
stocks.
Basically its job is to keep data about the projected use and
receipts of each item and to determine amount of inventory
available
11. Useful Formulae :
Net Requirement
= (Gross Requirement) – (Inventory on hand)
+ ( Inventory on order )
On Hand Inventory over period ( t )
= on hand inventory over period (t-1) + (Scheduled receipt –
Projected requirement )