What is MRP? Objective Structure Benefits Limitations

1. Material Requirement Planning (MRP)
Structure
Presented By:
Amit Verma
214216014
National Institute of Technology,
Tiruchirappalli

2. What is MRP..??
MRP is designed to answer three questions:
•what is needed,
•how much is needed, and
•when is it needed.
Material requirements planning (MRP) is a production planning,
scheduling, and inventory control system used to manage
manufacturing processes.
Material Requirement Planning(MRP) is a technique for
determining the quantity and timing for the acquisition of
dependent demand items needed to satisfy master schedule
requirements.

3. Objective:
•The main theme of MRP is “getting the right materials to the right
place at the right time”.
An MRP system is intended to simultaneously meet three objectives:
•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.
Most MRP systems are software-based, while it is possible to conduct
MRP by hand as well.

4. Types of System:
1.Dependent demand- are the component, parts, or sub
assemblies of finish goods.
2.Independent demand-Finish goods
EX:-
Bikes(2000)
Tyres(4000) Lights(4000)
Demand
forecast

5. Three Basic Steps of MRP
1)Identifying Requirements
2)Running MRP – Creating the
Suggestions
3)Firming the Suggestions

6. Step 1: Identifying the Requirements
•Quantity on Hand
•Quantity on Open Purchase Order
•Quantity in/or Planned for Manufacturing
•Quantity Committed to Existing Orders
•Quantity Forecasted

7. Step 2: Running MRP – Creating
the Suggestions
•Critical Items(immediate importance )
•Expedite Items(it is completed in less than the normal
lead time)
•Delay Items(not of vital importance )

8. Step 3: Firming the Suggestions
•Manufacturing Orders
•Purchasing Orders
•Various Reports

9. MRP System Structure
Output Reports
MRP by period
report
MRP by date
report
Planned order
report
Purchase advice
Exception reports
Order early or late or
not needed
Order quantity too
small or too large
Data Files
Purchasing data
BOM
Lead times
(Item master file)
Inventory data
Master
production schedule
Material
requirement
planning programs
(computer and
software)

10. To perform, an MRP system requires these as
Input
Master Production Schedule
Bill of Materials
Lead Time
Inventory Data
Purchasing Data
MRP System
Requirements(Input)

11. Master Production Schedule (MPS)
Firm orders
from known
customers
Forecasts
of demand
from estimates
Aggregate
product
plan
Master
Production
Schedule
(MPS)
MPS provide information about:-
•What end product are to be produced
•How many each type of product is to be produced
•When the product is likely to be dispatched.
The MPS is an extension of the aggregate production plan.

12. Bill of materials (BOM)
•A listing of all of the raw materials,
parts, subassemblies, and assemblies
needed to produce one unit of a product.
•BOMs are of hierarchical nature.
Chair
Leg
Assembly
Seat Back Assembly
Legs (2) Cross
bar
Side
rails (2)
Cross
bar
Back
Supports
(3)

13. Lead Time:
1.Ordering Lead Time
2. Manufacturing Lead Time
Initiation of
purchased
requisition
Receipt of items
from vendor
Place order
internally
Processing parts through
sequence of machines
End item delivered

14. The inventory records file is used to track
information on the status of each item by time
period.
•On-Hand Quantities
•On-Order Quantities
•Lot Sizes
•Safety Stock
•Lead Time
•Past-Usage Figures
Purchasing Data
Data Related to the Purchasing of Data like,
•Product cost,
Inventory Data

15. The main outputs from MRP include three primary reports
and three secondary reports.
The Primary reports consist of:
1- Planned order schedules,
2- Order releases,
3- Changes to planned orders.
The Secondary reports generated by MRP include:
1- Performance control reports,
2- Planning reports,
3- Exception reports.
MRP system Outputs

16. The Benefits of MRP
Inventory reduction.
Reduction in production & delivery time.
Increased efficiency.
Faster response to market changes.
Improved labour & equipment utilization.
Better inventory planning & scheduling.
Reduced inventory levels without reduced customer
service.

17. PROBLEMS WITH MRP
This system assume lead time is constant.
This system could not include resource planning in its
system.
MPS is only depends on Forecast value or firm order.
Most MRP systems requires at least 99% accurate
data.
The other major drawback of MRP is that takes no
account of capacity in its calculations.

18. THANK
YOU